Writing Off Business Gatherings For Taxation Purposes:
It's no doubt that meals for business gatherings that include meals can become quite expensive for any company, especially a smaller-to-midsized company. Although sometimes it's important to note that there can be tax write-offs for certain business-related meal expenses. It's important to know which expenses are OK to write off, and which ones are not to keep your business in "good standing" with the IRS.
Can I Write My Meals Off of My Business Taxes?
That's a bit of a complex answer. In some cases, yes meal expenses can be written off of taxes as a business cost. In other cases, you may not write your meals off as business costs. Yet other times, only part or some of the expenses may be written off. Essentially the tax codes are full of limitations that Below are some scenarios when you can write off some when you may write some or all of your meals as tax deductions:
50% Is Deductible: When you are meeting a client for a meal or taking them out to a restaurant for business related purposes you may deduct 50% of the costs of that meal from taxes.
Personal Meals Purchased At Work Are NOT Tax-Deductible: Meals you choose to buy while you are at work downtown or at the local office instead of bringing food from home are not tax-deductible in any way. These are not meals related to business expenses, therefore, they are not eligible for deduction.
Keep Record of Your Meal Expenses: For business-related meal expenses, you will be required to submit a record of the expenses with the claims. Technically there are no expenses that may be claimed off of taxes without records and proof. The IRS will look closely at these records, and it's especially important to have written down the date, time, and location of the meal. You need to save the receipt if the meal was over $75.
Holiday Celebrations are 100%: Along with proper documentation, you can deduct 100% of all holiday party expenses related to meals. The key is that the party/gathering has to be open to all employees of the company, and everyone needs to be included. Then you can feel free to write that off of taxes, just ensure you document it so the IRS doesn't have questions about how the money was spent. The more details and specific details the better.
Tracking the Expenses For Holiday Meals:
As mentioned above, the IRS will want to see the track record of your business expenses related to meals including date, time, and location of the meals as well as receipts (over $75). It's best to keep records throughout the year. It will be much easier that way than to scramble at the end to recall every single time, date, and location of each event and the amounts of the expenses you are deducting. It's also easier to just collect the receipts rather than scrounging around for them at the end of the year when taxes are being submitted.
Paint the Complete Picture For Easy Tax Filing:
The point is that when you are filing taxes, you want to "paint the entire picture" for the IRS. You want proof to back up your expenses, and evidence of the money spent. Leaving little for them to question is likely to make submitting taxes a much less painful process than it would be if questions are left unanswered. If the IRS can "follow the paper trail", and determine where the money went. This is the easiest way to have a hassle-free tax-filing experience with claiming your meal-related business expenses.
If you need assistance painting this complete picture of your business's meal-related expenses feel free to reach out to us here at Foster Financial CPA. We are always here to assist you with all of your tax-filing needs. We can help determine what you are writing off of your taxes and make sure you get the maximum written off of your taxes, and to make sure everything you wrote off as business expenses is within the IRS guidelines.
For information please contact us.