Richard Pon, CPA, CFP - Tax Expert
Minimizing Your Taxes and Managing Your Complex Affairs

Tax Tips, Finance Tips, Fun Events

Tips for Individuals, Businesses and Charities. Fun Events.

Business Tax Tip: Summer Outings for Employees

With summer coming, tax planning is needed for your business to maximize your summer party deductions.

Generally, meals are 50% deductible and entertainment is no longer deductible.

A summer outing for employees (and their guests) is still fully 100% deductible (unless it discriminates in favor of officers, owners and highly-compensated employees).

Expenses for recreational, social, or similar activities (including facilities therefor) primarily for the benefit of employees (other than employees who are highly compensated employees) are fully deductible. For example, this would include employee activities for a Christmas or holiday party, annual picnic, or summer outing.

An annual picnic or summer outing for employees would therefore be 100% deductible.

A picnic or outing where clients, vendors, prospects and referral sources were invited would not be an employee party. In this case, meals are 50% deductible and entertainment is nondeductible.

To maximize your tax deductions you could always have 2 events (one for employees that is 100% deductible and one party for business guests – which is partially tax deductible); however, the economic costs of having two parties may offset the tax savings from an employee only party.

 

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Richard Pon CPA, CFP