Page 196 - Individual Forms & Instructions Guide

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
Enter on line 20b amounts paid to • Contributions to a state unemploy- your employee, the travel is for a bona
rent or lease other property, such as of- ment insurance fund or disability benefit fide business purpose, and the expenses
fice space in a building. fund if they are considered taxes under would otherwise be deductible by that
state law. person.
Line 21 Do not deduct the following. Do not include expenses for meals on

Deduct the cost of incidental repairs and • Federal income taxes, including this line. Instead, see Line 24b, later. Do
maintenance that do not add to the prop- your self-employment tax. However, not include entertainment expenses on
erty's value or appreciably prolong its you can deduct one-half of your self-em- this line.
life. Do not deduct the value of your ployment tax on Schedule 1 (Form
own labor. Do not deduct amounts spent 1040), line 15 (but if filing Form Instead of keeping records of your
to restore or replace property; they must 1040-NR, then only when covered under actual incidental expenses, you can use
be capitalized. the U.S. social security system due to an an optional method for deducting inci-
international social security agreement). dental expenses only if you did not pay
Line 22 • Estate and gift taxes. or incur meal expenses on a day you
were traveling away from your tax
• Taxes assessed to pay for improve-
In most cases, you can deduct the cost of ments, such as paving and sewers. home. The amount of the deduction is
materials and supplies only to the extent • Taxes on your home or personal $5 a day. Incidental expenses include
you actually consumed and used them in use property. fees and tips given to porters, baggage
your business during the tax year (unless • State and local sales taxes on prop- carriers, bellhops, hotel maids, stewards
you deducted them in a prior tax year). erty purchased for use in your business. or stewardesses and others on ships, and
However, if you had incidental materials Instead, treat these taxes as part of the hotel servants in foreign countries. They
and supplies on hand for which you kept cost of the property. do not include expenses for laundry,
no inventories or records of use, you can • State and local sales taxes imposed cleaning and pressing of clothing, lodg-
deduct the cost of those you actually on the buyer that you were required to ing taxes, or the costs of telegrams or
purchased during the tax year, provided collect and pay over to state or local telephone calls. You cannot use this
that method clearly reflects income. governments. These taxes are not inclu- method on any day that you use the
You can also deduct the cost of ded in gross receipts or sales nor are standard meal allowance (as explained
books, professional instruments, equip- they a deductible expense. However, if under Line 24b, later).
ment, etc., if you normally use them the state or local government allowed You cannot deduct expenses for at-
within a year. However, if their useful- you to retain any part of the sales tax tending a convention, seminar, or simi-
ness extends substantially beyond a you collected, you must include that lar meeting held outside the North
year, you must generally recover their amount as income on line 6. American area unless the meeting is di-
costs through depreciation. • Other taxes and license fees not re- rectly related to your trade or business
lated to your business. and it is as reasonable for the meeting to
Line 23 Do not reduce your deduction be held outside the North American area

You can deduct the following taxes and ! for social security and Medi- as within it. These rules apply to both
care taxes by the nonrefunda-
CAUTION
licenses on this line. ble and refundable portions of the credit employers and employees. Other rules
• State and local sales taxes imposed apply to luxury water travel.
on you as the seller of goods or services. for sick and family leave wages that you For details on travel expenses, see
If you collected this tax from the buyer, claimed on Form 944 or Form(s) 941. chapter 1 of Pub. 463.
you must also include the amount col- Instead, you must report your credit for
lected in gross receipts or sales on qualified sick and family leave wages as Line 24b
line 1. income on line 6.
• Real estate and personal property Enter your deductible business meal ex-
taxes on business assets. Line 24a penses. This includes expenses for meals
• Licenses and regulatory fees for while traveling away from home for
your trade or business paid each year to Enter your expenses for lodging and business. Your deductible business meal
state or local governments. But some li- transportation connected with overnight expenses are a percentage of your actual
censes, such as liquor licenses, may travel for business while away from business meal expenses or standard meal
have to be amortized. See chapter 8 of your tax home. In most cases, your tax allowance. See Amount of deduction,
Pub. 535 for details. home is your main place of business, re- later, for the percentage that applies to
• Social security and Medicare taxes gardless of where you maintain your your actual meal expenses or standard
paid to match required withholding from family home. You cannot deduct expen- meal allowance. In most cases, the per-
your employees’ wages. Reduce your ses paid or incurred in connection with centage is 50%. However, business
deduction by the amount shown on employment away from home if that pe- meals are 100% deductible if the meals
Form 8846, line 4. riod of employment exceeds 1 year. Al- are food or beverages provided by a res-
• Federal unemployment tax paid. so, you cannot deduct travel expenses taurant and paid or incurred after De-
• Federal highway use tax. for your spouse, your dependent, or any cember 31, 2020, and before January 1,
other individual unless that person is 2023.

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