Business Meals and Entertainment Expenses

There was so much confusion about this deduction, it is always useful to get back to it and review what exactly you can deduct.

First thing to remember – entertainment expenses are disallowed. Say, if you decide to take your best clients or vendors to a Seahawks game, you won’t be able to deduct this expense, even if most of the time you discuss some business questions. BUT there’s an exception for company-wide events, such as holiday parties, company picnics – those are team-building type of activities. You can deduct 100%. So, keep celebrating with your colleagues!

Second thing to remember – business meals are still deductible; you can deduct 50% of the cost. Business meals expense should be incurred while you travel away from home on business, when you take someone business related to a restaurant, meals you buy when you attend a business seminar or meeting. Some other requirements:

- Owner or employee should be present

- Food and beverages should not be lavish and extravagant

- You can deduct your expenses if you pay for a business customer, client, vendor or a similar business contact.

- Same rule for tips and taxes

Interesting thing: the cost of transportation to a business meal is 100% deductible. Say, if you pay $35 for Uber to get to the restaurant, where you meet with your potential business customer, and then pay $110 for the business meal, you can deduct: $35 +$110/2 = $90. Nice!

Pay attention! If you organize or attend an entertainment event, make sure you buy food and beverages separately. If stated separately (different receipts, for instance), the cost is deductible!!

#businessmeals #businessdeductions