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Miscelaneous Travel and Entertainment Expenses Verified by the IRS

Among the many deductions available to contractors, entertainers, and other self employed taxpayers who are either living in the United States or overseas as a US Expat are allowable deductions for travel, vehicle wear and tear, entertainment, meals, and other miscellaneous work related expenses.  While many taxpayers qualify for these deductions, many either claim excessive deductions or fail to keep adequate records.  In either situation, if you’re not able to backup your deductions with some form of physical proof in the event of an IRS audit you will have to repay any balance due after adjustments are made to reflect only the deduction amounts you are able to prove.

Maintaining Proof of Your Tax Deductions

Understanding your burden of proof should the IRS choose to investigate you and your tax return will help you better prepare for your return during the year as you accumulate expenses.  Information the IRS will ask you to provide about each expense will include:

  • The exact amount,
  • The date, time, and location,
  • The relevance to your business, and
  • The nature of the professional relationship between your business and all parties involved.

Deduction Limitations

Many of these deductions are for expenses that are personal in nature such as entertainment and meals.  As such, only 50% of their total value may be deducted.  There are additional rules surrounding other deductions like the deduction of your vehicle usage and travel, for example.  With so many stipulations on so many available deductions, it’s easy to make a mistake if you’re not carefully paying attention to the instructions.  Additionally, the more deductions you claim the higher your chances become of experiencing a mathematical error.

 

The mere fact that there are numerous opportunities for mistakes, many US Taxpayers choose to have their taxes prepared by a professional.  If you need help making sure that all of your income is reported accurately and you’re legitimately getting as much out of available deductions as possible, speak with an international tax expert at Taxes for Expats and take advantage of over 100 years of combined experience in complicated international, professional and personal tax matters.

Need Help?

If you’ve been targeted for an audit by the IRS, speak with one of our qualified tax consultants before getting in touch with the representative assigned to your case – even if we didn’t prepare your US expat tax return.