Want to Deduct an Event Ticket?

Event stadium

Things to consider

As an employee, can you ever deduct the cost of a sporting event or other ticket on your expense report? Surprisingly, the answer can be yes, but only if you know and abide by the rules.

The accountable plan

If your employer uses accountable plan rules for reimbursing expenses, the IRS will not only provide the ability for you to be reimbursed by your employer for your qualified expenses, it will also allow your employer to deduct the expense on their corporate tax return. To be a qualified expense, three rules must be met:

Number 1 Expenses must be related to the duties and responsibilities of the employee for their employer.
Number 2 The expenses must be properly substantiated in a timely manner. This is usually within 30 to 60 days.
Number 3 Any excess reimbursements to the employee must be returned to the employer.

Applying the rules

To apply these expense deduction rules to a sporting event:

Checkmark There must be a business purpose for attending the event and
Checkmark an employee must accompany a prospective customer, a current customer or supplier to the event.

If you apply these rules, your employer can usually deduct 50% of the ticket cost and related expenses.

What can go wrong?

As you can imagine, the IRS looks closely at those who deduct entertainment as a qualified business expense. Here are some things to watch for:

Caution No customer or supplier is in attendance. Make sure you attend the event with your customer or the tickets are deemed a gift.
Caution The environment does not provide for a quiet place to conduct business. Do not try to deduct concert tickets or sporting events if you do not first meet in a quiet place prior to or after the event to conduct your business affairs.
Caution Over-charging the ticket price. You may only deduct the price of a ticket that is generally available to the public.
Caution Bringing friends. Generally you can include a spouse in the event, but other family members or unrelated guests can raise red flags.

As you can imagine, this area of expense deductibility is often the focus for the IRS during a review. If in doubt, please ask for help and clarification on the deductibility of this type of entertainment expense.

As always, should you have any questions or concerns regarding your situation please feel free to call.

Preview of Some Key 2017 Tax Figures

2017 compass

While official numbers for 2017 are not yet released by the Internal Revenue Service (IRS), many figures are based on the Consumer Price Index (CPI) published by the Department of Labor. Using the release of recent CPI figures, a number of sources are projecting key figures for 2017.

 

Tax Brackets: While the actual income brackets for tax rates are not set for 2017, the rate of inflation impacting the income levels for each rate is anticipated to raise the income brackets by approximately 0.6 – 0.8%.

Personal Exemption: $4,050 in 2017 (unchanged from 2016)

Standard Deductions:

Deduction Tax Year 2017 Tax Year 2016
Single
$6,350
$6,300
Head of Household
$9,350
$9,300
Married Filing Jointly
$12,700
$12,600
Married Filing Separately
$6,350
$6,300
Dependents (kiddie tax)
$1,050
$1,050
65 or Blind: Married
Add $1,250
Add $1,250
Single
Add $1,550
Add $1,550

Other Key figures:

Estate & Gift Tax Exclusion
$5.49 million
$5.45 million
Annual Gift Tax Exclusion
$14,000
$14,000
Roth and Traditional IRA Contribution Limit
$5,500
$5,500

Caution: Remember, these are early figures using the recently announced Consumer Price Index. Official numbers are released by the IRS later in the year.