While you’re enjoying the warmer weather, it’s still important to remain diligent about business and personal tax planning. Fortunately, many of the following hot summer tax-planning tips enable taxpayers to combine business with pleasure.
Entertain Top Business Clients: You may be eligible to write off 50% of the cost of business meals and entertainment if you entertain clients before or after a substantial business discussion. The 50% limit applies to all the qualified expenses, including the amounts you pay for the client, yourself and your significant others.
Throw a Company Picnic: You can generally deduct the entire cost of a picnic, barbecue or similar get-together. The 50% limit on meals and entertainment expense deductions doesn’t apply as long as the entire staff is invited.
Donate Household Items to Charity: Consider donating household items you don’t want or need any more to charity. Assuming they’re still in good condition, you may take a charitable deduction on your 2015 personal tax return based on the current fair market value of any donated items. Consult your tax professional for valuations.
Minimize Vacation Home Use: Federal tax law allows you to deduct expenses related to renting out a vacation home to offset the rental income you receive. With summer already underway, you’ve probably worked out a rental schedule for your vacation home, but remember that you can’t deduct a loss if your personal use of the home exceeds the greater of 14 days or 10% of the time the home is rented out. Watch your personal use to ensure you remain below the 14-day or 10% limit.
Generate an Energy Credit: If you replace or upgrade your air conditioning system this summer, you may qualify for a residential energy credit. The credit is equal to 30% of the cost of energy-saving devices, including air conditioners, air circulating fans, doors and skylights. Specific credit limits apply to certain items. For example, there’s a $50 limit for air circulating fans. And there’s an overall lifetime energy credit limit of $500.
Take Advantage of Business Travel: You can write off your travel expenses as long as the trip’s primary purpose is business-related – even if you indulge in some vacationing. For instance, if you spend the business week in meetings and the weekend sightseeing, the entire cost of your airfare plus business-related meals, lodging and local transportation is deductible within the usual tax law limits. Just don’t deduct any personal expenses you incur on your side-trip.