Meals and Entertainment

Hi all, quick update on the subject of meals and entertainment. I get a lot of questions on this topic and I’d like to clear the air by outlining the rules in bullet points.

• Entertainment is NOT deductible.

• If meals and entertainment are mixed, like in a sporting events, you can only deduct the entertainment if it’s separately stated.

• Generally, meals are 50% deductible and the taxpayer/employee must be present.

• Employee meals on business travel is 50% deductible and there must be receipts.

• Holiday parties are fully deductible because it’s for the benefit of the employees.

• Food made available to the public, like during an open house, is fully deductible.

• Free snacks in the employee breakroom – only 50% deductible.

• A free, on premise, cafeteria for employees (which is excluded from their income) is 50% deductible as long as it’s “for the convenience of the employer”.

• If you’re using the per diem rate to deduct meals – you must still keep receipts and you can take 100% of the per diem rate.

• There are other nuances such as whether the employer has an accountable or a non-accountable plan.

If you have other questions – please feel free to reach out to me.