Fully Deductible Business Meals in 2023 and 2024

Understand the rules for deducting business meals on your tax return.

Good news for business owners in Greensboro, NC, Raleigh, NC, and the surrounding areas: The IRS has extended the full deductibility of business meals through 2024. This means that you can fully deduct the cost of business-related meals as long as certain requirements are met. Here’s what you need to know about fully deductible business meals in 2023 and 2024:

What Qualifies as a Fully Deductible Business Meal?

To qualify for full deductibility, business meals must meet the following criteria:

1. The Meal Must Be Business-Related: The meal must be directly related to the active conduct of your trade or business. This includes meals with clients, customers, vendors, and employees.
2. You Must Be Present: You, or an employee of your business, must be present at the meal. If you’re dining with a client or customer, you must be present to discuss business-related matters.
3. Substantiation Requirement: You must be able to substantiate the business purpose of the meal, including the date, time, location, and business relationship of the individuals involved. This can be done through receipts, invoices, or other written records.

What Expenses are Fully Deductible?

The following expenses are fully deductible as business meals:

1. Cost of Food and Beverages: This includes the cost of food and beverages purchased during the meal, including tax and tip.
2. Entertainment Expenses: In addition to the cost of food and beverages, you can also deduct the cost of entertainment provided during the meal, such as tickets to a sporting event or concert.

What Expenses are Not Fully Deductible?

While the cost of business meals is fully deductible, there are some expenses that are not fully deductible:

1. Extravagant or Lavish Meals: The cost of extravagant or lavish meals is subject to a 50% limitation. This includes meals at deluxe restaurants or meals that are extravagant under the circumstances.
2. Entertainment Expenses Without a Substantial Business Purpose: Entertainment expenses that do not have a substantial business purpose are not deductible. This includes entertainment expenses that are primarily personal in nature.

Keep Detailed Records:

To ensure that you’re able to fully deduct your business meals, it’s essential to keep detailed records of all business-related meals. This includes receipts, invoices, and records of the business purpose of the meal and the individuals in attendance.

Consult with a Tax Professional:

Navigating the rules surrounding business meal deductions can be complex, so it’s a good idea to consult with a tax professional who can help you ensure that you’re in compliance with IRS regulations. If you need assistance with your taxes in Greensboro, NC, Raleigh, NC, or the surrounding areas, don’t hesitate to contact NC CPA PLLC. We’re here to help you navigate the complexities of the tax code and ensure that you’re maximizing your tax savings.