If you are planning any business meals, they may be fully tax deductible for 2021 and 2022.
The Consolidated Appropriations Act, which was signed into law in late 2020 provided several new relief packages for businesses and individuals. One of the updates included a change to the deductibility of business meals. Meals that could only be deducted by 50 percent after the passing of the 2017 Tax Cuts and Jobs Act are now temporarily fully deductible.
The change is intended to encourage businesses to buy meals to help the restaurant industry, still reeling from the impacts of COVID-19. The 100 percent deduction applies to meals or meal expenses incurred after December 21, 2020 through December 31, 2022.
If you take a client to a business lunch, provide food from a restaurant for in-office meetings, host an office holiday party, picnic, or team-building event, you can deduct 100 percent of the meal expenses. You can also deduct 100 percent for meals during business travel, seminars or conferences.
Sporting event tickets, transportation to and from restaurants, club memberships and expenses, and meals as part of entertainment that are not listed separately are not deductible. Other entertainment expenses are also not included.
To maximize this deduction, make sure to keep detailed records with separate categories for business meals, travel, employee social meals, and entertainment.
The temporary deduction will not affect your 2020 tax return, but will remain in effect for 2021 and 2022.
With constantly changing guidelines, you may want to seek the advice of a tax professional who can walk you through the steps needed to make the most of your unique tax situation. The tax team at Rodefer Moss is well-versed in tax requirements and can help you maximize your tax benefits while remaining compliant with current law. Contact us today to speak with a tax advisor.
