How to write off Meals + Entertainment ...

UPDATE 2021 : Per the Consolidated Appropriations Act of 2021, meals are 100% deductible if paid to a restaurant from January 1, 2021 through December 31, 2022.

Restaurant is defined as a business that prepares and sells food for immediate consumption regardless of whether those items are consumed on-site. Does not include things like grocery stores, vending machines or prepackaged meals.

Below are the ordinary rules except temporarily its all 100% until 12/31/2022!!!

Under the Tax Cuts and Jobs Act there were many changes to the deduct-ability of meals and entertainment starting in 2018. Here is an easy summary:

Entertainment = Nondeductible

All entertainment is no longer deductible for tax purposes even if you discussed or closed business during it. If you ate during entertainment, make sure to categorize this separately as these are still 50% assuming it had a business purpose.

Meals @ 50%

Most meals that have a business purpose are deductible at 50%:

• Meals with a client, staff or business professional while discussing business

• Staff meals at a conference

• Office snacks for staff/team

Two ways to write off meals at 100%

1. Meals purchased for a company wide holiday party

2. Food and drinks provided for free to the public

Exception to deducting a meal while dining alone

There is one exception to be able to write off 50% of a meal while dining alone and that is if its while “traveling”. The obvious type of travel is if you have to stay overnight somewhere, in that case it’s deductible.

However, the term “travel” is defined by the IRS a little looser and I think there is more opportunity. It’s defined as:

• Your job requiring you to be away from your “tax home” for longer than an ordinary day’s work and,

• You must sleep or rest to meet the demands of work while you are away.

Example: You’re a photographer and live in Portland. You have a photo shoot in Eugene. You go for an early morning shoot but have a several hour break in the day to rest before you have a full 8 hour evening shoot and then you drive home. This required you to leave your tax home for the day and resting was required to perform your duties even though it wasn’t an overnight job. Food purchased on this day will be 50% deductible.

Lastly, if you ever have a question about writing off a meal feel free to reach out, it can be confusing.

Ultimately, as its only a 50% write off (in most cases), meals are not the best deduction in comparison to other expenses like marketing & promotion.

But if you must eat out either way, may as well make it at least partially deductible.