‘Tax Strategy: How to Deduct Business Meals’
The IRS allows a deduction for meals, but not always. Learn how to maximize your deducitons.
2 min read

Education

20 December 2023

Tax Strategy: How to Deduct Business Meals

Angie M Grainger

Tax Strategy

Education

The rules for deducting business meals are often changing and can sometimes be confusing.

Business owners are allowed to deduct business meals but it can depend on a few factors.

Here are some things you need to know in order to best leverage your tax deductions for business meals.

Deducting Business Meals:

  • Reasonable and Ordinary: The expenses claimed must be reasonable and ordinary for your business. Extravagant or lavish expenses might not be fully deductible. 

  • Business-Related Meals: To qualify for a deduction, the meal must have a clear and substantial business purpose. 

  • Document Everything: Accurate record-keeping is crucial. Save receipts and document pertinent information, including the names of attendees, their relationship to your business, the purpose of the meal, and the date and location. 

  • 50% Rule: Generally, the IRS allows a 50% deduction on qualifying meal expenses. Be meticulous in differentiating between meal costs and entertainment expenses, as entertainment expenses are not currently deductible.

  • 100% Deductions: There are instances where meals can be fully deductible:

    • Employee Meals: Meals provided for the convenience of the employer, such as office snacks or meals provided for employees working overtime, can be 100% deductible.

    • Company-Sponsored Events: Meals provided at events open to the general public, such as promotional events or seminars, can be fully deductible.

    • Recreational Activities: Meals provided during recreational or social activities primarily for the benefit of employees (such as a holiday party) can also qualify for 100% deduction.

Deducting Travel Meals:

When You CAN Deduct Travel Meals:

  • Overnight Travel: Meals during overnight business trips are generally deductible. If you're required to be away from your tax home for a substantial period, whether domestic or international, you can typically deduct the cost of meals.

  • Business Destination: Meals consumed in a location that's far enough from your tax home to necessitate rest or sleep are usually considered eligible for deduction. 

When You CAN'T Deduct Travel Meals:

  • Non-Business Travel: Meals during personal or non-business-related travel are not deductible. If a trip combines business and personal activities, only expenses directly related to business are eligible for deduction.

  • Local Commuting: Meals incurred during regular commuting or local business activities in your tax home area are generally not deductible. The IRS considers these as nondeductible personal expenses.

Exclusive openings available for CFO Services.

Book discovery call

Exclusive openings available for CFO Services.

Book discovery call

Exclusive openings available for CFO Services.

Book discovery call

Exclusive openings available for CFO Services.

Book discovery call

Someone you’re thinking of?

Use this button to ‘copy’ the article link and ‘paste’ to your friends!

Why settle for anything less than your own, personal CPA firm?

Why settle for anything less than your own, personal CPA firm?

Our team of Certified Public Accountants, Personal Financial Specialists, and Certified Financial Planners® is dedicated to personal finance—so we’re dedicated to you.

Our team of Certified Public Accountants, Personal Financial Specialists, and Certified Financial Planners® is dedicated to personal finance—so we’re dedicated to you.

Prosper-ent

one who prospers.

Prosper-ent

one who prospers.