Deducting Meals and Entertainment Expenses from Your Tax Return

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.

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