Temporary 100% Deduction for Business Meals

Two women sitting at a table eating lunch

Through all of 2021 and 2022 certain business meals are 100% deductible.  This is part of the Consolidated Appropriations Act of 2021, which was passed and enacted in December of 2020 with the aim of revitalizing businesses and industries struggling after the mandated Covid-19 shut-downs. The meal deduction is designed to help out the struggling restaurants while stimulating the economy.  

Meal Deduction Rules

There are some specific rules surrounding the meal deduction, please scroll over the images to see the varying regulations.

Tracking the Expenses

In the case of an IRS audit, you will need to be able to substantiate all these expenses.  Hopefully, you have already been doing this, but since your meal expenses may be greater now, it is even more important.  Document your expenses and keep a file with your receipts with business associates, the reason for meeting, and the subject of discussion organized and separate from non-deductible expenses. Your CPA does not need to see these receipts, but YOU need to keep them to backup your expenses.  You can provide your CPA with the total amount for the year.

Exceptions to the Meal Deduction Rule

Though the rule is “the purpose for the meals must be in order to conduct business with another person” there are a few exceptions.

So, now you have a better reason to take a client or employee out to lunch!

Marian Pekelder, CPA | Strategic Advisor

With over 25 years of experience, Marian is a tax compliance and planning guru. Business owners can rely on her for answering questions with practical, well-researched advice. 

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