Deductibility of Meals Provided to Employees

If you are an employer who provides meals for your workers, you may be able to deduct some or all of the cost of the meals. Generally, you are limited to a deduction of only 50 percent of the cost of those meals. However, under certain circumstances, you may be able to deduct the entire cost.

Taxability of Military Pay

In general, if you are a member of the U.S. Armed Forces, your pay is included in gross income for federal income tax purposes. Basic pay includes amounts paid as back wages and amounts paid for services performed during active duty, attendance at designated service schools, drills, reserve training, and training duty. Special pay, including amounts received by medical and dental officers, nuclear-qualified officers, and amounts paid for services performed during diving duty, foreign duty, hostile fire, imminent danger, and special duty assignment must also be included in gross income. In addition, if you receive bonuses for enlistment and reenlistment, payments for accrued leave, muster out payments, personal money allowances paid to high-ranking officers, and certain scholarship and student loan repayments, you must include them in gross income.

Prepaid Interest Paid By Cash-Basis Taxpayers

In general, if you are a cash-basis taxpayer who prepays interest on a loan, you are not permitted to deduct all the interest in the year of payment. Under the Internal Revenue Code, you are required to capitalize the prepaid interest and deduct it as if you are an accrual-basis taxpayer. In other words, you cannot take a deduction for interest other than in the year in which it is due. The prepaid interest is allocated to the tax year in which the interest actually represents the cost of using the borrowed money. To allow a deduction of prepaid interest in the year of payment rather than in the year it is due would materially distort your income.

Work-Related Education Expenses

If you are an employee, you may be able to deduct the costs of qualifying work-related education, but only if you itemize instead of taking a standard deduction. The deduction allowed would be the amount by which your work-related education costs plus other job and certain miscellaneous expenses exceed two percent of your adjusted gross income. If they don't exceed this floor, no deduction is allowed. If you are self-employed, you may deduct the costs of work-related education directly from your self-employment income.

Business Structure

The manner in which the business files its income tax returns and pays its taxes depends on the way the company was organized. The most common forms of business are sole proprietorships, partnerships, corporations, S corporations, and limited liability companies, and both state and federal legal and tax considerations enter into the selection.