by Karon Thackston © 2002 http://www.ktamarketing.comEva Rosenberg (a.k.a. Tax Mama) started out just like you and I did… small! She took her BA in Accounting and MBA in International Business and put it to work with her own online company. TaxMama.com is
result of Eva’s inspiration and dream. She now answers our questions about marketing expenses and what Uncle Sam is really entitled to!
KARON: Hi Eva, thanks for taking time to share your insights with us.
EVA: You’re very welcome, Karon.
KARON: I'm aware that certain marketing expenses are deductible... like advertising, client entertainment, expenses for setting up a press conference, etc. What expenses from our marketing budgets could we deduct that we might be leaving off?
EVA: My philosophy is - if you're in business, just about everything you spend money on is deductible. It's just a matter of documenting its business purpose. So a lot depends on two things:
Your creativity Your paper trail
KARON: What are most overlooked expenses?
EVA: Cash expenses. Hardly anyone, unless pushed, keeps track of valet parking, parking meters, pay phones, gasoline, tips, newspapers or magazines, coffee or snacks with clients.
KARON: Hmmm… sounds like I need to get my note pad and pen out! Is there a guideline for marketing expenses, though? Can you give a quick definition of what qualifies as a deductible marketing expense?
EVA: Anything you spend money on designed to generate revenue. If you can PROVE that your expense had a profit motive, I can justify just about anything.
KARON: So, really it’s not so much expense itself, but USE for expense?
EVA: Right!
KARON: I see. Now has any of this changed for 2001? Are there any additional deductions we can take? Has IRS eliminated any deductions?
EVA: The laws haven't changed significantly with respect to marketing. You already know that several years ago, IRS removed certain dues as marketing (business) deductions - things like country clubs, health clubs, etc.
KARON: Right.
EVA: But here are some general things you can and cannot deduct.
Things you CANNOT deduct:
Your wedding, bar mitzvah, confirmation, etc. IRS knows you would have thrown that party anyway.
Gifts - They are still limited to $25 per PERSON, per YEAR. (Couples in business together count as one person).
Business suits and outfits. And cleaning them. I know, they can be expensive. And they are required by your company/industry, etc. Unless it's a formally designated uniform... and everyone in your position must wear it... forget it.
Things you CAN deduct:
Travel - plan your trip properly, and you can turn just about any trip into a marketing, prospecting or research trip, legitimately.
(I was able to get a trip to Orient and Hawaii accepted in an audit. My client was a set decorator and had detailed photos of artifacts, artwork, buildings, clothing, styles, settings, etc. She was doing research, expecting to land a job on an upcoming film. With her photos we could prove her business intent for this $8,000 trip even though she ‘played’ while she was there, too.)
