Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Free Taxes

Where File Amended 1040x1042ez1040nr Online Filing1040ez FormsFree Tax Filing Online State And FederalInstructions For 1040xWww Irs Gov Amended ReturnI Need To File My 2011 Tax Return1040a Tax FormAmend My 2010 Tax Return2011 Federal Tax FormH&r Block At Home Free FileVita Tax PreparationAmend 1040ez Tax FormIrs Form 1040How To File State Taxes FreeE File Tax PreparationFree Ez FileTaxes 2012 FormsE File State Taxes OnlyHr Block Tax PreparationTurbotax OnlineFree State Tax Filing OnlineSelf Employment Tax FormTax Form 2010Tax Questions For StudentsWww Hr Block2010 Ez 1040 Form1040 Ez OnlineFile A 2012 Tax Return1040 Tax Forms Printable2010 1040 Ez FormH & R Block Taxes1040nr Online Filing FreeIrs Forms 1040ez InstructionsFree 1040ez H&r BlockMilitary Onesource TurbotaxH&r Block Advantage Free FileClues Fill 1040x FormFree Tax Calculator 2011

Free Taxes

Free taxes Index A Abortion, Abortion Acupuncture, Acupuncture Adopted child's medical expenses, Adopted child. Free taxes AGI limitation, Introduction, Community property states. Free taxes Alcoholism, Alcoholism Ambulances, Ambulance Archer MSAs Health coverage tax credit, How To Take the Credit Medical expenses paid for decedent from, Decedent Artificial limbs, Artificial Limb Artificial teeth, Artificial Teeth Aspirin, Nonprescription Drugs and Medicines Assistance (see Tax help) Assisted living homes, Nursing Home Athletic club dues, Health Club Dues Automobiles (see Cars) B Baby sitting, Baby Sitting, Childcare, and Nursing Services for a Normal, Healthy Baby Bandages, Bandages Basis Medical equipment or property (Worksheet D), Worksheet D. Free taxes Adjusted Basis of Medical Equipment or Property Sold Birth control pills, Birth Control Pills Body scan, Body Scan Braille books and magazines, Braille Books and Magazines Breast pumps and supplies, Breast Pumps and Supplies Breast reconstruction surgery, Breast Reconstruction Surgery C Calculation of deduction, What If You Are Reimbursed for Medical Expenses You Did Not Deduct? Capital expenses, Capital Expenses Improvements to rented property, Improvements to property rented by a person with a disability. Free taxes Operation and upkeep, Operation and upkeep. Free taxes Worksheet A, Capital expense worksheet. Free taxes Cars, Car Out-of-pocket expenses, Car expenses. Free taxes Standard medical mileage rates, Car expenses. Free taxes Child care, Baby Sitting, Childcare, and Nursing Services for a Normal, Healthy Baby Children's medical expenses Adopted child, Adopted child. Free taxes Dependents, Dependent Chiropractor, Chiropractor Christian Scientist practitioner, Christian Science Practitioner Chronically ill persons, Chronically ill individual. Free taxes COBRA assistance Recapture of COBRA premium assistance, Worksheet F. Free taxes Recapture of COBRA Premium Assistance for Higher Income Taxpayers COBRA premium assistance, COBRA Premium Assistance Community property states, Community property states. Free taxes Computer banks to track medical information, Medical Information Plan Contact lenses, Contact Lenses Controlled substances, Controlled Substances Cosmetic surgery, Cosmetic Surgery Credit (see Health coverage tax credit) Crutches, Crutches D Dancing lessons, Dancing Lessons Decedent's medical expenses, Decedent, What if you pay medical expenses of a deceased spouse or dependent? Deductible amount, How Much of the Expenses Can You Deduct? Deductible expenses, Whose Medical Expenses Can You Include?, X-ray Definition of medical expenses Doctor, What Are Medical Expenses? Physician, What Are Medical Expenses? Dental treatment, Dental Treatment Artificial teeth, Artificial Teeth Teeth whitening, Teeth Whitening Dentures, Artificial Teeth Dependent's medical expenses Adopted child, Adopted child. Free taxes Multiple support agreement, Support claimed under a multiple support agreement. Free taxes Qualifying child, Dependent Qualifying relative, Dependent Dependents Disabled dependent care, Disabled Dependent Care Expenses, Dependents with disabilities. Free taxes Diagnostic devices, Diagnostic Devices Diaper services, Diaper Service Disabilities, persons with Dependent care expenses, Disabled Dependent Care Expenses, Dependents with disabilities. Free taxes Improvements to rented property, Improvements to property rented by a person with a disability. Free taxes Special education, Special Education Divorced taxpayers Medical expenses of child, Child of divorced or separated parents. Free taxes Drug addiction, Drug Addiction Drugs (see Medicines) Dues Health club, Health Club Dues E Education, special, Special Education Electrolysis, Cosmetic Surgery Employer-sponsored health insurance plans, Employer-Sponsored Health Insurance Plan Employment taxes, Employment taxes. Free taxes Excluded expenses Insurance premiums, Insurance Premiums You Cannot Include Eye surgery, Eye Surgery Eyeglasses, Eyeglasses F Fertility enhancement Eggs, temporary storage of, Fertility Enhancement Fertility, Fertility Enhancement In vitro fertilization, Fertility Enhancement Figuring the deduction, How Do You Figure and Report the Deduction on Your Tax Return? Final return for decedent Medical expenses paid, Decedent Flexible spending account, Flexible Spending Account Food (see Weight-loss programs) Form 1040 Health coverage tax credit, How To Take the Credit Self-employed persons, health insurance costs, Health Insurance Costs for Self-Employed Persons Form 1040, Schedule A Impairment-related work expenses, Where to report. Free taxes Medical and dental expenses, Introduction, What Tax Form Do You Use? Self-employed persons, health insurance costs, Health Insurance Costs for Self-Employed Persons Form 1040, Schedule C Impairment-related work expenses, Where to report. Free taxes Form 1040, Schedule C-EZ Impairment-related work expenses, Where