Meals and Entertainment Deduction

Businesses are allowed to deduct meals and entertainment costs from their gross income. However, not every expense that goes into business meals and entertainment are deductible. Only certain costs and a portion of the expenses are deductible in 2024 for the 2023 taxes.

After the Tax Cuts and Jobs Act of 2017, the entertainment expenses are no longer deductible. The meal expenses deduction for businesses have also changed. They are now limited or reduced. While some of the meal expenses can be deducted in full, some give a 50 percent of the expense in deductions.

Here are the expenses that qualify for the meals deduction for businesses.

50 percent deductible mexal expenses

  • Drinks, coffee, water, and snacks provided at the office
  • Meals included in charitable sports packages
  • Meals provided for the service of the employer
  • Meals in office during meetings
  • Meals during business travel, seminar, or conference
  • Meals for the client (must have a business purpose)

For the 2023 tax year which you’ll file a return in 2024, the above deductions will no longer have a 50 percent limit. Businesses will be able to deduct all the costs of the above expenses, the same as the below meal and entertainment expenses.

100 percent deductible meal expenses

  • Meals sold to a customer or client
  • Food or meals offered to the public for free (doesn’t need to have a promotional purpose)
  • Business holiday party such as picnic or brunch
  • Meals provided at a team-building event
  • Meals included as a taxable compensation to contractors or employees

How to deduct business meal expenses?

To claim business meal expenses, fill out 2024 Schedule C, Profit or Loss From Business. Enter the meal expenses qualified for the deduction on Line 24b. You can also claim plenty of other deductions using Schedule C as it reports the losses which are deductible from gross income.

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