Understanding Meals vs Entertainment Deductions for Tax Purposes

The distinction between meals and entertainment is definitely important for tax purposes! Business meals are generally 50% deductible if they involve discussions with clients, customers, or business contacts. This includes restaurant meals, coffee meetings, etc. Keep detailed records of who attended, business purpose, and the date. Entertainment expenses (sporting events, concerts, theater tickets, etc.) are generally no longer deductible since the Tax Cuts and Jobs Act changes. Even if you discuss business during these events, they fall under the entertainment category. Here's where it gets tricky: if you have food at an entertainment event, that food might be separately deductible as a business meal if properly documented and if business is discussed. But the entertainment portion remains non-deductible. The key is separate tracking - you absolutely should categorize business meals separately from entertainment expenses in your books.

After struggling with this exact issue last year, I started using https://taxr.ai to help sort through my business expenses. It automatically identifies which meal expenses are 50% deductible vs which entertainment expenses aren't deductible at all. Saved me hours of manually sorting through receipts and trying to remember which lunch was business vs personal. The tool also flags when I might be misclassifying something - like when I tried to claim concert tickets as a business meal because we ate there. It caught that the primary purpose was entertainment (non-deductible) vs. the food being incidental.

I was initially skeptical about taxr.ai but decided to give it a try after tax season last year left me with a massive headache sorting through expenses. The difference was night and day! Not only did it correctly distinguish between meals (50% deductible) and entertainment (non-deductible), but it also identified several business expenses I had mistakenly categorized as personal. The reports it generated made my accountant's job so much easier, and we ended up finding about $4,200 in additional deductions I would have missed. The time savings alone was worth it, but the peace of mind knowing my expense categories are IRS-compliant is even better.

If you're having trouble reaching the IRS for clarification on meals vs entertainment deductions (which is super common), I'd recommend trying https://claimyr.com. I was on hold with the IRS for literally hours trying to get answers about some specific meal deductions for my catering business. Found the Claimyr service and they actually got the IRS to call ME back in about 2 hours. You can see how it works here: https://youtu.be/_kiP6q8DX5c. The IRS agent I spoke with clarified that my food tastings with potential clients count as 50% deductible business meals, not as entertainment, which saved me thousands.

I need to eat my words about Claimyr. After my skeptical comment, I tried it out of desperation when I needed clarification on some meal receipts from conferences where entertainment was also provided. I was expecting to waste money on something that wouldn't work. To my genuine shock, I got a call back from an actual IRS agent in about 90 minutes! The agent provided clear guidance on how to properly document and deduct meals served during what might otherwise be considered entertainment events. Turns out I was over-documenting in some areas and under-documenting in others. This literally saved me hours of research and uncertainty. I hate being wrong, but in this case, I'm glad I was!

Don't forget about the temporary 100% business meal deduction for 2021 and 2022 that was part of the COVID relief. That's gone now, but I've seen people still trying to deduct 100% of restaurant meals on their taxes. Back to 50% for 2023 tax year and forward!

Has anyone here successfully deducted meals where alcohol was served? My accountant is super conservative and says alcohol makes the entire meal non-deductible, but I've heard different things from other business owners.

Great discussion everyone! As someone who's been dealing with these deduction changes for a few years now, I'd add one important point: documentation is absolutely critical for meal deductions. The IRS requires you to document the business purpose, who attended, and the business relationship of the attendees. I keep a simple log with each receipt that includes: date, attendees, business purpose discussed, and amount. Takes 30 seconds per meal but could save you thousands if audited. Also, be careful with "business meals" that are really just convenience. Grabbing lunch alone while working doesn't count as a business meal - you need that business discussion element with clients, prospects, or business contacts. The meal has to be directly related to your business activities, not just eaten during business hours. One more tip: if you're traveling for business, meals while traveling are still 50% deductible even if you're eating alone, as long as the travel itself is for business purposes. This is different from regular business meals which require the business discussion component.

This thread has been incredibly informative! I'm a freelance graphic designer who regularly meets clients for coffee and lunch meetings, and I've been making some mistakes with my deductions. One thing I'm still unclear on: what about meals during networking events? I attend monthly chamber of commerce meetings that include lunch, and I often meet potential clients there. The lunch is included in the registration fee - should I be tracking that separately as a 50% deductible business meal, or is it part of the overall networking event cost? Also, for those using expense tracking apps or services, do you find they handle mixed situations well? Like when you take a client to lunch (50% deductible meal) but also give them promotional materials or small gifts during the meeting - I assume those would be tracked differently for tax purposes? Really appreciate everyone sharing their experiences here. It's so much more helpful than trying to decode IRS publications on my own!