to report. Free taxes Form 1040, Schedule E Impairment-related work expenses, Where to report. Free taxes Form 1040, Schedule F Impairment-related work expenses, Where to report. Free taxes Form 1040NR Health coverage tax credit, How To Take the Credit Form 1040X Amended return, What Expenses Can You Include This Year? Deceased taxpayer, What if the decedent's return had been filed and the medical expenses were not included? Form 1099-H Self-employed persons, health insurance costs, Health Insurance Costs for Self-Employed Persons Form 2106 Impairment-related work expenses, Where to report. Free taxes Form 2106-EZ Impairment-related work expenses, Where to report. Free taxes Form 2555 Self-employed persons, health insurance costs, Health Insurance Costs for Self-Employed Persons Form 2555-EZ Self-employed persons, health insurance costs, Health Insurance Costs for Self-Employed Persons Form 8453 Health coverage tax credit, How To Take the Credit Form 8885 Health coverage tax credit, How To Take the Credit Self-employed persons, health insurance costs, Health Insurance Costs for Self-Employed Persons Founder's fee (see Lifetime care, advance payments) Free tax services, Free help with your tax return. Free taxes Funeral expenses, Funeral Expenses Future medical care, Payments for future medical care. Free taxes , Future Medical Care G Glasses, Eyeglasses Guide dog or other animal, Guide Dog or Other Service Animal H Hair Removal, Cosmetic Surgery Transplants, Cosmetic Surgery Wigs, Wig Health club dues, Health Club Dues Health coverage tax credit, Health Coverage Tax Credit Advanced payments, Monthly HCTC Alternative TAA recipient, Health Coverage Tax Credit Archer MSAs, How To Take the Credit Both spouses eligible, Qualifying Family Member Children of divorced parents, Health Coverage Tax Credit, Qualifying Family Member Eligible coverage month, Eligible Coverage Month Insurance that covers other individuals, Insurance that covers other individuals. Free taxes Legally separated, Legally separated. Free taxes Married persons filing separate returns, Qualifying Family Member Monthly HCTC, Monthly HCTC Nonqualified health insurance, Nonqualified Health Insurance Other specified coverage Benefits from the Veterans Administration, Other Specified Coverage Pension Benefit Guaranty Corporation (PBGC) recipient, Health Coverage Tax Credit Qualified health insurance, Qualified Health Insurance Qualifying family member, Qualifying Family Member Reimbursement credit, Monthly HCTC Reporting, How To Take the Credit State-qualified health insurance, State-qualified health insurance. Free taxes TAA recipient, Health Coverage Tax Credit Yearly HCTC, Yearly HCTC Health Coverage Tax Credit Alternative TAA recipient, Who Can Take This Credit? PBGC pension payee, Who Can Take This Credit? TAA recipient, Who Can Take This Credit? Health institutes, Health Institute Health insurance Credit (see Health coverage tax credit) Employer-sponsored plan, Employer-Sponsored Health Insurance Plan Premiums Deductible, Insurance Premiums Nondeductible, Insurance Premiums You Cannot Include Paid by employer, Premiums paid by your employer. Free taxes Paid by employer and you, Premiums paid by you and your employer. Free taxes Paid by you, Premiums paid by you. Free taxes Prepaid, Prepaid Insurance Premiums Unused sick leave used to pay, Unused Sick Leave Used To Pay Premiums Reimbursements (see Reimbursements) Self-employed persons, Health Insurance Costs for Self-Employed Persons Health maintenance organizations (HMOs), Health Maintenance Organization (HMO) Health reimbursement arrangements (HRAs), Health reimbursement arrangement (HRA). Free taxes Health savings accounts (HSAs) Payments from, Health Savings Accounts Hearing aids, Hearing Aids Hearing-impaired persons Guide dog or other animal for, Guide Dog or Other Service Animal Help (see Tax help) HMOs (Health maintenance organizations), Health Maintenance Organization (HMO) Home care (see Nursing services) Home improvements (see Capital expenses:) Hospital services, Hospital Services Hotels, Lodging Household help, Household Help HRAs (Health reimbursement arrangements), Health reimbursement arrangement (HRA). Free taxes I Illegal operations and treatments, Illegal Operations and Treatments Illegal substances, Controlled Substances Impairment-related work expenses, Workers' compensation. Free taxes , Impairment-related expenses defined. Free taxes Reporting of, Where to report. Free taxes Insulin, Nonprescription Drugs and Medicines Insurance (see Health insurance) Intellectually and developmentally disabled persons Mentally retarded, Intellectually and Developmentally Disabled, Special Home for Special homes for, Intellectually and Developmentally Disabled, Special Home for L Laboratory fees, Laboratory Fees Lactation expenses (see Breast pumps and supplies) Laser eye surgery, Eye Surgery Lead-based paint removal, Lead-Based Paint Removal Learning disabilities, Special Education Legal fees, Legal Fees Lessons, dancing and swimming, Dancing Lessons Lifetime care Advance payments for, Lifetime Care—Advance Payments Lodging, Lodging, Trips (see also Trips) Long-term care, Long-Term Care Chronically ill individuals, Chronically ill individual. Free taxes Maintenance and personal care services, Maintenance and personal care services. Free taxes Qualified insurance contracts, Qualified Long-Term Care Insurance Contracts Qualified services, Qualified Long-Term Care Services M Maintenance and personal care services, Maintenance and personal care services. Free taxes Maternity clothes, Maternity Clothes Meals, Meals, Weight-Loss Program (see also Weight-loss programs) Medical conferences, Medical Conferences Medical equipment or property Adjusted basis (Worksheet D), Worksheet D. Free taxes Adjusted Basis of Medical Equipment or Property Sold Medical expense records, What Tax