• AnaM

UPDATE: New Rules around Meals Deduction for 2021 and 2022

2020 was a year of changes and we have to say taxes regulation were not the exception.

Under the Taxpayer Certainty and Disaster Tax Relief Act of 2020 businesses are now allowed a 100% deduction for expenses paid or incurred in 2021 or 2022 for business meal food and beverages provided by a restaurant, including any carry-out or delivery meals.

  • The food or beverages must be provided by a restaurant. The use of the word “by” (rather than “in”) a restaurant makes it clear that the new rule isn’t limited to meals eaten on the restaurant’s premises. Takeout and delivered meals provided by a restaurant are also fully deductible.

  • The taxpayer or their employee is present at the furnishing of the food or beverages.

  • The expense is an ordinary and necessary expense paid or incurred during the taxable year in carrying on any trade or business.

  • The expense is not lavish or extravagant under the circumstances.

  • The food and beverages are provided to a current or potential business customer, client, consultant, or similar business contact.

Keep in mind that this applies only to meals, if you attend any entertainment activity, the food and beverage must be documented separately because the entertainment is still not deductible.

It is recommended that you save records of your business meals like; the purpose of the meal, the persons involved, location, and amount.

All other meals that are not provided by a restaurant are limited to a 50% deduction unless it qualifies as a business meal mentioned above.

If you need more information go to The COVID-Related Tax Relief Act of 2020 and Other COVID-Related Tax Provisions in P.L. 116-260

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