Post a new topic
    2 Replies Latest reply on Feb 13, 2010 9:48 PM by UncleLeon

    It's OK, I'll just expense it.

    adnaan Newbie
      I was wondering what the benifits are of expensing business items.

      If I pay for a clients meal does that mean at the end of the year that meal may very well end up being "free"? Will the tax of that meal be free? How would it effect something like a laptop purchase when doing it as a business expense versus a personal expense?

      I'd appreciate anyone who can help explain this to me.
        • Re: It's OK, I'll just expense it.
          latydesigns Wayfarer
          all expences in business is deductible
          • Re: It's OK, I'll just expense it.
            UncleLeon Scout
            No, it's not free.

            If there's a valid business reaon that you take a client to lunch (or other); the cost can be "Expensed". However it's not "FREE".

            It doesn't count as a "TAX Credit", but rather, a tax expense. There's a difference.

            A tax credit comes, in total, off the bottom line, and is, therefore, a full value credit against any taxes due.

            A tax deduction is taken off your "income" on which you pay taxes. Therefore, is, in effect, a partial reduction of taxes based upon your tax bracket.

            If your tax bracket is 25%, it is (in effect) 25% free. If your tax bracket is 35%, it is (in effect) 35% free.