Form Do You Use? Medical information plans, Medical Information Plan Medical savings accounts (MSAs), Medical Savings Account (MSA) Medicare Medicare A, deductible expense, Medicare A Medicare B, deductible expense, Medicare B Medicare D, deductible expense, Medicare D Medicines, Medicines Imported, Imported medicines and drugs. Free taxes , Medicines and Drugs From Other Countries Nonprescription drugs and medicines, Nonprescription Drugs and Medicines Missing children, photographs of in IRS publications, Reminders Multiple support agreement, Support claimed under a multiple support agreement. Free taxes N Nondeductible expenses, What Expenses Are Not Includible?, Weight-Loss Program Nonprescription drugs and medicines, Nonprescription Drugs and Medicines Nursing homes, Nursing Home Nursing services, Nursing Services, Baby Sitting, Childcare, and Nursing Services for a Normal, Healthy Baby Chronically ill individuals, Chronically ill individual. Free taxes Nutritional supplements Natural medicines, Nutritional Supplements O Operations, Operations Cosmetic surgery, Cosmetic Surgery Eye surgery, Eye Surgery Illegal operations and treatments, Illegal Operations and Treatments Optometrist, Optometrist Optometrist services, Eyeglasses Organ donors, Transplants Osteopath, Osteopath Oxygen, Oxygen P Paint removal, for lead-based, Lead-Based Paint Removal Parking fees and tolls, Car expenses. Free taxes Personal injury damages, Damages for Personal Injuries Personal use items, Personal Use Items Photographs of missing children in IRS publications, Reminders Physical examination, Physical Examination Physical therapy, Therapy Plastic surgery, Cosmetic Surgery Pregnancy test kit, Pregnancy Test Kit Premiums (see Health insurance) Prepaid insurance premiums, Prepaid Insurance Premiums Prosthesis, Artificial Limb Psychiatric care, Psychiatric Care Psychoanalysis, Psychoanalysis Psychologists, Psychologist Publications (see Tax help) R Radial keratotomy, Eye Surgery Recordkeeping, What Tax Form Do You Use? Rehabilitation facilities, Nursing Home Reimbursements, How Do You Treat Reimbursements?, What If You Are Reimbursed for Medical Expenses You Did Not Deduct? Excess includible in income More than one policy (Worksheet C), More than one policy. Free taxes One policy (Worksheet B), Worksheet B. Free taxes Excess Reimbursement Includible in Income When You Have Only One Policy Excess may be taxable (Figure 1), What If Your Insurance Reimbursement Is More Than Your Medical Expenses? Health Reimbursement Arrangement (HRA), Health reimbursement arrangement (HRA). Free taxes Insurance, Insurance Reimbursement, What If Your Insurance Reimbursement Is More Than Your Medical Expenses? Medical expenses not deducted, What If You Receive Insurance Reimbursement in a Later Year? More than one policy, More than one policy. Free taxes Received in later year, What If You Are Reimbursed for Medical Expenses You Did Not Deduct? Rental property Improvements to, Improvements to property rented by a person with a disability. Free taxes Reporting Health coverage tax credit, How To Take the Credit Impairment-related work expenses, Where to report. Free taxes Medical and dental expenses, What If You Are Reimbursed for Medical Expenses You Did Not Deduct? Medical deduction (see Form 1040, Schedule A) Self-employed persons, health insurance costs, Health Insurance Costs for Self-Employed Persons S Sale of medical equipment or property, Sale of Medical Equipment or Property Adjusted basis (Worksheet D), Worksheet D. Free taxes Adjusted Basis of Medical Equipment or Property Sold Schedules (see Form 1040) Seeing-eye dogs, Guide Dog or Other Service Animal Self-employed persons Health coverage tax credit, How To Take the Credit Health insurance costs, Health Insurance Costs for Self-Employed Persons Senior housing, Nursing Home Separate returns Community property states, Community property states. Free taxes Medical and dental expenses, Separate returns. Free taxes Separated taxpayers Health coverage tax credit, Legally separated. Free taxes Medical expenses of child, Child of divorced or separated parents. Free taxes Service animals, Guide Dog or Other Service Animal Sick leave Used to pay health insurance premiums, Unused Sick Leave Used To Pay Premiums Special education, Special Education Spouse's medical expenses, Spouse Deceased spouse, What if you pay medical expenses of a deceased spouse or dependent? Sterilization, Sterilization Stop-smoking programs, Stop-Smoking Programs Surgery (see Operations) Swimming lessons, Dancing Lessons T Tables and figures Medical equipment or property Adjusted basis (Worksheet D), Worksheet D. Free taxes Adjusted Basis of Medical Equipment or Property Sold Reimbursements, excess includible in income More than one policy (Worksheet C), More than one policy. Free taxes One policy (Worksheet B), Worksheet B. Free taxes Excess Reimbursement Includible in Income When You Have Only One Policy Reimbursements, excess may be taxable (Figure 1), What If Your Insurance Reimbursement Is More Than Your Medical Expenses? Tax help, How To Get Tax Help Teeth Artificial, Artificial Teeth Dental treatment, Dental Treatment Whitening, Teeth Whitening Telephone, Telephone Television, Television Therapy, Therapy Transplants, Transplants Travel and transportation expenses, Transportation Car expenses, Car expenses. Free taxes Includible expenses, You can include:, Transportation expenses you cannot include. Free taxes Parking fees and tolls, Car expenses. Free taxes Trips, Trips TTY/TDD information, How To Get Tax Help Tuition, Tuition V Vasectomy, Vasectomy Veterinary fees, Veterinary Fees Vision correction surgery, Eye Surgery Visually impaired persons Guide dog or other animal for, Guide Dog or Other Service Animal Vitamins or minerals, Nutritional Supplements Voluntary Employee's Beneficiary Association (VEBA) Qualified health insurance, Voluntary Employee's Beneficiary Association (VEBA) W Weight-loss programs, Weight-Loss Program, Weight-Loss Program What's new COBRA continuous coverage, What's New Health coverage tax credit, What's New Standard medical mileage rate, What's New Wheelchairs, Wheelchair Wigs, Wig Work expenses Disabled dependent care, Disabled Dependent Care Expenses Impairment-related, Impairment-Related Work Expenses Workers' compensation, Workers' compensation. Free taxes Worksheets Capital expenses (Worksheet A), Capital expense worksheet. Free taxes Medical equipment or property Adjusted basis (Worksheet D), Worksheet D. Free taxes Adjusted Basis of Medical Equipment or Property Sold Reimbursements, excess includible in income More than one policy (Worksheet C), More than one policy. Free taxes One policy (Worksheet B), Worksheet B. Free taxes Excess Reimbursement Includible in Income When You Have Only One Policy X X-rays, X-ray Prev  Up     Home   More Online Publications
Español

Health by Population Group

Find health-related information for children, seniors, veterans, and other specific populations.

The Free Taxes

Free taxes 2. Free taxes   Entertainment Table of Contents Directly-Related Test Associated TestMeetings at conventions. Free taxes 50% LimitExceptions to the 50% Limit What Entertainment Expenses Are Deductible?A meal as a form of entertainment. Free taxes Deduction may depend on your type of business. Free taxes Exception for events that benefit charitable organizations. Free taxes Food and beverages in skybox seats. Free taxes What Entertainment Expenses Are Not Deductible?Out-of-pocket expenses. Free taxes You may be able to deduct business-related entertainment expenses you have for entertaining a client, customer, or employee. Free taxes The rules and definitions are summarized in Table 2-1 . Free taxes You can deduct entertainment expenses only if they are both ordinary and necessary and meet one of the following tests. Free taxes Directly-related test. Free taxes Associated test. Free taxes Both of these tests are explained later. Free taxes An ordinary expense is one that is common and accepted in your trade or business. Free taxes A necessary expense is one that is helpful and appropriate for your business. Free taxes An expense does not have to be required to be considered necessary. Free taxes The amount you can deduct for entertainment expenses may be limited. Free taxes Generally, you can deduct only 50% of your unreimbursed entertainment expenses. Free taxes This limit is discussed later under 50% Limit. Free taxes Directly-Related Test To meet the directly-related test for entertainment expenses (including entertainment-related meals), you must show that: The main purpose of the combined business and entertainment was the active conduct of business, You did engage in business with the person during the entertainment period, and You had more than a general expectation of getting income or some other specific business benefit at some future time. Free taxes Business is generally not considered to be the main purpose when business and entertainment are combined on hunting or fishing trips, or on yachts or other pleasure boats. Free taxes Even if you show that business was the main purpose, you generally cannot deduct the expenses for the use of an entertainment facility. Free taxes See Entertainment facilities under What Entertainment Expenses Are Not Deductible? later in this chapter. Free taxes You must consider all the facts, including the nature of the business transacted and the reasons for conducting business during the entertainment. Free taxes It is not necessary to devote more time to business than to entertainment. Free taxes However, if the business discussion is only incidental to the entertainment, the entertainment expenses do not meet the directly-related test. Free taxes Table 2-1. Free taxes When Are Entertainment Expenses Deductible? General rule You can deduct ordinary and necessary expenses to entertain a client, customer, or employee if the expenses meet the directly-related test or the associated test. Free taxes Definitions Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation, and includes meals provided to a customer or client. Free taxes An ordinary expense is one that is common and accepted in your trade or business. Free taxes A necessary expense is one that is helpful and appropriate. Free taxes Tests to be met Directly-related test Entertainment took place in a clear business setting, or Main purpose of entertainment was the active conduct of business, and You did engage in business with the person during the entertainment period, and You had more than a general expectation of getting income or some other specific business benefit. Free taxes   Associated test Entertainment is associated with your trade or business, and Entertainment is directly before or after a substantial business discussion. Free taxes Other rules You cannot deduct the cost of your meal as an entertainment expense if you are claiming the meal as a travel expense. Free taxes You cannot deduct expenses that are lavish or extravagant under the circumstances. Free taxes You generally can deduct only 50% of your unreimbursed entertainment expenses (see 50% Limit ). Free taxes You do not have to show that business income or other business benefit actually resulted from each entertainment expense. Free taxes Clear business setting. Free taxes   If the entertainment takes place in a clear business setting and is for your business or work, the expenses are considered directly related to your business or work. Free taxes The following situations are examples of entertainment in a clear business setting. Free taxes Entertainment in a hospitality room at a convention where business goodwill is created through the display or discussion of business