Throwing a tax-deductible Cinco de Mayo office party
Thursday, May 05, 2016
When most folks think holiday office party, they think Christmas.
Here in Texas, though, Cinco de Mayo is a great day for an office party.
Today is the commemoration of the Battle of Puebla in 1862. On that day 154 years ago, the Mexican military defeated the numerically superior French forces that, the year before, had invaded Mexico.
Such an unlikely victory reminds all us Texans of how we did the same thing to Mexico at the Battle of San Jacinto in 1836, securing the independence of the Republic of Texas.
Plus, Ignacio Zaragoza Seguín, the man who led the victorious Mexican forces against the French, was a Texan. Zaragoza was born on March 24, 1829, at Bahía del Espíritu Santo in the state of Coahuila and Texas, near present-day Goliad.
OK, technically Zaragoza's birth date and place was while Texas was part of Mexico, but it counts. Especially when the toasting of margaritas and Dos XX is involved!
And despite all the political posturing during this particularly nasty 2016 presidential campaign, most of my fellow Texans are proud of our shared heritage with our neighbor to the south.
So we Texans have muchas razones to party today, including in workplaces across the Lone Star State.
There's even a tax reason.
Keeping it in the office: The cost of a holiday party for employees is fully tax deductible. Workers can even bring their spouses or significant others and the event is still a total business write-off for the hosting boss.
Just be sure to limit it to workers and their plus-ones.
If the festivities include the business owner's friends, customers, independent contractors, vendors or any other business-related associates, it is subject to the 50 percent limitation on meals and entertainment.
Don't go overboard: Also, don't overdo the event.
If you've brought in a baile folklórico troupe and had the guacamole and taquitos catered by the most expensive Tex-Mex restaurant in the county, then the Internal Revenue Service might consider the party as too lavish or extravagant.
The IRS says it must be along the lines of what is usual for your line of work. Such a determination is, of course, based on the notorious facts and circumstances standard often used by the IRS. Still, you don't want to have your Cinco de Mayo celebration ultimately crashed by a party-pooping tax examiner.
So keep things within reasonable boundaries and you, your workers and Uncle Sam will all stay happy.
Keep good records: Finally, follow the ultimate tax rule. Keep your receipts.
You want to make sure you document all deductions, and this includes office parties.
Be sure you can show any tax auditor that you invited your entire whole work force, not just executives. You also want to have records of what you fed them, where the party was held, and the like.
That way, you'll have reason to celebrate again when you count the expenses as a legitimate, deductible office party.
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