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Food and Fun: How the Tax Cuts and Jobs Act Will Impact Your Meal and Entertainment Expenses

Posted by Emily Taibl on Feb 19, 2018 2:18:54 AM

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By Tenly Krakoff

Headed to a Sounders game with a client? Off to a “working lunch” with your team?  Do you provide round-the-clock snacks for your employees during busy seasons? The Tax Cuts and Jobs Act makes some notable, though targeted, changes to one of the common expenses most businesses incur, meals and entertainment. These changes should be kept in mind when you are looking at your meals and entertainment budget for 2018 and beyond.

Previously, the general rule was that taxpayers could deduct 50% of expenses for business related meals and entertainment. Employers were also allowed to deduct 100% on meals provided to employees on the premise for the convenience of the employer.

The new bill modifies some of the existing deductions for amounts paid or incurred after December 31, 2017. In a nutshell, entertainment is no longer tax deductible. Additionally, all meals for any reason except company social or recreational functions are only 50% tax deductible.

Want the specifics? Check out our handy chart that summarizes the changes:

  Old Rule

2017

New Rule

2018 – 2025

 

2026 and beyond

Entertainment - in general

 

 

All expenses – 50% deductible Non deductible Non deductible
Entertainment - charitable events

 

100% deductible for qualified events Non deductible Non deductible
Meals - employee social or recreational functions (e.g. holiday parties) 100% deductible 100% deductible 100% deductible
Meals - business meetings

 

 

50% deductible 50% deductible 50% deductible
Meals - business travel

 

 

50% deductible 50% deductible

 

50% deductible
Meals - provided for the convenience of employer (e.g. on-premise cafeteria) 100% deductible 50% deductible Non deductible

 

For more information and for answers to your specific questions, please contact your Sweeney Conrad tax professional at 425.629.1990.

 

Topics: Tax

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