products. Free taxes Entertainment that is mainly a price rebate on the sale of your products (such as a restaurant owner providing an occasional free meal to a loyal customer). Free taxes Entertainment of a clear business nature occurring under circumstances where there is no meaningful personal or social relationship between you and the persons entertained. Free taxes An example is entertainment of business and civic leaders at the opening of a new hotel or play when the purpose is to get business publicity rather than to create or maintain the goodwill of the persons entertained. Free taxes Expenses not considered directly related. Free taxes   Entertainment expenses generally are not considered directly related if you are not there or in situations where there are substantial distractions that generally prevent you from actively conducting business. Free taxes The following are examples of situations where there are substantial distractions. Free taxes A meeting or discussion at a nightclub, theater, or sporting event. Free taxes A meeting or discussion during what is essentially a social gathering, such as a cocktail party. Free taxes A meeting with a group that includes persons who are not business associates at places such as cocktail lounges, country clubs, golf clubs, athletic clubs, or vacation resorts. Free taxes Associated Test Even if your expenses do not meet the directly-related test, they may meet the associated test. Free taxes To meet the associated test for entertainment expenses (including entertainment-related meals), you must show that the entertainment is: Associated with the active conduct of your trade or business, and Directly before or after a substantial business discussion (defined later). Free taxes Associated with trade or business. Free taxes   Generally, an expense is associated with the active conduct of your trade or business if you can show that you had a clear business purpose for having the expense. Free taxes The purpose may be to get new business or to encourage the continuation of an existing business relationship. Free taxes Substantial business discussion. Free taxes   Whether a business discussion is substantial depends on the facts of each case. Free taxes A business discussion will not be considered substantial unless you can show that you actively engaged in the discussion, meeting, negotiation, or other business transaction to get income or some other specific business benefit. Free taxes   The meeting does not have to be for any specified length of time, but you must show that the business discussion was substantial in relation to the meal or entertainment. Free taxes It is not necessary that you devote more time to business than to entertainment. Free taxes You do not have to discuss business during the meal or entertainment. Free taxes Meetings at conventions. Free taxes   You are considered to have a substantial business discussion if you attend meetings at a convention or similar event, or at a trade or business meeting sponsored and conducted by a business or professional organization. Free taxes However, your reason for attending the convention or meeting must be to further your trade or business. Free taxes The organization that sponsors the convention or meeting must schedule a program of business activities that is the main activity of the convention or meeting. Free taxes Directly before or after business discussion. Free taxes   If the entertainment is held on the same day as the business discussion, it is considered to be held directly before or after the business discussion. Free taxes   If the entertainment and the business discussion are not held on the same day, you must consider the facts of each case to see if the associated test is met. Free taxes Among the facts to consider are the place, date, and duration of the business discussion. Free taxes If you or your business associates are from out of town, you must also consider the dates of arrival and departure, and the reasons the entertainment and the discussion did not take place on the same day. Free taxes Example. Free taxes A group of business associates comes from out of town to your place of business to hold a substantial business discussion. Free taxes If you entertain those business guests on the evening before the business discussion, or on the evening of the day following the business discussion, the entertainment generally is considered to be held directly before or after the discussion. Free taxes The expense meets the associated test. Free taxes 50% Limit In general, you can deduct only 50% of your business-related meal and entertainment expenses. Free taxes (If you are subject to the Department of Transportation's “hours of service” limits, you can deduct 80% of your business-related meal and entertainment expenses. Free taxes See Individuals subject to “hours of service” limits , later. Free taxes ) The 50% limit applies to employees or their employers, and to self-employed persons (including independent contractors) or their clients, depending on whether the expenses are reimbursed. Free taxes Figure A summarizes the general rules explained in this section. Free taxes The 50% limit applies to business meals or entertainment expenses you have while: Traveling away from home (whether eating alone or with others) on business, Entertaining customers at your place of business, a restaurant, or other location, or Attending a business convention or reception, business meeting, or business luncheon at a club. Free taxes Included expenses. Free taxes   Expenses subject to the 50% limit include: Taxes and tips relating to a business meal or entertainment activity, Cover charges for admission to a nightclub, Rent paid for a room in which you hold a dinner or cocktail party, and Amounts paid for parking at a sports arena. Free taxes However, the cost of transportation to and