Overnight Sleep Test

DEFINITION of 'Overnight Sleep Test'

A criterion that determines whether meals eaten alone while working are tax deductible. To be considered a tax-deductible business expense, meals eaten alone must be eaten when the person is doing business away from home for long enough and/or far away enough that an overnight stay is required.

BREAKING DOWN 'Overnight Sleep Test'

For example, if Zoe drives across town for a business meeting, then stops at a restaurant afterward for a meal, the meal will not be tax deductible because she dined in the general vicinity of her office. She did not stay overnight anywhere, so the expense does not meet the overnight sleep test. If Zoe's office is in Los Angeles and she flies to Denver for a business meeting, then has lunch at the airport and returns to Los Angeles the same day, the lunch is still not tax deductible.

RELATED TERMS
  1. Tax Home

    The general locality of an individual's primary place of work. ...
  2. Away From Home

    The IRS criteria used to establish whether or not you are within ...
  3. Business Interest Expense

    The cost of interest that is charged on business loans used to ...
  4. Tax Deductible Interest

    A borrowing expense that a taxpayer can claim on a federal or ...
  5. Net Of Tax

    An accounting figure that has been adjusted for the effects of ...
  6. Interest Deduction

    A deduction for taxpayers who pay certain types of interest. ...
Related Articles
  1. Budgeting

    How to Manage Your Grocery Budget

    Managing your grocery budget can seem like a daunting task, but it doesn't need to be. These simple changes in the kitchen will help.
  2. Investing News

    Why Zoe's Kitchen Heated 26% Last Week (ZOES)

    The company's strategy to grow what it calls its "Mediterranean lifestyle brand" is resonating with consumers.
  3. Taxes

    How To Claim Home Office Expenses

    There are many factors to determine what home office deductions can be made towards your small business. Planning ensures high deductions.
  4. Budgeting

    Plated Review, Is It Worth It?

    Take a closer look at the ready-to-cook meal service, Plated, and learn how the company can help you take the hassle out of home cooking.
  5. Taxes

    Why You Should Itemize Your Tax Deductions

    This strategy of moving your tax deductable payments and donations to the following year could mean hundreds more on your return.
  6. Taxes

    Business Taxes: Not Paying More Than You Have To

    If you're a small business owner, note these potential tax deductibles so that you don't pay taxes that could have been extra revenue in your account.
  7. Taxes

    Want A Bigger Tax Refund? Don't Itemize

    Six reasons why many taxpayers can save money and time by claiming the standard deduction.
  8. Taxes

    Tax Deduction Guide: Contractors Vs. Employees

    The following are deductions independent contractors can write off, employees can write off, and a few that overlap.
  9. Brokers

    Top Tax Deductions For Brokers

    If you are paying out of pocket, you can make your business expenses work for you at tax time.
  10. Taxes

    How To Qualify For The Home-Office Tax Deduction

    Homebodies can save big on their tax bill. Learn how to get in on the action.
RELATED FAQS
  1. How is the deductible I paid for my insurance claim treated for tax purposes?

    Find out how your health insurance deductible is treated for tax purposes and under what conditions you may be able to deduct ... Read Answer >>
  2. How can I make sure I'm ready to file my taxes?

    Whether you file your return yourself, or have it done by a tax professional, you want to make sure you include all your ... Read Answer >>
  3. What are some commonly missed deductions for business owners?

    If you own a business, you are eligible to deduct certain business-related expenses. These include deductions for the following: ... Read Answer >>
  4. In what instances does overhead qualify for certain tax allowances?

    Find out about instances in which overhead expenses qualify for tax allowances, including some common examples of tax-deductible ... Read Answer >>
  5. What is the difference between a write-off and a deduction?

    Understand the differences between a tax write-off and a tax deduction. Learn how each one works to reduce income taxes and ... Read Answer >>
  6. Can you write variable costs off your taxes?

    Learn if you can deduct variable or fixed costs from your business taxes and learn more about business deductions, cost of ... Read Answer >>
Hot Definitions
  1. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  2. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  4. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  5. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  6. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
Trading Center