Prior to 2018 an employee could provide meals to their employees to keep them on the premise to ensure productivity or because they were unable to leave and deduct 100% of that meal. Now with the Tax Reform and Jobs Act only 50% of these meals will be deductible. These meals include:
- Meals served at required business meetings on your premises, in hotels, or other sites that qualify as your business premises
- Meals served to employees who are required to staff their positions during breakfast, lunch and other dinner times
- Food and meal costs for employees who live on premises for the convenience of the employer
For 2018 all businesses will need a new chart of account called “Meals-50%”. In this category you will code only meals listed above including your travel meals.
Is business entertainment really gone?
Prior to 2018 a business owner could entertain a client such as taking them to a sporting event or theatre. 50% of the face value of the event ticket was deductible. A ticket to a qualified charitable event was 100% deductible. Now with the Tax Reform and Jobs Act NO deduction for entertainment your clients.
However, the office holiday party is still 100% deductible. You just need to ensure you do the following:
Keep the records (date, copy of receipts, location, and business relationship of people entertained). You need to ensure the party is to benefit the employees; not the owners (or family members) of the company.
State the business purpose of the event (i.e. employee loyalty, morale, annual holiday party, specific event)
For 2018 the Meals and Entertainment chart of account will be inactivated. You will need to create a new chart of account called “Entertainment-100%” and only the office related entertainment will be coded here.