Are your business meals still deductible in 2018? Yes, kind of. There have been changes but for the most part some kind of meals deduction still exists.
Let’s go over what has changed.
In the past, we had a 100% meals deduction for meals furnished at the employer’s place of employment and for the benefit of the employer. That has changed effective 1/1/18. They will now only be 50% deductible and then eventually phase out completely.
There is one exception. If you have meal preparation actually done on premise (like a cafeteria), then it’s deductible as long as the employees pay tax on the cost of the food prepared. I can’t imagine what the accounting for that is going to look like. It will be interesting to see if companies continue offering cafeterias for employees with this new accounting nightmare to deal with.
If you go out golfing, go to a game, go to a show or some other form of entertainment, even if it’s with a client, prospect, vendor or for a clearly business-related purpose, it is not deductible.
However, if you go to a show and dinner, the dinner will be 50% deductible if you talk business. The show won’t be deductible.
That’s probably the biggest change. It’s no longer “meals & entertainment” that are deductible in the right circumstances. Only meals will be deductible.
Make sure your bookkeeper is aware of the tax changes. You’ll need to drop the “& entertainment” from your chart of accounts, along with other tax planning changes.