Here’s What Businesses Need To Know About The Enhanced Business Meal Deduction
The IRS encourages businesses to begin planning now to take advantage of tax benefits available to them when they file their 2022 federal income tax return. This includes the enhanced business meal deduction.
To qualify for the enhanced deduction:
- The business owner or an employee of the business must be present when food or beverages are provided.
- Meals must be from restaurants, which includes businesses that prepare and sell food or beverages to retail customers for immediate on-premises or off-premises consumption.
- Payment or billing for the food and beverages occurs after December 31, 2020, and before January 1, 2023.
- The expense cannot be lavish or extravagant.
Grocery stores, convenience stores and other businesses that mostly sell pre-packaged goods not for immediate consumption, do not qualify as restaurants.
Employers may not treat certain employer-operated eating facilities as restaurants, even if they operate under contract by a third party.
Here’s what business owners need to know about certain costs:
- The cost of the meal can include taxes and tips.
- The cost of transportation to and from the meal isn’t part of the cost of a business meal.
Business owners may be able to deduct the costs of meals and beverages provided during an entertainment event if either of these apply:
- The purchase of the food and beverages occurs separately from the entertainment
- The cost of the food and beverages is separate from the cost of the entertainment on one or more bills, invoices, or receipts.
Businesses should review the special record keeping rules that apply to business meals.
IRS Tax Tip: 2022-91
Our team at MNMW is working constantly to bring you the most recent news and updates related to the COVID-19 crisis that could impact you and your loved ones.
For more information, you can visit our MNMW Coronavirus (Covid-19) Resource page with the button below or call in at (239) 433-5554.
June 3 – Sept. 2 our offices will be open 8am-5pm Monday-Thursday. Closed on Fridays.