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Can I deduct irs meals and entertainment?

TL;DR

Meals are generally deductible at 50% if they are ordinary, necessary, and directly related to the active conduct of your business. Entertainment expenses are not deductible under current IRS rules.

Detailed Answer

For tax years after 2017, entertainment expenses are not deductible. However, business meals can be deducted at 50% if they are directly related to or associated with the active conduct of your trade or business. This includes meals with clients, customers, or employees, provided that there is a clear business purpose. The meal cannot be lavish or extravagant under the circumstances. During 2021 and 2022, the deduction for business meals from restaurants was temporarily increased to 100% under certain conditions. It's important to note that meals provided as part of entertainment activities must be separately stated on the bill to qualify for a deduction.

Where to Put It on the Tax Form

Schedule C, Line 24b for business meals. Entertainment expenses are not deductible.

Real World Example

A freelance graphic designer meets a potential client at a local café to discuss a new project. The total bill is $60. The designer can deduct 50% of the meal cost, so $30, as a business expense on their Schedule C.

Audit Risk & Documentation Tips

Moderate audit risk. Keep detailed records, including receipts, the names of the attendees, the business purpose of the meal, and any related invoices or contracts. Ensure that meal expenses are not combined with entertainment expenses on the same receipt unless they are itemized separately.

IRS Reference

IRS Pub 463, IRC §274

Relevant Industries

FreelancersConsultantsReal Estate AgentsSales Professionals

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Disclaimer: This is for informational purposes only and should not be construed as tax or legal advice. Always consult your tax advisor.

Page created on July 25, 2025

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