BizBoost News
Volume 10, Issue 24
For distribution 5/17/21; publication 5/20/21

Business Meal Deduction Changes from the Consolidated Appropriations Act

The Consolidated Appropriations Act that was signed into law December 27, 2020 includes a temporary provision allowing a 100 percent write-off for business meals from January 1, 2021 through December 31, 2022.  The food and beverages must be provided by a restaurant, although they do not need to be consumed on a restaurant’s premises. The deduction also includes any delivery fees, tips and sales tax.  This is an increase from the 50 percent deduction that applied for 2020 and earlier years.

It is important to note that other than lifting the 50 percent limitation on deductions for meal expenses, this legislation doesn’t amend any of the other rules related to business meal deductions.  Therefore, to be deductible:

• Business meals should still have a business purpose and involve dining with current or prospective customers, clients, suppliers, employees, partners, or professional advisors.
• The food and beverages should not be lavish or extravagant under the circumstances.
• You or one of your employees must be present when the food or beverages are served.

Although meals are 100 percent deductible, entertainment expenses are still disallowed.  So, while taking a client out for a dinner is tax deductible, the cost of the baseball game after dinner is not.  Furthermore, if an entertainment event includes food and beverages, they must either be purchased separately from the entertainment or broken out on a separate invoice or receipt.  Be sure to update your chart of accounts to make an account for meals and another for entertainment.

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Our latest blog: “Business Meal Deduction Changes from the Consolidated Appropriations Act” is available now! Subscribe here: [link]

The Consolidated Appropriations Act that was signed into law December 27, 2020 includes a temporary provision allowing a 100% write-off for business meals from January 1, 2021 through December 31, 2022. Learn more in our latest blog article: [link]  

Business Tip: Although meals are 100% deductible under the CAA, entertainment expenses are still disallowed.  So, while taking a client out for dinner is tax deductible, the cost of the baseball game after dinner is not. Learn more here: [link]

DID YOU KNOW… Business meals written off, under the CAA, must be provided by a restaurant, although they do not need to be consumed on a restaurant’s premises.  Learn more in our latest blog article: [link]

The Consolidated Appropriations Act includes a temporary provision allowing for 100% deduction of business meals. This is an increase from the 50% deduction that applied for 2020 and earlier years. Learn all about them in our latest blog article: [link]

To be deductible under the Consolidated Appropriations Act, business meals should not be lavish or extravagant under the circumstances. Find out more here: [link]

DID YOU KNOW… To deduct a business meal, you or one of your employees must be present when the food or beverages are served. Learn more here: [link]

It is important to note that other than lifting the 50% limitation on deductions for meal expenses, the new Consolidated Appropriations Act doesn’t amend any of the other rules related to business meal deductions.  Sign up for our newsletter to learn more: [link]