Oct 23, 2024

What's the Story on Meal Deductions?

The rules on deducting meals have changed over the years, leaving many to wonder what the current situation is. What kinds of deductions are available, and when? Read through for the latest guidance.

 

Business meals: yes or no on deductions? In brief, you cannot take a deduction for any expense related to activities generally considered entertainment, amusement or recreation. However, you can deduct 50% of the cost of business meals if you (or your employee) are present and the food or beverages aren't considered lavish or extravagant, according to the IRS.

The IRS has further advice: If food or beverages are provided during or at an entertainment event, and the food and beverages were purchased separately from the entertainment or the cost of the food and beverages was stated separately from the cost of the entertainment on one or more bills, invoices or receipts, you may be able to deduct the separately stated costs as a meal expense.

When traveling, you can deduct a portion of the cost of meals if it is necessary for you to stop for substantial sleep or rest to properly perform your duties while traveling away from home on business, according to the IRS.

The fine print

Despite the new guidance, businesses may still find it confusing to figure out what they can deduct and when. As the following paragraphs show, there can be a thin line between what is and is not allowed.

For example, you can probably claim the 50% deduction when taking a client out to a restaurant to talk about their account. You're at a conference away from home? Again, that will probably pass muster. Even when no client is involved, if you provide snack items and meals for your staff in the office, that will also get the 50% deduction.

Can anything get you a 100% deduction? Yes, in a few specific circumstances. The annual holiday party for your employees gets the full deduction, as does a team-building event. However, the IRS may take a dim view of your doing this too frequently.

So is this the full story? No! There are lots of subtleties when deciding what is or is not deductible and at what level. Your best bet is not to make assumptions but instead to speak with a tax professional in advance as you create a budget for your plans.

©2024


 

MORE RECENT NEWS…


Jul 31, 2025

Lose an Employee but Gain Information

Employers conduct exit interviews with departing employees during the final days of offboarding. If done right, these interviews can be a source of valuable information to help the company improve.


Jul 30, 2025

How To Budget for Salary Increases

One of the most important ways for an employee to feel valued by their company is to receive a salary increase. This also helps with retention! Read through for ideas on deciding how much of a salary increase should be awarded to your employees.


Jul 29, 2025

Is This Your Situation: Protecting Against Employee Theft

Business owners lose about $50 million a year to employee theft and fraud, according to the U.S. Chamber of Commerce. Read through for a glimpse at some of the many ways employees could be stealing from you.


Jul 28, 2025

OBBBA: Learning the Deduction Details

The recently passed law has a lot of complex provisions, which have led to a lot of misinformation! Fortunately, the IRS has just published a guide to many of the new rules. Read through to read about them, so you can discuss them with your tax advisor.


Jul 03, 2025

What To Know About Fringe Benefits and Taxes

When you provide workers with additional benefits on top of their regular pay, some may be taxable. As the rules can get complicated, it pays to familiarize yourself with the requirements. Read through for an overview of which benefits are taxable.


Jul 02, 2025

Working 'Off the Clock': What Employers Need To Know

Disputes over unpaid work time often arise from tasks performed outside official hours — for example, answering emails, traveling between jobsites or changing into work clothes. Employers must understand when these activities count as compensable work. Read through to learn how exempt and nonexempt statuses affect wage obligations.




More News & Press can be found in our Archive.