MEALS & ENTERTAINMENT
"Ahh, the good old days" . . . meals and entertainment expense deductibility actually fits this expression. Prior to the Tax Cuts and Jobs Act (TCJA) of 2018, businesses could deduct anywhere from 50% to 100% of their meals and entertainment expenses as long as they were associated with conducting or discussing business. Along came the TCJA and the rules changed. Then COVID era changes changed it again and we are now back to the TCJA rules. Below are the current and prior year rules for guidance.
WHAT CAN I DEDUCT?
For tax years 2023 and 2024, below is some general guidance on the deductibility of meals and entertainment . . .
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100% Deductible
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Food for recreational employee events, such as holiday parties, summer picnics, or team-building events
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Food provided to the public to promote goodwill (e.g., snacks or coffee for customers)
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Food for events in support of a charitable cause (make sure they are an IRS tax exempt org - search here)
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Meals that are an essential part of your business function (for example, if you’re a food critic or food blogger)
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Meals provided to the employees for the convenience of the employer (e.g., dinner for employees who work late at the office)
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Meals included as taxable compensation to employees or independent contractors
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Meals sold to a client or customer
50% Deductible
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Business meals
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Meals provided in-office for meetings of employees, stockholders, agents, or directors
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Employee meals at a company cafeteria if the annual revenue of the facility is equal to or greater than the costs
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Food items, such as soda, coffee, or snacks, for employees
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Meals while traveling for work
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Meals at a conferences
Not Deductible
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Entertainment (any activity which is of a type generally considered to constitute entertainment, amusement, or recreation, such as entertaining at night clubs, cocktail lounges, theaters, country clubs, golf, and athletic clubs, sporting events, and on hunting, fishing, vacation, and similar trips)
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