Taxes: deducting meal expenses

If you spent money on meals that were in any way business-related last year, you may be eligible to take them off your taxes. Find out how.

Everybody's familiar with the old saying, "Have your cake and eat it too." Well, suppose it went something like this: "Have your cake, eat it too, and take it off your taxes." Sounds good? Well, if the cake is in any way business-related, then you just may be able to deduct it from what you owe the government as a meal expense.

In order for the IRS to allow meals to be deducted from your income, they have to be related to business in some way. If you go out for a few drinks and a bite to eat with a colleague after work to discuss the latest proposal, this would qualify as a deductible expense. If you take out some clients for lunch to pitch your newest product, this would also qualify.

However, this doesn't necessarily mean that you have to be conducting business during your dinner out. The meal can be with a potential client, and if you even mentioned business to them at some point during the evening, it would qualify. Furthermore, if the meal comes before or after a business meeting, you may be able to deduct the expense. For example, suppose that you and three clients went golfing, and on the course you hammered out a business deal. Afterwards, the four of you retired to the clubhouse for lunch. This would most likely qualify as a deduction, as it followed a legitimate business discussion. However, taking your girlfriend out for lunch before going to a business meeting would not qualify, as this was not connected to the impending business discussion.



If you incurred any meal expenses while traveling for business, you can also deduct this from your income. For example, if you went to a week-long seminar to learn new skills for your job, any meals you paid for during that time would qualify. However, the IRS is strict about only allowing you to take off expenses for yourself. Even if your spouse joined you during last year's convention, the only meal expenses that you can deduct are those related to you, even if you paid for the entire meal.

If you're planning on deducting meal expenses - and you should - you need to keep detailed records throughout the year of your expenses. For meals of $75 or more, you need to have a receipt. Otherwise, all that is required is some form of written documentation substantiating your claim. You can keep this record yourself by buying a day planner and simply noting in it the date and location of the meal, who it was with, as well as a brief description indicating how it was business-related. Believe it or not, this is all that is required should the IRS question your tax return, so while it may seem like a hassle while you are doing it throughout the year, it is well worth it.

For the most part, meal expenses can be deducted from your income at a 50% rate. Some meals qualify to be deducted at a higher percentage - see IRS Publication 535 and the instructions for Form 1040 for meal expenses that are treated differently.

Deducting meal expenses is a good way to lower your tax bill at the end of the year. So the next time you are out for dinner with a client, or even a potential client, go ahead - order dessert. The IRS will pay for part of it.

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