from a business meal or a business-related entertainment activity is not subject to the 50% limit. Free taxes Figure A. Free taxes Does the 50% Limit Apply to Your Expenses? There are exceptions to these rules. Free taxes See Exceptions to the 50% Limit . Free taxes Please click here for the text description of the image. Free taxes Figure A. Free taxes Does the 50% limit apply to Your Expenses?TAs for Figure A are: Notice 87-23; Form 2106 instructions Application of 50% limit. Free taxes   The 50% limit on meal and entertainment expenses applies if the expense is otherwise deductible and is not covered by one of the exceptions discussed later. Free taxes   The 50% limit also applies to certain meal and entertainment expenses that are not business related. Free taxes It applies to meal and entertainment expenses you have for the production of income, including rental or royalty income. Free taxes It also applies to the cost of meals included in deductible educational expenses. Free taxes When to apply the 50% limit. Free taxes   You apply the 50% limit after determining the amount that would otherwise qualify for a deduction. Free taxes You first have to determine the amount of meal and entertainment expenses that would be deductible under the other rules discussed in this publication. Free taxes Example 1. Free taxes You spend $200 for a business-related meal. Free taxes If $110 of that amount is not allowable because it is lavish and extravagant, the remaining $90 is subject to the 50% limit. Free taxes Your deduction cannot be more than $45 (50% × $90). Free taxes Example 2. Free taxes You purchase two tickets to a concert and give them to a client. Free taxes You purchased the tickets through a ticket agent. Free taxes You paid $200 for the two tickets, which had a face value of $80 each ($160 total). Free taxes Your deduction cannot be more than $80 (50% × $160). Free taxes Exceptions to the 50% Limit Generally, business-related meal and entertainment expenses are subject to the 50% limit. Free taxes Figure A can help you determine if the 50% limit applies to you. Free taxes Expenses not subject to 50% limit. Free taxes   Your meal or entertainment expense is not subject to the 50% limit if the expense meets one of the following exceptions. Free taxes 1 - Employee's reimbursed expenses. Free taxes   If you are an employee, you are not subject to the 50% limit on expenses for which your employer reimburses you under an accountable plan. Free taxes Accountable plans are discussed in chapter 6. Free taxes 2 - Self-employed. Free taxes   If you are self-employed, your deductible meal and entertainment expenses are not subject to the 50% limit if all of the following requirements are met. Free taxes You have these expenses as an independent contractor. Free taxes Your customer or client reimburses you or gives you an allowance for these expenses in connection with services you perform. Free taxes You provide adequate records of these expenses to your customer or client. Free taxes (See chapter 5 . Free taxes )   In this case, your client or customer is subject to the 50% limit on the expenses. Free taxes Example. Free taxes You are a self-employed attorney who adequately accounts for meal and entertainment expenses to a client who reimburses you for these expenses. Free taxes You are not subject to the directly-related or associated test, nor are you subject to the 50% limit. Free taxes If the client can deduct the expenses, the client is subject to the 50% limit. Free taxes If you (as an independent contractor) have expenses for meals and entertainment related to providing services for a client but do not adequately account for and seek reimbursement from the client for those expenses, you are subject to the directly-related or associated test and to the 50% limit. Free taxes 3 - Advertising expenses. Free taxes   You are not subject to the 50% limit if you provide meals, entertainment, or recreational facilities to the general public as a means of advertising or promoting goodwill in the community. Free taxes For example, neither the expense of sponsoring a television or radio show nor the expense of distributing free food and beverages to the general public is subject to the 50% limit. Free taxes 4 - Sale of meals or entertainment. Free taxes   You are not subject to the 50% limit if you actually sell meals, entertainment, goods and services, or use of facilities to the public. Free taxes For example, if you run a nightclub, your expense for the entertainment you furnish to your customers, such as a floor show, is not subject to the 50% limit. Free taxes 5 - Charitable sports event. Free taxes   You are not subject to the 50% limit if you pay for a package deal that includes a ticket to a qualified charitable sports event. Free taxes For the conditions the sports event must meet, see Exception for events that benefit charitable organizations under What Entertainment Expenses Are Deductible?, later. Free taxes Individuals subject to “hours of service” limits. Free taxes   You can deduct a higher percentage of your meal expenses while traveling away from your tax home if the meals take place during or incident to any period subject to the Department of Transportation's “hours of service” limits. Free taxes The percentage is 80%. Free taxes   Individuals subject to the Department of Transportation's “hours of service” limits include the following persons. Free taxes Certain air transportation workers (such as pilots, crew, dispatchers, mechanics, and control tower operators) who are under Federal Aviation Administration regulations. Free taxes Interstate truck operators and bus drivers who are under Department of Transportation regulations. Free taxes Certain railroad employees (such as engineers, conductors, train crews, dispatchers, and control operations personnel) who are under Federal