I’m using TurboTax and I have a schedule C business. On the Meals & Entertainment screen, do I have to list each and every business meal for the year (most were under $25) or can I aggregate them? If I list them separately am I less likely to get flagged for an audit?
I know that you’re not my tax attorney.
Thanks!
Aggregate them. Since that’s how everyone else does it, I can’t see how listing them separately would reduce chances for an audit.
To expound a little:
I’m no tax pro, this is just common sense. All of the entries on Schedule C are for the total of that category. That’s why there’s just one line for each. For example, under “Utilities” I enter the total for all utilities - electric, gas, phone, etc. They don’t expect - nor at this point want - a list of every single utility bill I’ve paid. In part III, line 36, I enter the total cost of goods I bought for resale. If I listed every single invoice for those goods, it would be a 458 page form.
Keep your individual receipts and invoices for verification in case you happen to be audited, but don’t list them on Schedule C.
The “Meals & Entertainment” screen in Turbo Tax doesn’t go to the IRS anyway. It’s only an aid for you to determine the amount that goes on that single line of Schedule C, which the IRS does get.
Exactly. The IRS will only see the total that is on the form that you print out (or efile) for them. In the unlikely event that you are audited, and they question your meal expenses, they will want to see a breakdown. I don’t even use that Turbo Tax feature. I just total it with a calculator and give Turbo Tax the total.
Note that business meals come under two categories: personal meals for out of town overnite travel- where it is best to take Per Diem (and you get 1/2 of that as a dedcution).
And business entertainment meals, always a fertile audit field and where you likely should not be doing that taxes yourself. You need copious records for this.