Our New York City accountant office provides updates on the new tax rules under the Tax Cuts and Jobs Act (TCJA) such as changes in regard to meal deductions. At the beginning of the year, it looked like the IRS was not going to allow the deduction of 50 percent of food and beverage expenses associated with business operations. However, this rule was recently clarified to confirm that you can continue to deduct meal expenses as long as they meet the specific guidelines for such deductions.
Keep in mind, however, that expenses for entertainment, amusement, or recreation in the course of business are not deductible. For example, if you want to treat your client to dinner plus tickets to a show, only 50 percent of the meal expenses would be deductible.
You can deduct client meal expenses, but they have to be legitimate. As a refresher, here are the requirements for being able to take advantage of the meal expense deduction on your freelance business tax return:
- The meal expense must be reasonable and a necessary as part of your business operations.
- Either you, or an employee of your business, must be present when the meal is eaten.
- The food and beverages you are claiming must be provided to a current or potential business customer, client, consultant, or similar business contact.
- If food and beverages are provided during or at an entertainment activity (i.e. brats and beer at a baseball game) they must be purchased separately from the entertainment on one or more bills, invoices, or receipts.
Remember that you must have receipts to support your meal expense deductions (not just a credit card statement) so be sure to keep those filed with your other tax information. If you need assistance with 2018 tax planning and tax filing please contact our New York CPA office.