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Meals and Entertainment Deductions Changed

As of January 1, 2018, the new tax laws went into effect that will change what types of expenses will be tax deductible. Meals and Entertainment deductions are changes that will impact our clients the most. Here is a quick summary of some of the changes, and how they affect your bookkeeping:

  • Entertainment: Under the new tax law, the taxpayer will no longer be able to deduct 50% of their entertainment like they did before. Any cost related to entertainment, even if it is business related is no longer deductible. This means the tickets for sporting/theater events, amusement or recreation, trips, resorts, etc. Yikes – taking away all the tax-deductible fun (like the baseball games Melinda loves to attend!)
  • Business Meals: The IRS is no longer allowing deductions for those business-related meals. In the past you were able to deduct 50% of the meal if you or an employee was present during a meal that involved a business discussion – these are your typical coffee meet-ups and/or lunches with clients and/or colleagues. But now – no more! A bummer for sure, but don’t stop networking just because you can no longer write it off as a tax deduction.
  • Company Meeting Meals: Meals provided for employees, stockholders and directors during a business meeting are still 50% deductible. Hooray! Meet away, as long as it is with your internal folks!
  • Working Meals & Company Events: Meals provided by the employer while at the work location, and holiday parties, picnics or company events are now only 50% deductible. You used to be able to deduct 100%, but no longer. After 2025, the deduction will disappear altogether and you won’t be able to write any of this off as a business tax-deductible expense. That is unless they change the laws again before this expires.

In summary, we recommend the following categories and names to provide clarity for your tax reporting:

  • Meals & Entertainment (non-deductible)
  • Company Meetings, Events & Working Meals (50% deductible)

That should hold you through at least 2025 and appropriately categorize things to make your tax person smile when they receive your final 2018 books! Take some time now to ensure that you are tracking this clearly, and you are not mixing transactions of deductible and non-deductible expenses. No one wants to pour through all of this at year end, so take a moment now to be sure your bookkeeping is tracking this cleanly, clearly and easily!

Of course, if you need assistance you can always reach out to our team at ZümiFi…

We are always here to help!

Contact us today!

Meals and Entertainment Deductions Changed

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