As a business owner if you entertain your customers, clients, or employees the cost of your meals may be deductible as a business expense, so long as the meal was directly related to or associated with your business. Generally, the deduction for business meals is limited to the 50%, however, there are certain circumstances where your meals could be 100% deductible.
Faruk is a web designer and developer who also monitors and regularly maintains his client's websites. He has two employees who rotate working double shifts to ensure Faruk's clients can still be serviced outside of normal business hours. Because his employee working nights has limited time to leave the office during his shift, Faruk orders food to be delivered to this employee every evening. When Faruk is ready to file his taxes, he would be able to deduct 100% of these business meals on line 24b of his Schedule C since the night shift meals purchased were for Faruk's benefit.
Ellen is an author who is about to finish writing her 6th novel, which she wants to ensure is placed in all major bookstores across the country. She arranged a meeting with her publisher at a steakhouse to discuss how they can best bring her new novel to market. During this meeting, Ellen spent $280 on food and drinks. When Ellen prepares her Schedule C, she could deduct $140 (50% of the $280) for this business meal.
Wong is an Uber driver who always goes home for lunch when ride requests slow down. However, last week she responded to a ride request that took her all the way from San Diego to Los Angeles. After dropping off her passenger, before turning around to make the long trip home Wong purchased lunch from drive through restaurant. Since Wong was buying her lunch for purposes directly related to business, she could deduct 50% of this meal on her Schedule C.
Tom is a landlord who is based in Denver, Colorado but owns and manages several rental properties in Southern Colorado. Often times, Tom will travel to Southern Colorado for three day periods to tend to his rental properties. Typically, while Tom is away he spends $300 on food. When Tom prepares his taxes $150 (50%) of his travel meal expenses will be deductible on Line 6 of his Schedule E.
Jackie is a serial entrepreneur with her own software business who recently traveled to Miami, Florida to attend tech conference hosted at a new nightclub. While at the club Jackie met an old friend who was interested in her latest startup idea. While they were talking, Jackie ended up purchasing $170 of cocktails and bar snacks. Even though she was discussing her latest business idea with her friend,she may not be able to deduct her cocktails as a business meal since the IRS could consider the environment to have substantial distractions that would prevent her from actively conducting business, however, she would be able to deduct her ticket to the event as a business expense.
