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Schedule C: Meals

Under the new tax reform law passed the end of last year, the rules for deducting business meals changed slightly. Business meals are tax still deductible at the current 50% limit, but the deductibility of business meals also expanded to meals provided by employers through an in-house location like a cafeteria.

Tax deductible business meals are ordinary and necessary meals you buy while traveling on work trips outside your normal commute or meals you pay for while meeting clients or business associates. The trip has to have a clear business purpose and the cost of the meal has to be reasonable (not extravagant).

Heads up: Although you don't need receipts for meals under $75, it's important to keep good records and that you substantiate business purpose, date, amount and who was in attendance for each meal while traveling.

Examples of tax deductible meals include:

  • Meals while traveling for training, conventions, trade shows, or conferences

  • Meals while traveling to meet prospects, clients, or business associates

  • Meals while traveling to check up on a out-of-town property or location

Right now, the rules for meals with clients and business partners requires the taxpayer to be present and the meeting be ordinary and necessary, but the law gets rid of  “business meals with clients and business partners have to be directly related to” or “associated with” your business. We expect the IRS to come out with guidelines before filing time. Check back to get the latest updates on how tax reform impacts the deduction of business meals.

Examples of meals that might be deductible:

  • Meals with potential clients, current clients, or business partners where you discuss business

  • Meals for a client or business partner’s spouse (and your own, if other spouses are present)

Don’t worry about keeping track of your business meals.  QuickBooks Self-Employed can help you track your deductible business meals with receipt capture and separate your business and personal expenses year-round.

Looking for information on entertainment expenses? Read more about changes to those deductions in 2018 here.

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