Eligibility for Deduction
Yes, you may claim meals and entertainment deduction when filing at the end of the tax year. What qualifies a meal as a business expense? The business owner or employee is present. The cost of the meal or beverages isn’t lavish or extravagant. The meal is with a business contact. If you must travel on business, you can also claim for subsistence, for example, lunch or an evening meal while you’re away. Your business can deduct 100% of meal expenses that are reported as taxable compensation to employees. Generally, expenses are only tax deductible if they are wholly and exclusively for the business. The exception is a reasonable expenditure on meals when on business trips.
Business meals are deductible business expenses, and most meals are deductible at 50% of the cost. But entertainment expenses are not deductible as a business tax expense. Your business could deduct business meals at restaurants and bars at 100% during this time from Jan. 1, 2021 through Dec. 31, 2022.
Documentation Requirements
What records should I keep for business meals? When making a claim for a business-related meal, you must provide receipts documenting the cost, time and place. It’s recommended that every business practice consistent record-keeping of all its events.