Meals & Entertainment Tax Deduction - Youngblom Consulting

Meals & Entertainment Tax Deduction

The Meals and Entertainment tax deduction allows small business owners to deduct 50% of the cost of meals and entertainment expenses that are directly related to or associated with the active conduct of their trade or business. This means that business owners can deduct the cost of meals and entertainment that they provide to their employees, customers, or clients, as long as the expenses are for the purpose of conducting or promoting their business.

Some examples of expenses that may qualify for the Meals and Entertainment deduction include:

  • Meals provided to employees while on a business trip
  • Entertainment expenses incurred while entertaining clients, such as tickets to a sporting event or a concert
  • Meals provided at a business meeting or conference

It's important to note that there are some limitations and restrictions on the Meals and Entertainment deduction. For example, expenses incurred while entertaining clients at a night club, or a facility where entertainment is the primary attraction, are not deductible. Additionally, expenses incurred while entertaining individuals who are not associated with the business, such as friends or family members, are also not deductible.

It's also important to keep accurate records of all meals and entertainment expenses, including the date, place, time, amount, and business purpose of the expense, as well as the name and business relationship of the person(s) entertained. These records will be required to prove that the expenses qualify for the deduction.

It's always a good idea to consult with a tax professional or accountant to ensure compliance with all tax laws and regulations and to determine the specific expenses that qualify for the Meals and Entertainment tax deduction.