How To Write Off Your Date Nights On Your Taxes

Early in my marriage, a wise woman said this to me: “When you are married, you are in business together. If you don’t see it like that, you’re going to have problems.”

Don’t tell me that is unromantic because you know what is truly unromantic? Fighting about money and not sharing goals. That’s unromantic. That is why I thought this advice was so wise! If you take the business of your family seriously, you will avoid those truly unromantic things.

In my recent post about incorporating your family, I received many questions about how you pay yourself and how you avoid getting in trouble with the IRS for commingling. Here is the short answer: you live your life inside of your small business as much as you possibly can. I’ve already convinced you of the tax benefit to doing this. Now let me explain.

If you run a small business inside of your family, your business will eventually make money. Now the object is to pay for as many expenses as you can out of that business account. Like what? Well, like for instance:

• Broadband
• Vehicles
• Vehicle maintenance and insurance
• Gas
• Electricity
• Cleaning services
• Date nights

That’s right, even date nights can count as legitimate business expenses as long as they do not egregiously exceed a normal meal expense for business purposes. So no Jean-Georges meals on the business unless you regularly go there with clients! You must also have non-expensed date nights too. The IRS will call foul on EVERY date night as a business expense but for my husband and I, a lot of them legitimately are. How do I prove that? Here are a few tips:

• You need receipts! I use a Neat Connect to organize every business expense because I do not want to be caught with my pants down in the event of an audit. On the receipt, you must write down the purpose of the business expense. So if we went to lunch to discuss a recent property acquisition, I will write down the name of the property and either have my minions scan it into my Neat Connect later, or else I’ll take a photo of it in the Neat app. Neat’s software not only allows you to categorize your expenses, it also notes the amounts, and makes the receipts searchable so I can find them later. This is an important investment for small business and Chief Home Officers and one I highly suggest you explore.
• You may need agendas. If you go on a retreat for a specific purpose, keep an agenda and email logs. If you use a cloud service such as Google Docs or Dropbox, your agendas will have timestamps so the IRS won’t think you put them together as counterfeit documents for the audit. In the event of an audit, you’ll want as much proof as possible that you did not spend the day in bed doing unmentionable things, if you know what I mean, Vern!
• Pay yourself! You will eventually want to take money out of your business to pay for personal expenses. In fact, if you don’t take an income, the IRS will catch you on this. When you do pay yourself, you will have to issue yourself a paycheck and pay taxes on that money on your personal social security number. At the end of the year, you will 1099 yourself for the money the business paid you. You must be diligent about this! If you use the business account to pay for non-business expenses such as your child’s taekwondo lessons, you’ll be in big trouble for commingling. You will be penalized for that plus taxed on the money you misused. Don’t. Mess. With. This. Just don’t.

I was raised by a small business owner who has since turned into a pretty large business owner. In my family, my mother had a very successful career with a large firm so my father had the luxury of taking home a relatively small paycheck and leaving most of the money in the business. I am very familiar with the value of living inside the business as much as legally possible. Our broadband, our computers, our phones: all a company expense. I worked for the family business so my car and insurance were both company cars — which was a brilliant move on my father’s part back then because it meant his teenage daughters had million-dollar coverage. For the record, my sister was the one who needed it back then! Not me!

If you follow these rules, the IRS will not care a hoot about your date nights, even if you spend 40 percent of your time discussing how to get your kids to stay seated at the dinner table without a fight. (Seriously, how do you!?)

In another post, I am going to talk about making travel a business expense. I am actually writing this while on a legitimate business trip with my husband. It also happens to be our 5-year anniversary. Two birds, my friends! That is the secret to successful Chief Home Officer’ing! Understanding the system and using it to our full advantage! Happy anniversary to us and the business of our family!

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Note: This is a re-post from my personal site, www.natalimorris.com.