{"id":2052,"date":"2023-04-01T08:00:00","date_gmt":"2023-04-01T08:00:00","guid":{"rendered":"https:\/\/sandovaltax.com\/?p=2052"},"modified":"2023-12-10T23:06:33","modified_gmt":"2023-12-10T23:06:33","slug":"know-the-75-rule-for-business-expenses","status":"publish","type":"post","link":"https:\/\/sandovaltax.com\/know-the-75-rule-for-business-expenses\/","title":{"rendered":"Know the $75 Rule for Business Expenses"},"content":{"rendered":"\t\t
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The $75 rule applies to certain business expenses where you do not need a receipt. But we emphasize that this rule does not apply to all tax deductions.<\/p>

Many taxpayers mistakenly apply the $75 rule to all their tax deductions, which can result in a significant loss of deductions and penalties. We encourage you to know the $75 rule and its limitations to avoid potential negative consequences.<\/span><\/p>

IRS Reg. Section 1.274-5(c)(2)(iii) contains the $75 rule, and Notice 95-50 provides a clear explanation of what it applies to. The rule applies to business travel expenses, vehicle expenses, and gifts that cost less than $75. But remember that the $25 limit on deductions for business gifts applies, meaning the practical limit is $25.<\/span><\/p>

It\u2019s worth noting that your bank and credit card statements do not provide sufficient proof of expenses for tax purposes<\/a>. You need to have both the receipt (proof of what you purchased) and the canceled check or credit card statement (proof of payment) to substantiate the expenditure.<\/span><\/p>

While the $75 rule may allow you to avoid having a receipt for some expenses, it is crucial to document all your expenses properly. To document a $60 meal consumed during deductible business travel with or without a receipt, for example, you need to prove the amount spent, the date of the meal, and the name and location of the restaurant.<\/span><\/p>

While you don\u2019t need a receipt for the $60 travel meal, your documentation life is easy with a receipt.<\/span><\/p>

We encourage you to keep all your receipts for tax purposes<\/a>, as they often take less time to keep track of and are better evidence in the event of an IRS audit<\/a>.<\/span><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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If I Hire My Kids, Can I Give Them Tax-Free Education Benefits? <\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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If your children work in your business, consider giving them education fringe benefits. Doing this right creates<\/p>