Many business owners assume that any meal they eat while working is tax deductible. Ignoring IRS rules about what is and isn’t allowed could get you into trouble, should you be audited.
When in doubt, remember: the IRS doesn’t pay you to eat.
One good guiding line is “where is it reasonable you could have eaten from home or packed a lunch?” If you’re driving out for the day but will be back home that night, that’s generally considered just a workday (i.e., someone who works all day in an office at a W-2 job usually doesn’t get their meals covered nor can they deduct them).
When in doubt, remember: the IRS doesn’t pay you to eat.
Often, an overnight stay is what hits the threshold of when it wouldn’t be reasonable to bring/pack meals.
Another factor is “is this meal intended to get/retain business for you?” If you meet a prospective client for coffee to discuss your business offerings, that could likely be a deductible business expense. i.e., this is not always a bright line test, so other factors could come into play.
That said, don’t go high on the hog with travel meals. They should be in the same ballpark of your personal budget. If you regularly only budget for fast food personally, yet all your business travel meals are from steakhouses, that’s a no-go. Going a little bit nicer is fine, just don’t get greedy.
Remember that even with a tax write-off, the tax savings is only a modest percentage of your actual money out for the meal, so it being a tax deduction does not make it free for you, you’re still net at least some money out.
The tax savings is only a modest percentage of your actual money out for the meal, so it being a tax deduction does not make it free for you.
For documentation, keep the receipt(s), note who was at the meal, and what was discussed (you can upload receipts and make these notes in Quickbooks or your other accounting/bookkeeping software). Your tax pro likely won’t want that detail level of information, but you are required to have it to back up the deduction if your tax pro or the IRS asks for further substantiation.
If you have more detailed questions or want to inquire about a specific meal scenario, please book a tax planning meeting with me here.