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Bringing Back Hospitality to the River Towns and it is 100% Deductible!

“Taxpayer Certainty and Disaster Tax Relief Act of 2020” allows a full deduction for certain business meals expenses. “

Take your current clients to dinner! Meet potential new clients for a drink or coffee.  

Under the “Taxpayer Certainty and Disaster Tax Relief Act of 2020” allows a full deduction for certain business meals expenses.  This is an increase from the 50% deduction limit.  The expenses must be paid or incurred during calendar year 2021 or 2022.  The food and beverages are provided by a restaurant.  This does not provide the full deduction to entertainment.

Under section 274 To be deductible as a business meal is that the food and beverages must not be lavish or extravagant under the circumstances and the taxpayer or an employee of the taxpayer must be present at the furnishing of the food or beverages.

This includes the delivery fees, tips and sales tax may also be deductible as long as the food and beverages are provided by a restaurant.  You must substantiate these expenses. The IRS will disallow any expenses that do not have appropriate backup documentation.

This provision does not change the 50% deduction for “Travel Meals,” office meetings or meals directly related with business meetings with employees, stockholders, agents and directors.  

It may be a good idea create two separate meal accounts in your accounting system to keep track of the 2 different types of meal expenses.

If you have questions about taxes for meals and entertainment we are here to help.

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This is for educational purposes only and is not to constitute for legal, accounting or other professional advice.  If you have specific questions, you should consult with your personal tax advisor.

1099 Accountant LLC, help@1099accountant.com, a virtual accounting and tax firm for the Freelancers, Independent Contractors, solopreneuers and owner only companies.