Alyssa McBride, CPA •
The Tax Cuts and Jobs Act of 2017 created a lot of changes for taxpayers. One area that you should not overlook is the change to meals and entertainment. Entertainment is now nondeductible. Also no longer fully deductible are workplace meals, these now fall into the 50% deductible category. What is most concerning is that there is a current lack of information on business meals, these could be 50% deductible or they could fall into the nondeductible category. This could be a significant change for many taxpayers. We will keep you updated as more information becomes available.
While we wait on the resolution, we have one recommendation you can immediately put in place:
The Tax Cuts and Jobs Act of 2017 created a lot of changes for taxpayers. One area that you should not overlook is the change to meals and entertainment. Entertainment is now nondeductible. Also no longer fully deductible are workplace meals, these now fall into the 50% deductible category. What is most concerning is that there is a current lack of information on business meals, these could be 50% deductible or they could fall into the nondeductible category. This could be a significant change for many taxpayers. We will keep you updated as more information becomes available.
While we wait on the resolution, we have one recommendation you can immediately put in place:
Break out your chart of account to reflect these changes and record transactions in the appropriate categories. If you didn’t break out your year-to-date activity, you may also want to move those transactions to the appropriate buckets. The following are suggested accounts to keep this activity separate:
- Entertainment (nondeductible)
- 100% Deductible meals – this would still cover firm events like a holiday party
- Business meals – our hope is that these will be 50% deductible but resolution is pending
- Employee meals – these are still 50% deductible and cover meals while traveling or meals in the office for the convenience of the employer
