Did You Know: Meals Are Now 100% Deductible?
Happy New Years! Whether 2020 was good to you or was less than hoped and expected, the year has passed, and we are on to 2021. May this New Year bring you an abundance of joy, happiness, and prosperity.
Changes to the tax code are inevitable in December. For example, in 2018, Trump signed into law the biggest tax changes in 30 years. Part of those changes were to meals. It was very restrictive and might I say hugely unpopular.
President Trump signed in a stimulus package on December 27, 2020. It’s over 5000 pages long and the accounting community is scouring its pages to see what’s important to our clients. The pendulum has swung the opposite direction. For 2021 and 2022, meals will now be 100 percent deductible.
This is great news as the law from 2018 was still causing some confusion on what was 100% and was 50% deductible. It’s also fabulous news for our restaurants. The intent of the law is to help out our fellow restaurant business owners.
The restaurant industry has been hit hard by the pandemic. I’ve seen some media posts that say it's not enough and that may be so. What I do know is that small business owners do what they can to help other small business owners. So, here’s an opportunity to do just that and have it fully deductible on the business.
Please note the same rules apply as before. You must document who you were with, what was discussed and what the possible outcome of business will be. If it’s for your team, that is great – just be sure to have a team meeting and document what’s being discussed.
Save those receipts. The IRS wants the detailed receipt, not just the total receipt.
We may be sheltering in place, and all spread out. We can get creative. Let’s help Uber Eats, Door Dash and other delivery services survive by sending lunch to our team. I don’t mind my team enjoying food during our team meeting. I’m not so crazy about them eating food in front of a client zoom call – but when it’s just family…
Go have fun with this. We all need a bit of cheer and joy.