Maximizing Deductions – Meal Expense – LNK Tax Group
50 Percent Deductions:
• Lunch with customer, client or employee associated with a business
discussion
Taxes and tips relating to a meal or entertainment activity
• Room rental for a dinner or cocktail party (assuming the event met the
business relation test)
100 Percent Deductions:
• Transportation costs to and from a business meal or entertainment activity,
may be 100 percent deductible or 50 percent depending on the facts.
• Meals provided on the employer’s premises for the employer’s convenience,
if more than 50 percent of the employees are furnished meals for the
employer’s convenience
• Promotional activities that are made available to the general public
• Employer-provided social/recreational expenses primarily for the benefit of
employees who are not highly compensated, such as a summer picnic or
holiday party
• Business gifts up to $25 to any one individual per tax year
Nondeductible Items:
• Lunch with customer, client or employee without a business purpose/
discussion
• Ticket price for sporting event that you do not attend
• Club dues; for example, country clubs, golf and athletic clubs
• Lavish or extravagant entertainment expenses (basically unreasonable
expenses)
• Under TCJA, entertainment deductions are eliminated. Based on IRS
guidance issued Oct 3, 2018, meals will continue to be deductible.
Tax Savings Ranges:
50-100% deduction times your income tax rate.
Our Thoughts:
With the changes Donald Trump made to the tax code, meals (and entertainment) have become even more difficult to understand. Make sure to call LNK Tax Group for a free 20 minute consultation. Don’t attempt to do it yourself. We are here to help!
Disclaimer:
To ensure compliance with requirements imposed by the IRS, we inform you that any US federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and it cannot be used for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein. Always seek advice based on your particular circumstances from an independent advisor.