Tax Savings with COVID: Business Meals Are 100% Deductible in 2021 and 2022
In the last month of 2020, Congress passed a bill called the Consolidated Appropriations Act that included several new relief packages for the COVID-19 pandemic. As of December 31st 2020, all business meals from restaurants are 100% deductible through December 31st, 2022, as opposed to normally 50% deductible.
As your personal and business CPA, we wish to share the latest information with you about the new bill and how you can take full advantage of the provision.
What Exactly Does the Bill Include Under “Meals?”
The new provision includes meals from restaurants, as a means to support the struggling restaurant industry and encourage citizens to support their local businesses. The bill does not include food items purchased from a grocery store.
The bill specifies “food or beverages provided by a restaurant” but it is still unclear on whether it applies only to in-restaurant meals or takeout and catered meals as well.
In 2021 and 2022, the following are 100% deductible:
- Meals provided for the employer’s convenience, such as for employee overtime
- Meals provided to treat a client or vendor
- Meals provided for employees during meetings, training or working hours
- Meals during business travel
- Meals purchased at a conference or seminar
- Meals sold to a client or customer
- Food offered to the public free-of-charge
- Office holiday parties and gatherings
- Meals provided during team-building events
How Do I Ensure All My Restaurant Meals are 100% Tax Deductible?
As a business professional, it is in your best interest to make sure that you are separating business meals from restaurants and entertainment in your accounts. Since entertainment expenses are still non-deductible, you want to separate these to make it easier to identify what expenses are and which are not deductible between these commonly combined expenses. Travel should be separate from entertainment, including meals purchased while traveling. Additionally, create a separate account for employee meals, which might include the holiday party, summer picnic, team building event, staff mentoring and training, etc. All of these meals are now 100% deductible.
If the thought of putting in the extra work to separate your restaurant meals and entertainment purchases sounds overwhelming on top of your already busy workload, leave it to your business CPA. We’ve got the expertise and comprehensive cloud-based software to ensure that all expenses are recorded and categorized into their correct, updated areas.
Contact Paul Anderson CPA today to receive personalized individual and business accounting, bookkeeping, tax preparation, and financial management services to ensure you receive all of the financial benefits of this time, while staying up-to-date, organized, and sane!