Month: December 2024

In general, you can deduct 50% of meals and 0% of entertainment. There are various exceptions to this, such as:
a. You can deduct 100% of the office holiday party or picnic
b. You can deduct 100% of the transportation to the entertainment event or meal
c. You can deduct 100% of the food offered to the public for free (e.g. seminar, open house)

You can deduct up to $25 in gifts paid to an individual per year.  Thus, if you give a client a $50 Starbucks gift card, you can deduct $25 of that gift.  How to get around this?  Give a gift of $25 to the client and a gift of $25 to that client’s spouse and deduct $50 in total instead of just $25. 

If you buy a new or used truck or SUV at the end of the year and claim 100% business-use (by, for example, purchasing it on December 31st and driving it from the dealership to Office Depot to purchase paper for your business and then leaving it in the Office Depot parking lot until January 1st), then you can write off 60% of the cost of the vehicle in the year that you buy it even though you are likely never going to use that vehicle very often for business again. If you buy the same vehicle mid-year and use it 5% for your business, then your deduction would be 5% of the cost of the vehicle times roughly 60% = 3% deduction. This strategy works best if the vehicle is titled in the name of the business, but that isn’t necessary.

If you arrive at the end of the year and need a business or rental deduction to make sure that you don’t creep into the next tax bracket, then consider pre-paying 2025 expenses in 2024. You can pre-pay up to 1 years’ worth of 2025 expenses in 2024 and take a deduction for that pre-payment in 2024. You can pre-pay 12 months of phone bills, utilities, rent, supplies, insurance, etc. Remember, you get a deduction for what you charge on your credit card in 2024 on your 2024 return even if you don’t pay off the credit card until a future year.

These improvements include hot water heaters, HVAC systems, windows, exteriors doors, insulation, etc.

• As of January 1, 2023, you can receive up to $1,200 per year (up from the previous $500 annual credit limit) on your federal tax return from these improvements.
• In addition, you can receive up to $2,000 for certain electric or natural gas heat pump water heaters, electric or natural gas heat pumps & biomass stoves & boilers (you can exceed the $1,200 limit on this one).
• So, max credit might be 2,000 plus 1,200, if you spend enough money.

Note, beginning in 2025, for each item of qualifying property placed in service, no credit will be allowed unless the item was produced by a qualified manufacturer and the taxpayer reports the PIN for the item on their tax return.