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Have to pay your business dues? Deduct them

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in Small Business Tax

Q. As the owner of a small company, I have been invited to join a professional association. The dues cover luncheons at meetings. Would it better to deduct those costs as business meals? L.A.R., Anchorage, Alaska

A. It depends. Remember that the dues are 100 percent deductible as a business expense. On the other hand, you can deduct only 50 percent of your business-qualified meals. For instance, if the dues run $250 for the year, you would have to incur more than $500 in luncheon costs to surpass the dues deduction. Plus, you would have to substantiate the actual cost of the meals.

Tip: In either event, the company should pay the dues (assuming it’s a corporation). Otherwise, the business expense must be deducted as a miscellaneous expense, subject to the 2 percent-of-AGI floor.

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