What meal expenses can I deduct and at what rate?
Deductible meal expenses include expenses for meals while traveling away from home for business. Your deductible business meal expenses are a percentage of your actual business meal expenses or the standard meal allowance.
Business meal expenses are deductible only if all of the following conditions are met:
Standard Meal Allowance
The meal expense was an ordinary and necessary expense in carrying on
your trade or business.
The expense was not lavish or extravagant under the circumstances.
You or your employee was present at the meal.
The meal was provided to a current or potential business customer, client,
consultant, or similar business contact.
In the case of food or beverages provided during or at an entertainment
event, the food and beverages were purchased separately from the entertainment,
or the cost of the food and beverages was stated separately from the cost
of the entertainment on one or more bills, invoices, or receipts.
- Instead of deducting the actual cost of your meals while traveling away from home, you can use the standard meal allowance for your daily meals and incidental expenses. Under this method, you deduct a specified amount, depending on where you travel, instead of keeping records of your actual meal expenses. However, you must still keep records to prove the time, place, and business purpose of your travel.
The standard meal allowance is the federal M&IE rate. You can find these rates at www.gsa.gov
. Click Per Diem Rates
for links to locations inside and outside the continental United States. Also, see IRS Publication 463
for details on how to figure your deduction using the standard meal allowance, including special rules for partial days of travel.
Amount of Deduction
- Generally, you can deduct only 50% of your business meal expenses, including meals incurred while away from home on business. For individuals subject to the Department of Transportation (DOT) hours of service limits, that percentage is increased to 80% for business meals consumed during, or incident to, any period of duty for which those limits are in effect. Individuals subject to the DOT hours of service limits include the following:
- Certain air transportation workers (such as pilots, crew, dispatchers, mechanics, and control tower operators) who are under Federal Aviation Administration regulations.
- Interstate truck operators who are under DOT regulations.
- Certain merchant mariners who are under Coast Guard regulations.
However, you can fully deduct meals and incidentals furnished or reimbursed to an employee if you properly treat the expense as wages subject to withholding. You can also fully deduct meals and incidentals provided to a nonemployee to the extent the expenses are includable in the gross income of that person and reported on Form 1099-MISC. See IRS Publication 535
for details and other exceptions.
If you qualify as a family daycare provider, you can use the standard meal and snack rates, instead of actual costs, to compute the deductible cost of meals and snacks provided to eligible children. See IRS Publication 587
for details, including record keeping requirements.