Business Meals Now 100% Deductible

NEW ORLEANS – The newest federal COVID-19 relief bill changes the rules for business meal deductions in tax years 2021 and 2022. In an effort to boost the restaurant industry, the IRS will allow businesses to fully deduct meals that would normally be only 50% deductible.

“Businesses are built on relationships, and as vaccinations become more widespread, allowing for a return to some form of normalcy regarding meetings and face-to-face interactions, those businesses will need to reintroduce themselves to customers and colleagues,” said Michael DiSimone, Link Restaurant Group CEO. “The meal deduction gives businesses an incentive to do this while sharing a meal; however, it isn’t just a benefit to businesses, but a way to jump-start and move our economy forward after a challenging period for the hospitality industry.”

Accounting firm GunnChamberlain provided these details:

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The following expenses are not deductible:

  • Sporting event tickets
  • Transportation to/from a restaurant for client business meals
  • Club memberships and club-related expenses
  • Meals during entertainment that are not listed separately on the invoice

The following types of expenses are 50% deductible in 2020:

  • Meals provided for the convenience of the employer (such as meals for occasional employee overtime) 100% deductible in 2021 and 2022 if the meals are provided by a restaurant
  • Water, coffee, and snacks at the office no change in 2021/22
  • Meals included in charitable sports packages 100% deductible in 2021/22

The following deductions were unchanged and continue to be allowable:

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  • Meals in office during meetings of employees, stockholders, agents, or directors (50% deductible) 100% deductible in 2021 and 2022 if the meals are provided by a restaurant
  • Meals during business travel (50% deductible) 100% deductible in 2021/22
  • Meals at a seminar or conference (50% deductible) 100% deductible in 2021/22
  • Meals included as taxable compensation to an employee or independent contractor (100% deductible)
  • Meals sold to a client or customer (100% deductible)
  • Food offered to the public for free (100% deductible)
  • Office holiday party or picnic (100% deductible)
  • Client business meals (50% deductible if the taxpayer is present and not lavish or extravagant) 100% deductible in 2021/22
  • Team-building events (100% deductible)

 

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