If you are planning business meals in 2021 and 2022, keep detailed records of your expenses.
A temporary exception by the Treasury Department and Internal Revenue Service increased the usual 50% deduction to 100% for business meals purchased from restaurants January 1, 2021 through December 31, 2022.
The increase is intended to help the struggling restaurant industry, still reeling from the impacts of the pandemic. To claim the deduction, the business owner or an employee of the business must be present when the food or beverages are provided.
Deductible expenses include food or beverages purchased for immediate consumption either on or off site. This applies to business lunches, in-office meetings, holiday parties or picnics, team building events, and meal expenses during business travel, seminars, or conferences.
The deduction can not be applied to grocery stores and convenience stores that primarily sell pre-packaged goods. Sporting event tickets, transportation to and from restaurants, club memberships and expenses, and meals as part of entertainment that are not listed separately are also not included. Additionally, certain employer-operated eating facilities and restaurants are not deductible.
To maximize this deduction, keep records with separate categories for business meals, travel, employee social meals, and entertainment.
With constantly changing guidelines, you may want to seek the advice of a tax professional who can walk you through the steps needed to make the most of your unique tax situation. The tax team at BSB is well-versed in tax requirements and can help you maximize your tax benefits while remaining compliant with current law. Contact us today to speak with a tax advisor.