Meal and Entertainment Deductions

When tax season rolls around, it is important that business owners have a record of all deductible expenses, which includes the cost of meals and entertainment. Determining which expenses are deductible is difficult, so if you have questions about your own business-related expenses, it is important to speak with an experienced tax attorney who can advise you.

50 Percent Deductible 

Businesses can write off the cost of providing meals and entertainment for employees and clients in certain circumstances. Entertainment includes everything from attendance at sporting events and social clubs to vacations. Food and entertainment provided at office meetings also fall under this category and are 50 percent deductible. Generally, any meals paid for during business trips can also be deducted, although if a portion of a trip was taken for personal reasons, the meals purchased during that time period will not be deductible. An employee’s meal expenses are always deductible at 50 percent, even when he or she was reimbursed for 100 percent of the cost.

Meals with clients, customers, and vendors are also 50 percent deductible as long as the meeting had a business purpose or will result in a benefit to the business. Meals served at conventions or seminars are also deductible at 50 percent, even when the meal’s cost is not billed separately from the cost of the event. In these situations, each taxpayer must report an amount that is based on a reasonable estimate or on per diem rates in that area. However, if there is no business function to the meal at all, the bill will not be considered tax deductible.

100 Percent Deductible  

In certain cases, meal expenses are 100 percent deductible. For example, meals served at a company picnic or holiday party can be completely written off, as can office snacks, such as soft drinks, bottled water, or coffee as long as they are served on the business’s premises. Food that is made available to the public for free as part of a promotional event can also be deducted at a rate of 100 percent. Other covered expenses include:

• When meals are provided on the business premises to more than half of the employees if they are required to work late, be on call, or work weekends;
• When the expense is included as taxable income on the employee’s W2;
• When a professional firm charges meal expenses separately and is subsequently reimbursed; and
• When the meal is served at a qualifying charity sporting event.

Call us Today to Speak With an Experienced Tax Attorney 

Calculating deductible expenses requires careful record keeping and a clear understanding of tax law, so if you have questions about whether your own entertainment-related business expenses can be deducted, please contact Ronald Cutler, P.A. by calling 386-490-9949 today to schedule a one-on-one consultation with an experienced Florida tax attorney. You can also reach us by sending us a message with a brief description of your case or by initiating a live chat with a dedicated member of our legal team.

Resources:

irs.gov/taxtopics/tc512.html

irs.gov/publications/p463/ch02.html#en_US_2016_publink100033869