Back To Top

Major Changes to Meals Expense Deductions for Tax Years 2021 and 2022

The Consolidated Appropriations Act included several new relief packages for individuals and businesses. As we dissect the current bill, YHB is producing a series of in-depth analysis on the bill to help you take advantage of the bill. In this article, we will explore the new rules involving meal deductions.

The new bill has a temporary provision that allows a 100 percent deduction for meals for any meal expenses incurred after December 31, 2020 through December 31, 2022. For example, if on January 1, 2020 a company takes client out for a New Year’s Day meal, the company can now deduct 100 percent of the meal instead of 50 percent.

The inclusion of this provision is meant to help spur businesses to buy meals in order to help the restaurant industry.

For this period, it will be important for businesses to make sure they are accounting for meals and entertainment separately in their chart of accounts. Entertainment expenses are still non-deductible during this time period, so separating out these expenses on your trial balance will make it easier to identify what is and what is not deductible between these commonly co-mingled expenses.

Should you have any questions, contact a YHB advisor today!

Additional articles in this series:

About the Author

Nicholas Preusch, CPA, JD, LLM

Nick’s expertise includes helping high wealth individual and large business entities with complex tax compliance, along with specializing in international, non-for-profit tax issues, and tax ethics issues. He has used his tax expertise not only to serve his clients, but also his peers. He has authored publications for the AICPA’s Journal of Accountancy, AICPA’s Tax Advisor, NATP’s Tax Pro Journal, and CCH’s Journal of Tax Practice and Procedure and co-authored a textbook, Tax Preparer Penalties and Circular 230 Enforcement, published by Thomas Reuters. He has also lectured nationally on topics such as ethics, complex tax transactions, and IRS practice and procedure.