The federal income tax treatment of business-related meal and entertainment expenses has been a moving target. If you’re confused about what rules currently apply, I don’t blame you. This column aims to eliminate confusion. That’s an optimistic goal, but here goes.
What the earlier Tax Cuts and Job Act said For 2018 and beyond, the Tax Cuts and Jobs Act permanently eliminated deductions for most business-related entertainment expenses. Before the TCJA, you could deduct 50% of the cost of most business entertainment. But after the TCJA change, you can no longer deduct any part of the cost of taking clients out for a round of golf, to the ballgame, or for a ride on the Ferris wheel. Rats.
Why you should insist on detailed receipts from entertainment venues For purposes of the general disallowance of deductions for entertainment expenses, the term entertainment does not include food and beverages unless: the food and beverages are provided in conjunction with an entertainment activity and the food and beverages costs are not separately stated.
Key point: The regulations make it clear that you can deduct 50% of the cost of a business-related meal for yourself . You can deduct 100% of the cost if the business-related meal is provided to you by a restaurant in 2021-2022. For example, meal expenses for your spouse are deductible if he or she works in your unincorporated business and accompanies you on a business trip for legitimate business reasons. The temporary 100% deduction allowance applies to legitimate business-travel-related meals provided to your spouse by restaurants in 2021-2022.