Railroad Administration regulations. Free taxes Certain merchant mariners who are under Coast Guard regulations. Free taxes What Entertainment Expenses Are Deductible? This section explains different types of entertainment expenses you may be able to deduct. Free taxes Entertainment. Free taxes   Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation. Free taxes Examples include entertaining guests at nightclubs; at social, athletic, and sporting clubs; at theaters; at sporting events; on yachts; or on hunting, fishing, vacation, and similar trips. Free taxes   Entertainment also may include meeting personal, living, or family needs of individuals, such as providing meals, a hotel suite, or a car to customers or their families. Free taxes A meal as a form of entertainment. Free taxes   Entertainment includes the cost of a meal you provide to a customer or client, whether the meal is a part of other entertainment or by itself. Free taxes A meal expense includes the cost of food, beverages, taxes, and tips for the meal. Free taxes To deduct an entertainment-related meal, you or your employee must be present when the food or beverages are provided. Free taxes    You cannot claim the cost of your meal both as an entertainment expense and as a travel expense. Free taxes    Meals sold in the normal course of your business are not considered entertainment. Free taxes Deduction may depend on your type of business. Free taxes   Your kind of business may determine if a particular activity is considered entertainment. Free taxes For example, if you are a dress designer and have a fashion show to introduce your new designs to store buyers, the show generally is not considered entertainment. Free taxes This is because fashion shows are typical in your business. Free taxes But, if you are an appliance distributor and hold a fashion show for the spouses of your retailers, the show generally is considered entertainment. Free taxes Separating costs. Free taxes   If you have one expense that includes the costs of entertainment and other services (such as lodging or transportation), you must allocate that expense between the cost of entertainment and the cost of other services. Free taxes You must have a reasonable basis for making this allocation. Free taxes For example, you must allocate your expenses if a hotel includes entertainment in its lounge on the same bill with your room charge. Free taxes Taking turns paying for meals or entertainment. Free taxes   If a group of business acquaintances takes turns picking up each others' meal or entertainment checks primarily for personal reasons, without regard to whether any business purposes are served, no member of the group can deduct any part of the expense. Free taxes Lavish or extravagant expenses. Free taxes   You cannot deduct expenses for entertainment that are lavish or extravagant. Free taxes An expense is not considered lavish or extravagant if it is reasonable considering the facts and circumstances. Free taxes Expenses will not be disallowed just because they are more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs, or resorts. Free taxes Allocating between business and nonbusiness. Free taxes   If you entertain business and nonbusiness individuals at the same event, you must divide your entertainment expenses between business and nonbusiness. Free taxes You can deduct only the business part. Free taxes If you cannot establish the part of the expense for each person participating, allocate the expense to each participant on a pro rata basis. Free taxes Example. Free taxes You entertain a group of individuals that includes yourself, three business prospects, and seven social guests. Free taxes Only 4/11 of the expense qualifies as a business entertainment expense. Free taxes You cannot deduct the expenses for the seven social guests because those costs are nonbusiness expenses. Free taxes Trade association meetings. Free taxes   You can deduct entertainment expenses that are directly related to and necessary for attending business meetings or conventions of certain exempt organizations if the expenses of your attendance are related to your active trade or business. Free taxes These organizations include business leagues, chambers of commerce, real estate boards, trade associations, and professional associations. Free taxes Entertainment tickets. Free taxes   Generally, you cannot deduct more than the face value of an entertainment ticket, even if you paid a higher price. Free taxes For example, you cannot deduct service fees you pay to ticket agencies or brokers or any amount over the face value of the tickets you pay to scalpers. Free taxes Exception for events that benefit charitable organizations. Free taxes   Different rules apply when the cost of a ticket to a sports event benefits a charitable organization. Free taxes You can take into account the full cost you pay for the ticket, even if it is more than the face value, if all of the following conditions apply. Free taxes The event's main purpose is to benefit a qualified charitable organization. Free taxes The entire net proceeds go to the charity. Free taxes The event uses volunteers to perform substantially all the event's work. Free taxes    The 50% limit on entertainment does not apply to any expense for a package deal that includes a ticket to such a charitable sports event. Free taxes Example 1. Free taxes You purchase tickets to a golf tournament organized by the local volunteer fire company. Free taxes All net proceeds will be used to buy new fire equipment. Free taxes The volunteers will run the tournament. Free taxes You can deduct the entire cost of the tickets as a business expense if they otherwise qualify as an entertainment expense. Free taxes Example 2. Free taxes You purchase tickets to a college football game through a ticket broker. Free taxes After having a business