Tax Help, Tax Relief, Best Tax Service in Pleasant Hill CA
Tax Help, Tax Relief, Best Tax Service in Pleasant Hill CA
Tax services, tax help and sometimes tax relief when you are claiming business gifts in your tax filing.
Tax help - When filing a tax return a business can deduct ordinary and necessary expenses paid or incurred in carrying on any trade or business. The expense must be reasonable and must be helpful to the business.
Most gifts by individuals to co-workers are normally considered nondeductible personal expenses. However, achievement awards ($400 limit) and qualified plan awards are not subject to the $25 limitation when filing your tax return.
Gifts to a client, customer or business contact can be deductible business expenses. However, the maximum deduction for gifts to any individual is $25 per year (IRS tax Code Sec. 274(b)). A gift is any item that is excluded from income under Code Sec. 102. Gifts that cost $4.00 or less, as well as promotional items, are not subject to the $25 limitation.
Substantiation
According to the CA tax board taxpayers filing a tax return must be able to substantiate certain business expenses with maintained records or sufficient evidence to take them as a deduction. Substantiation is required for business gifts, as well as traveling, lodging and entertainment expenses, because they are considered more susceptible to abuse.
For more tax help information see - IRS Tax Code Sec. 274 - d.
For tax filing of business gifts, IRS regulations require that tax services and tax filing individuals substantiate the following elements of the gift for tax relief on a return:
- Amount (the cost to the taxpayer)
- Time (the date of the gift)
- Description of the gift
- Business purpose - the business reason for the gift, or the nature of the business benefit derived or expected to be derived as a result of the gift.
- Business relationship - occupation or other information relating to the recipient. For example name, title and other designation, sufficient to establish the business relationship to the taxpayer through IRS tax services.
The IRS provides tax help for substantiation rules in Treasury Reg. 1.274-5T(c). The taxpayer must maintain and produce, on request, "adequate records" or "sufficient evidence" that corroborate the taxpayer's own statement. Written evidence has "considerably more probative value" than oral evidence alone. While a contemporaneous log is not required, written evidence is more effective the closer in time it relates to the expense. Support by sufficient documentary evidence is highly credible when being reviewed.
Sufficient evidence
A taxpayer that does not have adequate IRS tax records may establish an element by other sufficient evidence, such as the taxpayer's written or oral statement with specific, detailed information, and other corroborative evidence. A description of a gift shall be direct evidence, such as a detailed statement by the recipient or documentary evidence otherwise required as an adequate record.
If the taxpayer loses records through circumstances beyond the taxpayer's control, the taxpayer may substantiate the deduction by reasonably reconstructing his expenditures before tax filing.
Adequate records
Adequate records include an account book, diary, log, statement of expenses or similar records, as well as documentary evidence, which in combination establish each element of the expense. However, according to the CA tax board it is not necessary to record information that duplicates information on a receipt. The record should be prepared at or near the time of the expenditure, according to the CA tax board when the taxpayer has full present knowledge of each element. A statement, such as a weekly log, submitted by an employee to his employer in the regular course of good business practice is considered an adequate record.
An adequate record of business purpose generally requires a written statement of business purpose. However, the degree of substantiation will vary depending on the facts and circumstances.
Additional tax help is available from any local tax services company.
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