No More Tax-Free Lunch?
Business Owners, this is not a happy part of the Tax Cuts and Jobs Act changes.
We have lost the Entertainment 50% deduction. But for now meals remain a deduction (aka a write off). Taking a client or prospect out to lunch has been ruled a 50% deduction but we almost lost that too. No deduction for tickets you might gift, not for rounds of golf, and not for social/recreational memberships.
You can write off any of these expenses provided for employees IF it is treated as compensation to the employee – meaning taxed on their W-2 as additional income. Company holiday party or picnic for every employee is still a full deduction. And if you hold events where a meal is included in the price the client pays (Cost of Goods Sold) that remains a full write off.
Travel meals remain a 50% write off and feeding your staff in house so they can work through lunch or have in house education is also a 50% deduction.
Just know your new rules and consult with a tax professional and planner to make great decisions.