Travel and Meal Expenses Deduction

Another deduction that often causes confusion is travel and meals. Generally speaking, food is not a tax deductible expense but under some circumstances IRS will allow for deduction. There are 2 type of meal deductions:

• 100% - when meals are provided to employees as part of the compensation (company must report it in employees’W2) or when meals are provided during companywide events such as holiday parties or milestone celebrations. More than 50% of the team must be present to claim a companywide party.

• 50% (certain federal transportation workers are eligible for 80% deduction) - when business owners or employees travel away from home at distances where it would be unreasonable to bring food from home, the meals are 50% deductible. Also meeting with clients are 50% deductible.

Luxurious meal and beverage expenses do not qualify for a deduction. IRS advises using https://www.gsa.gov/ guidelines for daily meal allowances per region. All other meal expenses, such as lunches not included in employee compensation, do not qualify for tax deductions.

Travel expenses are typically deductible if the travel is for business. Everyday commute to a place of business does not qualify as a tax deduction. Typical travel expenses are airline tickets, car rentals, taxi and hotels used for conferences, client meetings etc... If the travel is both for business and leisure, 50% of expenses can be deducted.