The 2018 tax act impacted meals and entertainment deductions for businesses in a number of important ways.
Here are the big changes:
- Entertainment expenses - no longer deductible
- Meals at company parties, picnics and events - 100% deductible, as long as more than 50% of the people in attendance are non-owners
- Food, coffee and drinks for the office - deduction reduced from 100% to 50%
These rules stay the same as in the past:
- Dining expenses when talking business with customers, clients and prospects - remain 50% deductible
- Dining when traveling on business (even by yourself) - remains 50% deductible
QuickBooks Planning Tip
Be sure to tell your CPA or accountant which expenses relate to meals at company parties, picnics and events. He or she should create a new line item for "Meals-Celebratory" in your Chart of Accounts in QuickBooks to track these expenses so that the 100% deduction is not lost at tax time. This planning tip will significantly cut the after-tax cost of holiday business parties.
Please note that this discussion is based on the rules in effect at the time of writing this article. These rules are subject to change by the IRS.
If you have any questions about tax matters, IRS audits, installment agreements, offers in compromise, catching up on back taxes, QuickBooks, or other tax and accounting issues, feel free to contact us at 678-235-5460.
You may also contact us by email at gary.massey@masseyandcompanyCPA.com, or on our website.
Our offices are in the Buckhead neighborhood of Atlanta and we welcome face to face visits.
Gary Massey, CPA
3550 Lenox Road NE, Suite 2100, Atlanta, GA 30326