The allowable amount of meal expenses you are allowed to deduct on your Schedule C is determined by the line of work you are in.
- For most taxpayers, the IRS allows you to deduct 50% of your business meal expenses, including meals incurred while away from your home on business.
- If you are subject to the Department of Transportation (DOT) hours of service limits, the allowable deductible percentage is increased to 80% for business meals consumed, or related to, any period of duty for which those are in effect.
Tax Cuts and Jobs Act
The TCJA eliminated deductions allowed for entertainment and amusement purposes. Food and Beverage expenses may be deducted so long as certain requirements are met. Generally the meal must service some business purpose, the owner or an employee must be present at the meal, the cost of the meal must be separately stated from any entertainment, and the meal must not be considered lavish or extravagant.
2021 Tax Year
The Taxpayer Certainty and Disaster Relief Act of 2020 allows a temporary exception to the normal limitation on deductions for food and beverage expenses. Businesses may now claim 100% of qualifying meal expenses incurred between January 1, 2021 and December 31, 2022. For more information, please see the IRS News Release.