If you do your best business deals over a good meal, you’re in luck. In an effort to boost the struggling restaurant industry, the business meal deduction has been temporarily increased from 50% to 100% with the passage of the Taxpayer Certainty and Disaster Tax Relief Act of 2020. Here is how you can take advantage of this increase.
- The temporary increased deduction applies to business meals purchased between January 1, 2021 and December 31, 2022.
- The food and beverage must be provided by a restaurant, either on or off premises. Yes! That means delivery is included.
- A “restaurant” is considered any place that prepares and sells food or beverages to customers for immediate consumption. This leaves out grocery stores, convenience stores, vending machines, drug stores and liquor stores.
- Employer-operated eating facilities do not qualify, even if operated by a third party.
- Refrain from overdoing it. The disallowance of lavish or extravagant meals still stands.
- Entertainment is still non-deductible, so be sure to have any business meals separated from entertainment expenses.
As with any deduction, keeping records is key. Keep your receipts and include any other information that may be needed, such as the client’s name. Even if the meal was not provided by a restaurant, you still may be able to claim the original 50% deduction. Keeping track of these expenses throughout the year will save you a major headache come next tax year.
Our IOOGO accounting team can help you get your books organized and expenses categorized, and you won’t even have to take us to lunch. Contact us today!
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