Deduction of Business Meals
UPDATE: As part of the stimulus bill passed in December 2020, businesses may deduct 100% of business meals in 2021 and 2022 if the meals are purchased from a restaurant. The business requirements in paragraph 2 below still applies.
The 2017 TCJA was the largest change of the tax code since 1986. One of the areas that was changed for the first time in very long time is business meals. Prior to the tax law changes, some meals were deductible at 50% and others were deductible at 100%. After the TCJA, all meals are deductible at 50%. While there are a few instances where the meals are deducted at 100%, they are VERY rare.
What has not changed is the requirement that business meals must have a legitimate business purpose. Legitimate business purposes include but are not limited to the following: meals provided for convenience of the employer, business travel away from your tax home, client meals, and meals at training events. You MUST retain proof or be able to provide proof to the IRS, should you be audited, that your meal was for a legitimate business purpose. Proof could be a brief memo, receipt, notes, day planner, or calendar entry.
Please don't hesitate to reach out to us with questions around these requirements