Winning Back-Office Strategies to Boost Your Business Agility
VIEWpoint Issue 1 | 2023
2023 Compliance Trends: Staying Ahead in an Evolving Regulatory E...
The Taxpayer Certainty and Disaster Tax Relief Act of 2020 temporarily increased the tax deduction from 50% to 100% for a business’s restaurant food and beverage expenses for 2021 and 2022. The increase was intended to encourage patrons to support the struggling restaurant industry in the wake of the COVID-19 pandemic. It’s important to note that business owners can still take advantage of this deduction until the end of this year. Doeren Mayhew’s business tax accountants provide an overview of this deduction below.
To qualify for the 100% deduction, consider the following:
If the meal does not follow the above criteria, all other expenses are still subject to the 50% deduction limitation, unless another exception applies.
According to the Internal Revenue Service (IRS), a restaurant is defined as a business that prepares and sells food or beverages to retail customers for immediate consumption. Consumption does not have to occur on-premise to be 100% deductible.
The agency clarified that selling pre-packaged foods or beverages intended for later consumption, such as grocery stores, convenience stores and vending machines is still subject to the 50% deduction limit. Furthermore, it indicated eating facilities on the employer’s premises that are operated by a third party or provide meals excluded from employees’ gross income are considered a de minimis fringe.
This 100% deduction creates increased opportunities for business leaders to meet with prospects and bolster business relationships. It is also an opportunity to host employee get-togethers to thank them for their hard work. Be sure to keep your receipts for any business-related meals, including the date of the outing and who attended. If you need assistance determining business meal deductibility, contact a Doeren Mayhew business tax accountant today.
This publication is distributed for informational purposes only, with the understanding that Doeren Mayhew is not rendering legal, accounting, or other professional opinions on specific facts for matters, and, accordingly, assumes no liability whatsoever in connection with its use. Should the reader have any questions regarding any of the news articles, it is recommended that a Doeren Mayhew representative be contacted.
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