How to Claim Deductions for Meals and Entertainment Expenses in 2024

Claim Deductions for Meals and Entertainment — BookkeeperLive

Tax time can be confusing, especially when it comes to figuring out what meal and entertainment expenses you can deduct. Let’s make it simple for 2024 by explaining what you can and can’t deduct.

2023 Meals and Entertainment Deduction: A Brief Recap

In 2021 and 2022, thanks to the Consolidated Appropriations Act, there was a sweet perk for businesses: 100% deductibility for meals and entertainment expenses.

Fully Deductible Meals and Entertainment (in 2024? Not quite)

Unfortunately, the party’s over for full deductions in 2024. We revert back to the rules set by the Tax Cuts and Jobs Act. This means:

• Business meals: Only 50% deductible. So, if you treat a client to a $100 lunch to discuss business, you can deduct $50.
• Meals for employee events: Here’s some good news! Meals provided at company-wide parties or as part of employee compensation packages are still 100% deductible. Think holiday parties, team lunches, or meals included in business trips.

So What’s Nondeductible?

Entertainment expenses separate from meals are generally a no-go for deductions in 2024. This includes:

• Client outings: Tickets to sporting events, concerts, or shows for clients are no longer deductible.
• Lavish meals: The meal itself needs to be reasonable and customary for your industry. Avoid extravagant dinners.

Remember

• The key to meal deductions is the business purpose. The meal should be necessary for conducting business, not just a social gathering.
• Keep good records! Receipts and detailed notes about the business purpose of the meal are crucial for claiming deductions.

By understanding these guidelines, you can navigate meal and entertainment deductions for 2024 with confidence. If you have any further questions, consulting a tax professional is always recommended.