discussion, you take a client to the game. Free taxes Net proceeds from the game go to colleges that qualify as charitable organizations. Free taxes However, since the colleges also pay individuals to perform services, such as coaching and recruiting, you can only use the face value of the tickets in determining your business deduction. Free taxes Skyboxes and other private luxury boxes. Free taxes   If you rent a skybox or other private luxury box for more than one event at the same sports arena, you generally cannot deduct more than the price of a nonluxury box seat ticket. Free taxes   To determine whether a skybox has been rented for more than one event, count each game or other performance as one event. Free taxes For example, renting a skybox for a series of playoff games is considered renting it for more than one event. Free taxes All skyboxes you rent in the same arena, along with any rentals by related parties, are considered in making this determination. Free taxes   Related parties include: Family members (spouses, ancestors, and lineal descendants), Parties who have made a reciprocal arrangement involving the sharing of skyboxes, Related corporations, A partnership and its principal partners, and A corporation and a partnership with common ownership. Free taxes Example. Free taxes You pay $3,000 to rent a 10-seat skybox at Team Stadium for three baseball games. Free taxes The cost of regular nonluxury box seats at each event is $30 a seat. Free taxes You can deduct (subject to the 50% limit) $900 ((10 seats × $30 each) × 3 events). Free taxes Food and beverages in skybox seats. Free taxes   If expenses for food and beverages are separately stated, you can deduct these expenses in addition to the amounts allowable for the skybox, subject to the requirements and limits that apply. Free taxes The amounts separately stated for food and beverages must be reasonable. Free taxes You cannot inflate the charges for food and beverages to avoid the limited deduction for skybox rentals. Free taxes What Entertainment Expenses Are Not Deductible? This section explains different types of entertainment expenses you generally may not be able to deduct. Free taxes Club dues and membership fees. Free taxes   You cannot deduct dues (including initiation fees) for membership in any club organized for: Business, Pleasure, Recreation, or Other social purpose. Free taxes This rule applies to any membership organization if one of its principal purposes is either: To conduct entertainment activities for members or their guests, or To provide members or their guests with access to entertainment facilities, discussed later. Free taxes   The purposes and activities of a club, not its name, will determine whether or not you can deduct the dues. Free taxes You cannot deduct dues paid to: Country clubs, Golf and athletic clubs, Airline clubs, Hotel clubs, and Clubs operated to provide meals under circumstances generally considered to be conducive to business discussions. Free taxes Entertainment facilities. Free taxes   Generally, you cannot deduct any expense for the use of an entertainment facility. Free taxes This includes expenses for depreciation and operating costs such as rent, utilities, maintenance, and protection. Free taxes   An entertainment facility is any property you own, rent, or use for entertainment. Free taxes Examples include a yacht, hunting lodge, fishing camp, swimming pool, tennis court, bowling alley, car, airplane, apartment, hotel suite, or home in a vacation resort. Free taxes Out-of-pocket expenses. Free taxes   You can deduct out-of-pocket expenses, such as for food and beverages, catering, gas, and fishing bait, that you provided during entertainment at a facility. Free taxes These are not expenses for the use of an entertainment facility. Free taxes However, these expenses are subject to the directly-related and associated tests and to the 50% limit , all discussed earlier. Free taxes Expenses for spouses. Free taxes   You generally cannot deduct the cost of entertainment for your spouse or for the spouse of a customer. Free taxes However, you can deduct these costs if you can show you had a clear business purpose, rather than a personal or social purpose, for providing the entertainment. Free taxes Example. Free taxes You entertain a customer. Free taxes The cost is an ordinary and necessary business expense and is allowed under the entertainment rules. Free taxes The customer's spouse joins you because it is impractical to entertain the customer without the spouse. Free taxes You can deduct the cost of entertaining the customer's spouse. Free taxes If your spouse joins the party because the customer's spouse is present, the cost of the entertainment for your spouse is also deductible. Free taxes Gift or entertainment. Free taxes   Any item that might be considered either a gift or entertainment generally will be considered entertainment. Free taxes However, if you give a customer packaged food or beverages that you intend the customer to use at a later date, treat it as a gift. Free taxes   If you give a customer tickets to a theater performance or sporting event and you do not go with the customer to the performance or event, you have a choice. Free taxes You can treat the tickets as either a gift or entertainment, whichever is to your advantage. Free taxes   You can change your treatment of the tickets at a later date by filing an amended return. Free taxes Generally, an amended return must be filed within 3 years from the date the original return was filed or within 2 years from the time the tax was paid, whichever is later. Free taxes   If you go with the customer to the event, you must treat the cost of the tickets as an entertainment expense. Free taxes You cannot choose, in this case, to treat the tickets as a gift. Free taxes Prev  Up  Next   Home   More Online Publications