11 Oct Business meal deductions likely here to stay after new IRS guidelines
Are you wondering if you’ll still be able to deduct business meals from your tax returns? The IRS is expected to release guidance regarding business meal deductions. Continue reading to learn more.
Employers wondering whether they can still deduct business meals from their tax returns may soon be getting an answer from the Internal Revenue Service.
The agency is expected to release guidance saying that business meals will continue to be 50% deductible, according to an article in the Wall Street Journal.
The confusion over the deductibility of business meals stems from the IRS’s decision to end deductions for client entertainment, a move that was part of the government’s tax overhaul. Previously, the entertainment-related deduction was 50% of qualified expenses.
The elimination of deductions for client entertainment left many tax professionals wondering whether client meals might be considered entertainment and therefore no longer qualify for deductions.
The anticipated IRS guidance — which comes at the urging of the American Institute of Certified Public Accountants and other groups — is expected to preserve the 50% deduction for the cost of meals with clients and elaborate on how the 50% meal write-off meshes with entertainment expenses, the Wall Street Journal said.
If a business owner or employee, for example, takes a client to a ballgame, the cost of the tickets is not deductible because the expense is for entertainment. Hots dogs and drinks purchased at the event, however, could still be 50% deductible, the IRS is expected to say, according to the Wall Street Journal.
The IRS, which did not respond to a request for comment, is not likely to change the normal requirements corporate executives must meet to take deductions for client meals.
They must discuss business with the client before, during and after the meal, and the meal must not be “lavish or extravagant,” the Wall Street Journal said.
SOURCE: Correia, M. (28 September 2018) “Business meal deductions likely here to stay after new IRS guidelines” (Web Blog Post). Retrieved from https://www.benefitnews.com/news/business-meal-deductions-likely-here-to-stay-after-new-irs-guidelines?brief=00000152-14a5-d1cc-a5fa-7cff48fe0001