fbpx

< Back to Thought Leadership

New Meals & Entertainment Rules: What Qualifies And What Does Not?

The Tax Cuts and Jobs Act made many changes to the meals and entertainment deduction. The largest change is that entertainment is no longer deductible. Below is a summary of what will and what will not qualify for deduction:

  • Entertaining Clients:
    • Meals will continue to be 50% deductible as long as they are not considered extravagant or lavish in the circumstances.
    • Entertainment will no longer be deductible even if it is directly related to the taxpayer’s business. This includes any activity generally considered to be entertainment, amusement, or recreation. (sporting event tickets, etc.)
  • Employee Travel Meals:
    •     These expenses will continue to be 50% deductible.
  • Meals Provided for Employer Convenience Located on Employer’s Premise:
    •     Historically these expenses have been 100% deductible, however, they are now limited to a 50% deduction until 2025 when they will become non-deductible.
  • Reimbursed Expenses:
    •     Expenses billed to a client under a reimbursement arrangement are still deductible if the taxpayer accounts the charges to a client
  • Office Holiday Parties:
    •     These expenses will remain 100% deductible as long as they are primarily for the benefit of non-highly compensated employees.
  • Expenses Treated as Taxable Compensation to an Employee:
    •     These will continue to be 100% deductible as compensation expense if added to an employee’s W-2.

As always, when dining with clients, it is important to be mindful that the expenditures are in accordance with bona fide business discussions and active taxpayer business to ensure the meal is deductible to the full 50%.

Please feel free to contact your local Blue & Co. advisor with any questions regarding these changes, as well as any other changes related to the Tax Cuts and Jobs Act.

 

Tax Reform Resource Center

Read More Thought Leadership Articles Like what you read? Subscribe to our newsletter. Click Here.

 

shamrocks not-for-profit tips

3 Lucky Tips for Not-For-Profits to Avoid Bank Fraud

Trusted Insights from The National Bank of Indianapolis Nonprofit Services Team Not-for-profit organizations are increasingly falling victim to fraud, with a rising number of incidents and an ever-growing amount of money being lost. Fraudsters find it easy to target not-for-profits, as their publicly available 990s provide valuable information. Protecting your organization from such fraudulent activities […]

Learn More

Capital Efficiency Concepts: How to Evaluate Capital Purchases

Rising interest rates and historic inflation are impacting hospital purchasing decisions. Using capital efficiency concepts in making hospital purchasing plans is as important as ever. What is Capital Efficiency? Capital efficiency refers to how effectively a hospital deploys its resources to generate returns. In the context of fixed assets and software purchases, capital efficiency involves […]

Learn More
someone writing kentucky house bill 360 with a pen

Kentucky House Bill 360 – Pass-Through Entity Tax Proposal

By Amy Sandlin, CPA, Tax Senior Manager at Blue & Co. A pass-through entity tax proposal is currently making its way through the Kentucky General Assembly as part of a larger tax omnibus bill (Kentucky House Bill 360). The pass-through entity (PTE) tax provisions in the bill are intended to be retroactive to January 1, […]

Learn More