Prior to the Tax Cuts and Jobs Act of 2017, taxpayers could only deduct 50 percent of meals and entertainment and 100 percent of meals provided for the convenience of the employer. Under the new law, effective January 1, 2018, entertainment is no longer deductible and meals for the convenience of the employer are subject to the 50 percent limitation. For tax years after 2025, meals for the convenience of the employer will not be deductible at all. No change was made to the rule allowing a 50 percent deduction for business meals.
We recommend setting up the following general ledger accounts to reflect the new tax laws. This will aid in properly classifying the expenses for tax purposes and maximizing your deduction where possible.
- Business Meals (50% deductible)
- Entertainment (non-deductible)
- Office parties/events for employees (100% deductible)
For more information about these changes and the other changes resulting from the Tax Cuts and Jobs Act of 2017 please contact us.