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Are Military Holiday Party Expenses Tax Deductible?

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Dear Q&B,

My husband is the senior leader in his unit and every year, like most senior leaders, we host a Christmas party for his unit's officers and senior non-commissioned officers.

As you can imagine, it's really expensive. We love doing it, but the cost really adds up. We know this is just one of those expectations that comes with being higher ranking and getting paid more. But still, we'd like to save money where we can.

Since this is a work-related event, I want to save our receipts and deduct the party costs from our taxes. I've asked other senior leaders about this and have heard all kinds of answers. Some say "yes," others say "no." I'm wondering -- what do you say?

Sincerely,
Party Planning Spouse

Dear Party,

Military life is packed with these traditions, obligations and expectations -- the cost for which almost always comes out of your pocket. It's not that you are required to spend the money or uphold the tradition but, well, you kind of are.

And it starts early in the career, doesn't it? They can't order your service member to buy a ball ticket except that they kind of do by making it a non-ordered expectation. More than $100 in tickets (if you're lucky), a ball gown and cash for the bar later, and you've fulfilled your obligation, but you might not be happy about it.

It's the same thing with the holiday party you have to (but don't actually have to) throw. So being able deduct the expenses from your taxes only makes sense, right?

Unfortunately, the Internal Revenue Service doesn't always use the same kind of logic you and I enjoy. So we asked a military tax expert for her thoughts on this.

But first, a caveat -- don't take this advice as law. Go talk to your own tax expert. We aren't lawyers and we aren't the be-all, end-all of IRS advice. Still, we are happy to throw in our two cents.

Here it is. Bad news: No, your party costs are most likely not tax deductible.

Like military haircuts and gym memberships, you can't write them off. Were you to deduct them and then be audited by the IRS, you would likely have to pay those monies back with interest and a penalty, according to accredited financial consultant Letty Stevens.

Why? Because, Stevens said, the IRS likely does not see your party as a work requirement.

"From an IRS perspective, there is no employer requirement to have the party," she said.

If there were an actual requirement (as opposed to a tradition or expectation), you could receive funds to host it. That's why very senior commanding officers often receive an additional taxable allotment in their pay to cover these types of expenses.

And so the parade of paying for things out of pocket that-are-not-actually-required-but-pretty-much-are goes on.

Need more tax help? Don't listen to tax rumors. Consider calling Military OneSource. They have free tax advisers available for military families year round.

Sorry for the bad news.

Sincerely,
Team Q&B

-- Do you have a question about your benefits? Email the Military.com Questions and Benefits team at questionsandbenefits@military.com.

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