How to Deduct 100% of Your Meals Expense


This post is in: Business
5 Comments

10-21-2010-2

How much of your latte this morning was deductible? Read on to learn how it can be a perfectly legal 100% deduction.
First, let’s start off with what it takes to turn a meals expense into a tax deduction.

You need to have a business. And that means a real business, in the eyes of the IRS, in which you have a profit motive and are running it like a business.

Then, you need to be able to prove that the meal expense is related to your business. There is a business purpose for the meal that is ‘ordinary’ and ‘necessary’ to the production of income.

If you meet these two tests (business and business purpose) and you keep the necessary records, then you’ve got a 50% deduction.

But there’s more. You could also get a 100% deduction if you have the meal at your place of employment “for the benefit of the employer.” If you have a business, you’re the employer.

That means lunch meetings at the office where you bring in take-out food, you’ve got a 100% deduction. Eat a bagel and cream cheese at your desk while you’re answering email and you’ve got a 100% deduction.

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5 Comments

  1. Diane Kennedy says:

    Dennis,
    I hesitate to say anything is “always” or “never” because there are so often exceptions. But in answer to your question, I can’t think of a case where the overnight convention travel meals would be 100% deductible.

    – Diane

  2. Dennis says:

    Are domestic overnite travel meals for a convention ever 100% deductible?

  3. V Kaufmann says:

    http://www.projectposner.org/case/1985/758F2d211

    The ruling here seems to show that there is a limit to the 100% deduction.

  4. Diane Kennedy says:

    Thanks Jacqueline. I would call this a “meeting expense” or “working condition fringe”.

  5. This is a fantastic piece of practical information! How should we account for working lunch provisions in the books – as part of ‘supplies’ or a separate line item all together?

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