Deducting Travel, Entertainment, Gifts, and Meals – overview

For business owners with questions about deducting expenses for travel, meals, entertainment, and gifts, here is a small overview.  Generally meals and entertainment are deductible as long as they are ordinary and necessary expenses that are directly business related.  An ordinary expense is one that is common and accepted in the taxpayers trade or business.  A necessary expenses is one that is appropriate for business.  Also remember that generally only 50% of meals and entertainment can be deducted.

For travel, when taxpayers are away from home on business they may deduct the travel related expenses.  This includes the cost to get to their desination (airplane ticket, gas, rental car, etc.), the cost of lodging, and the cost of meals.  To qualify as travel away from home they work duties must take longer than one day.  Meals are still subject to a 50% limitation even when traveling away from home.

When it comes to gifts, taxpayers are often able to deduct some or all of the expense of gifts given during the course of their business.  Generally a deduction for a gift is limited to $25 per person per tax year. 

This is just a quick overview of deducting travel, entertainment, gifts, and meals.  If you have further questions about the deductibility of any of these items it is always a good idea to contact your tax professional.


About the author

Seattle CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. Since 2002, he has owned his own small business, Huddleston Tax CPAs. He is a graduate of Washington State University and the University of Washington School of Law.