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Spouse Meal Deductions Not as Easy You Think

A lot of my small business clients have spouses who work in their business or involved in the day-to-day business activities in some way. So, a frequent question I get is, "Can I deduct meals with my spouse if we talk business?"
The easy answer to this question is a big N-O because of the tax rule that disallows personal, family or living expenses to be deducted. However, there a few situations in which you MAY be able to deduct a nice dinner out with your spouse provided you have properly documented the event.
If your spouse is a bona-fide employee of the business you can take them to lunch/dinner to discuss issues that need to be discussed away from the distractions of the office and household. For example, if you need to discuss confidential business matters such as pay increases, terminations, etc. This meal would fall under the 50% meal deduction.

This deduction may be challenged.  You must document why it is better to go out to discuss these business issues and have notes that support the conversation during the meal was dominated with business issues.

Spouse with no Relation to Business:
If your spouse has no business relation to your business - there is a 0% chance you will be able to take your spouse out to dinner then claim a deduction. If your spouse is made a board member, then the same criteria of the Employee Spouse applies above.  

However, if you take your spouse, a client or vendor out to dinner you may be able to claim the 50% entertainment deduction. You will just need to show you had a clear business purpose, rather than a personal or social purpose for providing the entertainment.

Ironic twist
You'll be interested to know that it may be easier to take a trip with with your spouse and claim the travel deduction. We will go over this next week.

IRS Changes Filing Deadlines for W-2 & 1099 Forms

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