Are you aware of the $75 receipt rule?

Under the $75 receipt rule, you are not required to keep receipts for overnight travel, gifts, and vehicle expenses IF the expense is under $75.

But should be taking advantage of the $75 rule? Even if you do not need to have receipts for travel, gift, and vehicle expenses, you still need proof of those expenditures! But how do you prove an expense when you do not have a receipt?

Can your bank and credit card statements serve as a proof of the expense the IRS is looking for? – NO. The statements will only prove that you spent money but not what you paid for or business purpose of the expenditure. You can purchase groceries at the gas station and still have it show up on your bank statement as a gas station expenditure.

You can keep daily business mileage and expense log to document all the expenses that fall in that $75-and-less category. IRS Publication 463 has an example of the log you can use. But it is time-consuming and confusing, so our recommendation is to keep receipts for every expenditure and ignore the $75 receipt rule.  To make it less manual, you can utilize a number of receipts management apps currently on the market, like Expensify, Shoeboxed, Evernote, Receipt Bank, Google Drive, Dropbox.

If you need help with record-keeping, expense tracking, or expense maximization, schedule a free consultation.

Business Meal Deductions

Did you know that business meal deductions can apply to 100% of the total cost? 

In an effort to assist this industry, the Consolidated Appropriations Act of 2021 introduced a 100% business meal deduction. This temporarily increases the deduction of expenses that are paid or incurred for food or beverages provided by a restaurant to 100% of the costs. The temporary increase is effective for the years 2021 and 2022. 

The new provision creates a temporary but meaningful tax incentive to spend more on an industry that has been significantly impacted by the COVID-19 pandemic. Thus, business owners can write off meals and entertainment at full cost (formerly 50%) for the years 2021 and 2022. 

New Business Meal Rules

To qualify for 100% deduction, your deductible business meals must be:

1. Ordinary and necessary business expenses
2. Not lavish or extravagant meals
3. You must be present at the meal and a bona fide business discussion must take place.

Again, it is important to take note that the law requires that a restaurant must provide the food and beverages. Keep receipts. 

What qualifies as a restaurant?

According to the guidance released by the IRS on April 8, 2021, the Notice 2021-25 defines a restaurant as a business that prepares and sells food or beverages to retail customers for immediate consumption, regardless of whether the food or beverages are consumed on the business premises. This means takeout, delivery tips, fees and sales tax also qualify for the temporary 100% deduction.

Excluded from the definition of a restaurant are those establishments that primarily sell pre-packaged food or beverages not for immediate consumption, such as: grocery stores, specialty food stores, wine or liquor stores, drug stores, convenience stores, newsstands, or vending machines or kiosks. 

Additionally, (1) any eating facility located on the business premises of the employer and used in furnishing meals excluded from an employee’s gross income as a convenience of the employer; and (2) any employer-operated eating facility by a third party under contract with the employer are also excluded from the definition of a restaurant. The 50% deduction limitation continues to apply to these establishments.

What about food bought at an entertainment event?

Expenses related to business entertainment, amusement or recreation activities are no longer eligible for a 50% deduction starting 2018. Taxpayers may, however, still deduct business expenses related to food and beverages in conjunction with entertainment provided that (1) the food or beverages provided at or during an entertainment activity are purchased separately from the entertainment, or (2) the cost of the food or beverages is stated separately from the cost of the entertainment on one or more bills, invoices or receipts.

What about travel meals?

Travel meals qualify for the 100% deduction as long as the taxpayer or employee of the taxpayer is present at the meal and it is for business travel reasons. However, no deductions are allowed for meal expenses incurred for spouses, dependents or other individuals accompanying the taxpayer on business trips unless they are also employees of the business and are on the trip for business purposes.

Some Little-known Deductibles

Before the TCJA of 2017, the following tax-law exceptions allowed 100% deductibility for eligible meal and entertainment expenses. Your business can deduct 100% of meal and entertainment expenses that are:

• reported as taxable compensation to recipient employees;
• incurred for recreational, social or similar activities primarily for the benefit of employees;
• made available to the general public;
• sold to customers for full value, including the cost of related facilities; and
• reported as non-taxable income to a non-employee recipient on a Form 1099. 

Takeaways

Business owners are encouraged by the Congress through this temporary tax-incentive to spend on business meals and beverages to resuscitate the economy. So the next time you meet with a client or think of throwing a party for your employees, remember that 100% of those expenses are now tax deductible. Help your favorite establishments survive these trying times, and extend their lifeline for years to come. So party on! 

If you would like to chat more about this and other deductions, schedule a free consultation.

 

 ISCPA Career Opportunities

Why Work at ISCPA?

ISCPA is a fast-growing, cutting-edge, non-traditional and virtual CPA firm. We have a burning desire to help our clients stop overpaying their taxes and start achieving their dreams. We help them become financially independent and cash-strong by implementing various tax-saving and cash-saving opportunities. Our goal is to provide quality service to our clients and fulfilling and exciting opportunities to our staff. ISCPA career opportunities are an invitation to join a great team.

This is not just “a job”. This is an opportunity to join a company that is growing. We are building an incredible business made up of incredible people who work hard, push themselves and have a blast learning, growing and doing new things. We run our company like a “professional sports team” with a High-Performance Culture. If this is attractive to you, APPLY! We want to hear from you!

 

Job Posting

 

Tax Preparer:  CPA or Enrolled Agent – Contracted Position

Responsibilities

• • • Prepare and/or review moderate and complex business and personal income tax returns, including multi-state returns and returns with foreign disclosures
    • Conduct tax research and continue to develop industry expertise including staying current on regulatory and industry changes, implementing new standards and technical pronouncements, and contributing to staff development through sharing of industry knowledge.
    • Develop and train staff-level tax accountants
    • Plan, manage and supervise multiple client engagements to ensure exceptional client service while meeting both internal and external deadlines, coordinating staffing, time budgets, and billing
    • Develop and update processes and workflows

Requirements

• • • 8+ years of tax experience preparing complex tax returns
    • Must be a licensed EA or CPA
    • Knowledge of UltraTax CS is a plus
    • Quick learner and quick thinker
    • Experience as a Senior Tax Manager is a plus
    • Excellent communication, interpersonal and technical skills
    • In-depth knowledge of the tax code for individuals and small business

 

Staff Accountant – Full-time Position

Responsibilities

• • • Enter daily transactions for all of our clients using a number of software platforms
    • Enter inventory transactions and reconcile inventory accounts for retail clients
    • Prepare reconciliations (i.e. bank reconciliations, credit card reconciliations, general ledger accounts, etc.)
    • Prepare monthly journal entries
    • Respond to requests from clients on general accounting needs (i.e. running reports, responding to requests, etc.)
    • Perform self-review to ensure that accounting is accurate
    • Prepare financial statements and provide overview to client
    • Assist in onboarding new clients
    • Assist with cash flow planning and budgeting
    • Establish, document, and evaluate internal processes for the best client experience
    • Assist in building our brand, our firm and our client base through referrals, social media, lead generation, etc.

Requirements

• • • 5+ years of accounting experience
    • Bachelor’ Degree in Accounting or Finance
    • Understanding of accounting cycle, accrual and cash method accounting
    • Quick learner, quick thinker and problem solver
    • Excellent verbal and written communication skills.
    • Excellent organizational skills and attention to detail.
    • Knowledge of general financial accounting and cost accounting.
    • Understanding of and the ability to adhere to generally accepted accounting principles.

 

How to Apply

1. Please click on this link to fill out our employment application to be considered for this position
2. Then email your resume to [email protected]