And then they came for our snacks. Well, 50% of them anyway.
The tax rules around meals & entertainment aren’t what they used to be since the passing of the Tax Cuts and Jobs Act (TCJA), effective 2018. Don’t worry---there’s still a bit of fun to be had, as long as it’s edible, totally business-related, reasonably-priced and attended by at least one employee.
Here’s the scoop:
ENTERTAINING CLIENTS - 0% TAX-DEDUCTIBLE (used to be 50%)
BUSINESS MEALS - 50% TAX-DEDUCTIBLE (no change)
OFFICE SNACKS - 50% TAX-DEDUCTIBLE (used to be 100%)
COMPANY-WIDE EVENTS - 100% TAX-DEDUCTIBLE (no change)
I’m not going to lie, it can be a lot to keep track of, but there are steps you can take to make things easier for yourself in the future. My first recommendation is to create a separate chart of account for each category (i.e. Meals Expense, Team Building, Non-Deductible Business Expenses).
My second recommendation is to keep the snacks flowing---after all, hangry employees are bad for business.