Here are some common scenarios to lessen your reportable taxable income with legal deductions:
- The 100 percent deductible meal expenses are usually specific to public events, charity, or employee social events. The event must be beneficial to your employees, such as an employee recognition event or company party. Note that there is an exception for businesses that sell food—any meals given between, before, or after shifts being fully deductible.
- According to the IRS update, the 50 percent deductible meals include office snacks or meals provided on an employer’s premises for the employer’s convenience. Before the 2017 Tax Act, these meal expenses were 100% deductible. Included in this category are meal expenses such as coffee and water. Also included are full meals for on-site, evening, or weekend work.
- Other 50% deductible includes meals around client events. This rule did not change with The Tax Cuts and Jobs Act of 2017. To qualify, there must be a business function for the meal. This includes business meetings of directors of a business, travel meals related to business, conventions, seminars, or per diem reimbursements.
As you see, there are essentially three categories for meal expenses (nondeductible, 50% deductible, and 100% deductible). Your best bet is to keep track of every expense with the details of the meeting’s purpose and who attended the meeting, and what relationship he or she has to the business (vendor, client, etc.).
At Estess CPAs, we specialize in helping businesses save time and money. In addition to providing bookkeeping, payroll, and accounting services, we are here to advise you and help you succeed. Call us today and schedule an appointment at our Belle Chasse or Luling offices:
7822 Highway 23 128 Lakewood Drive
Belle Chasse, LA 70037 Luling, LA 70070
(504) 433-5122 (985) 785-1470