Both small businesses and the restaurant industry took a serious plunge during the COVID-19 pandemic. But there seems to be a silver lining ahead. The government is taking steps to revive the economy, including making tax-payer friendly adjustments to business deductions.
In 2021 and 2022, business meals will be 100% tax deductible. Read on for some tips on this change on how to take advantage when you head out to eat.
How Is This Different From Previous Years?
Before this new change, business meals were only 50% deductible. Now, in an effort to stimulate the restaurant business, meals conducted over business will be 100% deductible.
What Constitutes A Business Meal?
Business meals that qualify for the deduction are meals eaten with a “business associate.” This can be anyone from a coworker to a customer to a supplier. You do have to be present with your client at the meal in order to write it off. For instance, you can’t simply pay for your client to go out to eat. A business meal must include the taxpayer.
Since the major goal behind this change is to help the struggling food service industry, meals must be eaten at a restaurant. The term “restaurant” is defined as a business that prepares and sells food or beverages for immediate consumption. Grocery stores or convenience stores don’t qualify as restaurants.
How To Take Advantage Of The Deduction:
Before you rally up your coworkers and head to the nearest restaurant, it’s important you know how to claim your deductions. First, you must save your receipts. You should also be writing down who you attended the meal with, and the business purpose for the meal.
Here at The Royce CPA Firm, we understand taxes and deductions can get confusing. We are here to help you organize your expenses and get the most of your write-offs. Contact our CPA firm today at (520) 321-4626.