Usually yes, but generally only 50% of the cost. Under IRS Publication 463, a business meal qualifies when you or your employee is present, the food is not lavish or extravagant, and it is with a current or potential customer, client, consultant or similar business contact. Entertainment itself is not deductible. A ProfitDrawer bookkeeping spreadsheet can keep meals in their own expense category so the 50% share is easy to work out.
More rules from the IRS:
- Ordinary and necessary: the meal must be a normal, accepted expense in your business.
- Entertainment events: food and drinks at an event such as a game or show count only if they are bought separately or shown separately on the bill or receipt.
- Travel: meals while traveling away from home are deductible when the trip requires you to stop for substantial sleep or rest, again generally at 50%.
- Higher limit for some workers: people subject to Department of Transportation hours of service limits, such as interstate truck and bus drivers, can deduct 80% of meals while away from their tax home.
- Exceptions to the 50% limit exist, for example meals you sell to customers or meals treated as pay to an employee.
Example (example numbers only): a $60 lunch with a client is recorded as $60, with a deductible share of $30.
Keep the receipt and note who you met and the business reason. General information, not tax advice.
Source: IRS Publication 463, Travel, Gift, and Car Expenses · Updated
Tools and spreadsheets for this
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General information, not tax, legal or financial advice. Check the rules for your state and your situation.