During the COVID-19 pandemic, restaurants were either closed completely or forced to offer limited services. In helping the restaurant industry get back on its feet, the IRS, by way of Notice 2021-25/Section 274, is allowing your business to also benefit in the following ways for tax years 2021 and 2022.
The following meals are 100% tax deductible:
- Restaurant meals with clients and prospects
- Employee meals for required business meetings purchased from a restaurant
- Meal served at a Chamber of Commerce meeting held in a hotel meeting room
- Meal consumed in any restaurant while in overnight business travel status
- Food purchased for year-end parties for employees and spouses
- Golf outings for employees and spouses
- Meals made on premises for the general public at marketing presentations
- Meals purchased at team-building recreational event for all employees
- Meal with a prospective customer at a country club or other golf facility following your non-deductible round of golf
The following meals are 50% tax deductible:
- Employee meals for convenience of employer, served by an in-house cafeteria
- The cost of all ingredients for meals cooked by you in your hotel room kitchen while traveling away from home overnight
The following meals and entertainment are NOT tax deductible:
- Entertainment such as baseball and football games with clients and prospects
- Year-end parties thrown for your customers
- A round of golf or tickets to a theatrical performance like a ballet, opera, or play
If you have questions on how to determine your tax deductions for meals and entertainment, please call Susan at 630.523.5762. For more great tips on becoming a highly profitable business owner, check out Highpoint Advisory Services.
