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The Tax Cuts & Jobs Act – Dining, Meals, and Entertainment Expenses for 2018 & 2019



hey mark Kohler here with an important tax and legal update we've got to talk about meals dining entertainment all the above 2018 is new territory now business owners pay attention because this is so important we've got a lot of changes and an important tax update from the IRS that just came out a month ago October of 2018 so the tax cuts and Jobs Act is great eighty percent of Americans are gonna see tax savings in some way form or fashion especially business owners but where the government giveth the government taketh away so let's talk meals dining entertainment all right first and foremost entertainment gone entertainment expense going to the theater the golf course the spa going out and just having fun talking business with a potential client or customer is no longer a write-off now we're hoping for some additional regulations and updates on this from the IRS and tax notices but nothing yet however we got some clarity on meals because when the tax cuts and Jobs Act came out at first they'd gutted meals more than expected and some of you saw my initial videos earlier in 2018 on that topic this is the update this is the new rule and it's it's easier to explain where we're at now by looking at where we came from so quickly let's remember both 2017 and earlier what did it look like well there was really when it came to food so remember entertainments gone that's the new territory but when it was meals before it was kind of two areas there was dining and then there was meals or food in the office so I'm just gonna put food in the office now in these two categories in the good old days you could go out and have a conversation with a client or a customer or an employee and go out to eat and as long as you talk business with someone with others then I'm gonna put talked with others you got a 50% write-off you could go dutch you didn't have to buy their meal you could buy your they buy their own but you still got to write off 50% of it so you track all your meals that's the same rule track all your meals out with others and then you could cut it in half that was the old rule now also when you were traveling even by yourself you could write off 50% that's right you didn't even have to talk business with anybody and the rule was outside of a normal commute so if I was outside of my city limits and it was somewhere I normally didn't go and you ran through the drive-through of Wendy's or Burger King hey you could write that meal off because you didn't have the ability to pack a lunch you were outside of your normal commute you were good you could write off 50% of those meals then when you bought food for the office doughnuts on Wednesday bagels on Friday put food in the fridge the water cooler the coffeemaker the company cafeteria all that stuff was a hundred percent that was the good old days now here's the new rules let's put him in read talking with others when the tax cuts and job act first came out this was cut no more were okay because of the new Revenue Ruling 2018 76 or I should say IRS Notice 2018 76 it's not a red ruling you've purists out their CPAs accounts you know what I'm saying 2018 76 notice we're okay you can still write off dining with others and even while you're entertaining as long as you can separate the food from the entertainment so if you go to the golf course and you go golfing you can't write off the green fees but you could literally write off the food on the golf cart or at the back of the clubhouse as long as you can separate that from the golfing expense that could be going out to dinner and the theater it could be going to the spa having lunch as long as you can separate the food from the entertainment that food is still a write-off again assuming you're talking business with a client customer employee potential contact even travel we're still okay no problems there this is the biggie cut in 50% so if you're gonna buy food for the office and even sodas in the fridge you can only deduct 50% of that kind of a pain right now the only way you can write off a hundred percent food down is this exception and this is that fourth area I was talking about it's kind of this new ground of area that's dissected from this and it's where you're having a company party a motivational meeting training but more than 50% of the people that are there have to be bona fide employees and not family members or owners so you've got to have a little larger organization it can't just be you and your spouse and kids that a Board of Directors meeting thinking you can write off a hundred percent it's not going to work this is going to be I'm gonna put company functions company functions with more than 50% non-owners now when that's the case you can get back to a hundred percent right off for the food now I want to provide an important distinction because people call me about this let's talk about one other area of a hundred percent that's it let's say you're a realtor doing an open house and you're gonna provide food at an open house to sell a home or you're gonna be a presenter at a conference and you're gonna have food at the conference for your attendees that's a hundred percent right off because it's part of a sales presentation that open house sort of some sort of function for your customers you can write off a hundred percent but there has to be a sales presentation or a sales motive you can't just have a party for your customers without some sort of sales aspect to it now that's again a gray area you're gonna the more you can present and sell something to better but this is the new area for meals and entertainment and food in the office company parties hopefully this makes a lot of sense and and please watch this video again the main takeaway that I want to encourage all your business owners is write down all your food all your food when you're traveling for business meeting with others food in the office that's all going to be on a specific line that you're going to cut in half but when you do pay for food and then a function or four you're an employee party or even for your customers put that on a separate line put call that event food or employee training food or company party food because your account needs to know that that's a hundred percent you're leaving money on the table if you don't allocate that properly in your QuickBooks so exciting stuff keep living the dream lots of good stuff there as a business owner to keep track of and help make put more money on the bottom line thanks so much for watching that video and I want to be your source for tax and legal strategies it's hard enough to live the American dream without being out on the web on Google trying to find answers to complex questions and just click in a mouse hoping you got it right my team and I want to be a huge resource treat the law firm accounting firm by education resources on my site please continue to follow these strategies I know the safety thousands now click here if you want to be a part of my newsletter it's awesome weekly updates and deadlines and strategies and tips also subscribe to my youtube channel you'll love it and make sure to click the bell icon so you get a little ping whenever there's a new video and finally check out my site Marjorie Kohler comm with all sorts of videos probably 70 plus videos 30 plus hours of content that'll save you thousands

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Comments
  • Are you able to write off “lunch” for example I work Monday-Friday and file a 1099. If I take a lunch break can I claim 50% ? Most of the job sites are 25> miles away from my home so I’m wondering if that counts as “travel” thank you

  • *Are you talking about putting this info on Schedule C? You haven't said a thing about WHAT form to put these figures on, both meals AND AUTOMOBILE expenses, because Form 2106 was done away with this year.

  • Awesome update Mark! No, I'm not a purist yet . . . however, I do appreciate you citing Notices and Revenue rulings. Because often when I read them I have a better frame of reference and more confidence when presenting to friends and clients. After years and years of trudging the entrepreneurial road to happy destiny, I'm finally taking your advice and working on my business not just in it. Thanks Mark!👍🏿

  • Hi Mark, Great information. I have a question. I'm an overseas contractor. I'm only allowed to be in the USA for 35 days in order to get the tax free benefits. I was wondering can I write off my trips to foreign countries and my meals? I haven't been able to find a great CPA but I definitely want to use you when I come home a start a business.

  • Great recap Mark. Thank you for distinguishing the differences. 100% agree with your idea to create separate meal accounts on the GL.

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