Don't reduce your deduction if you aren't required to

In most cases, an employer is only allowed to deduct one-half of the expense that is paid to employees for meals. However, in some instances, the full amount is allowed.


If you have an eating facility on your business premises, and you provide meals to at least half of your employees as a convenience to you, then the full amount of the meals is deductible as a business expense.

An allowance you pay to your employees for meals is allowed in full as an expense to you if you include the reimbursement as compensation to your employees.

If you pay a per diem to your employees for meals, and they account to you for the cost, or you pay them a per diem at the federal per diem rate, you are only allowed a deduction for 50 percent of what you pay. The cost is not included on their W-2.

De minimis costs for food or beverages are also allowed in full as a business expense. A de minimis cost is one in which the frequency you provide the benefit is so small that accounting for it would be unreasonable or impractical. De minimis costs for meals include a holiday party, group meals or picnics, traditional holiday gifts of turkeys or hams, or coffee and donuts.

Tax Tips Small Business

  • Deducting the Business Use of Your Home

    Don't overlook your home office

    If you use a portion of your home for business, you may be able to take a home office deduction whether you are self-employed or an employee. Expenses that you may be able to deduct for business use of the home may include the business portion of real estate taxes, mortgage interest, rent, utilities, insurance, depreciation, painting, and repairs.

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Small Business Quick Tip

  • DOT Hours of Service

    Truck drivers and other employees who are subject to the Department of Transportation's "hours of service" rules are allowed to deduct 80 percent of their meals in 2016. In lieu of using actual expenses for meals and incidental expenses, you can deduct the federal rate of $63 per day.
Saturday, 25th May 2019
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Tax Tips Personal

  • Converting a Traditional IRA to a Roth?

    You may want to wait

    At some point, taxpayers who have a traditional IRA may wish to convert it to a Roth. Roth IRAs are more flexible in that there are no required minimum distributions when the owner reaches age 70 1/2. In addition, qualified distributions from a Roth IRA are not taxable.

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