In December of 2020, lawmakers decided to help the COVID-stricken restaurant industry while taking a bite out of your business tax bill by enacting a temporary 100% business meal deduction for 2021 and 2022.
Qualifying meals must be purchased from a restaurant. The IRS has defined a restaurant as “a business that prepares and sells food or beverages to retail customers for immediate consumption, regardless of whether the food or beverages are consumed on the business’s premises.”
Grocery stores, specialty food stores, liquor stores, pharmacies, convenience stores, newsstands, and vending machines do not meet the criteria. Anyway, it’s not in your best interest to entertain a client at a 7-Eleven. But if you did so, the 50% limitation would apply to business meals from these sources.
Meal expenses qualify for a deduction under the following guidelines: you must be present at the business meal, and you must provide the business meal to a person with whom you could reasonably expect to deal with in your business, such as a customer, client, supplier, employee, agent, partner, or professional advisor. If you prefer entertaining at the office, you can use Uber Eats or Grubhub for delivery and still maintain the 100% deduction status.
Have questions before you dig in? Give me a call at 201.787.6542 or email me.