Business Deduction for Meals

When it comes to food, taxes are a bit crazy especially for business owners. Food purchases are somewhere from zero to 100% deductible. It depends on whose mouth it ends up in.

The full cost is deductible as an expense if the end user is:

  • The General Public
  • Employees that are working late
  • Holiday office parties so tell your boss not to hold back

A portion of the cost is deductible (generally 50%) if the end user is:

  • Dining with clients – this may change to 100% deductible based on upcoming legislation
  • Travel meals
  • Employees during normal business operations

None of the cost is deductible if the end user is:                                       

  • Friends
  • Family

Keep all receipts and make sure your accounting software is setup to assign food transactions to the proper account. When it comes to dining with clients you must document the reason for the meeting and who was there. The top of the receipt is a great place to write it down.

Tax rules for food are constantly changing. The hot topic right now is moving the expense for dining with clients into the 100% deductible class. Some say it is a good idea to encourage more businesses to go out and spend while others see it as tax breaks that could do more elsewhere. Regardless of your opinion make sure you are ready to put the rules to work in your favor. Contact us today for assistance.

Joe Wright CPA PLLC provides the information in this blog as a general guide. Tax laws are extremely complex, and every taxpayer is unique. Some or all of this information may or may not apply to you. We provide simplified situations to clarify some of the major aspects and highlights of the topic at hand. Some of the language used is casual and may be misconstrued. Please make an appointment with us soon to discuss your particular circumstances.