What types of meal and entertainment expenses are 100% deductible on a business return?

If meals or entertainment are provided for the benefit of your employees, you can write off 100% of the cost as a business expense with some exceptions.  These are exceptions to the usual 50% write-off rule for meals and entertainment.

Common examples of expenses that can be written off at 100% include:

  • Meal and entertainment expenses for a company picnic or holiday party so long as this is only 1-2 times per calendar year.  In other words, you can’t do this every week and treat it at 100%
  • Free coffee, bottled water, donuts, and office snacks provided to employees at the place of business.
  • Free food or beverages provided to the public for promotional purposes.
  • Meals provided at the place of business to more than half of the employees as an enticement for working after-hours, weekends, or holidays but be careful!!   The purpose of this is to meet deadlines or cover shifts where as the employee can not leave their station during what would be their normal dinner/lunch break.  However, if you are doing this as a benefit (something nice for your employees) then the value of the meals must be added to your employees income and is taxable.
  • Cost of meals included on employee W-2 forms as taxable compensation.
  • If you bill your clients for meals as part of the services you provide, so long at the meals are line listed on their invoice, you can include the meals on your tax returns at 100% however your client can only include these meals at the 50% tax deduction level.