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IS YOUR COMPANY HOLIDAY PARTY TAX DEDUCTIBLE?


Whether you have a small gathering at the office or take your employees out to dinner and drinks, it's important to know what you can deduct from your company holiday party.  Under President Trump, important changes have been made to meals and entertainment and it's important to know what qualifies for deduction.

WHAT CHANGED?

While the deduction for entertainment has been eliminated in it's entirety, the IRS released further guidance in late September of 2018 confirming that companies can still deduct 50% of meals while entertaining clients and customers. 

WHAT DO YOU MEAN?

For example, a meal purchased for a client during a sporting event is deductible. However, the tickets to the game itself that includes food and drink would not be eligible since this cost is absorbed in the ticket price. Items like tickets to sporting events are not deductible with or without food!

WAIT, I THOUGHT THIS POST WAS SUPPOSED TO BE ABOUT HOLIDAY PARTIES?

Sorry, I got a little side tracked. Here is is:

100% DEDUCTIBLE

A party for employees and employees' families only 
Note: all employees must be invited.

50% DEDUCTIBLE

A party that is for clients and friends, in addition to employees and employees' families

0% DEDUCTIBLE

Family of the business-owner, even if they are employee 

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WHAT ELSE DO YOU NEED TO KNOW AND TRACK FOR YOUR OFFICE HOLIDAY PARTY?

  • The IRS requires you keep the party within your means. In other words, the party cannot be too extravagant like a wedding.​
  • As noted above, you must invite all your employees. Not only is that the right thing to do, but it is also discriminatory to pick and choose.
  • It's a good idea to send out invitations, whether paper or through email, that state the intention of the party is for business.
  • Keep receipts and records for everything!

Remember, the above are guidelines for office holiday parties. If you need guidance for other holiday outings, reach out to us! 

P.S Don't worry. This won't stop us from having our holiday party : )


Keith Boyer

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