WHEN IS THAT MEAL TAX DEDUCTIBLE?
(updated 01.05.19)
Regulations for 2018 have changed significantly due to the massive US tax reform which became law late in 2017
The legislation is known as TCJA (Tax Cuts & Jobs Act)
The short answer for individual taxpayers is generally that your meal expenses are NOT deductible at all.
In the past, if you had unreimbursed business meal expenses which you incurred as an employee, you could deduct them as miscellaneous itemized deductions on your 1040 to the extent they were more than 2% of your adjusted gross income. For tax year 2018 that is no longer allowed.
SUPER IMPORTANT WARNING
This information pertains only to your Federal tax return. Not every State has adopted all of these changes, so some deductions not allowed on your US 1040 could be allowed on your State return.
For example, some States still allow some of the miscellaneous itemized deductions.
Remember, too, that the tax laws can change at any time and might even become effective retroactively. For those reasons, you should continue to keep detailed records of all possible deductible expenses (e.g. non-reimbursed employee expenses, moving expenses, and State and local taxes including sales tax).
As always, you should check with your professional tax preparer about your specific situation.
The short answer for business taxpayers is still “it depends.”
The most recent guidance (at time of writing this) includes the following statements from the IRS:
“The 2017 TCJA eliminated the deduction for any expenses related to activities generally considered entertainment, amusement or recreation.
Taxpayers may continue to deduct 50 percent of the cost of business meals if the taxpayer (or an employee of the taxpayer) is present and the food or beverages are not considered lavish or extravagant. The meals may be provided to a current or potential business customer, client, consultant or similar business contact.
Food and beverages that are provided during entertainment events will not be considered entertainment if purchased separately from the event.
Prior to 2018, a business could deduct up to 50 percent of entertainment expenses directly related to the active conduct of a trade or business or, if incurred immediately before or after a bona fide business discussion, associated with the active conduct of a trade or business.”
This is quite a complicated area. Since the IRS considers the facts and circumstances of each individual situation, it’s important for you to get help from a professional who knows your particular story.