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

  • Thinking of Selling Your Corporation?

    Carefully review your options before making a decision

    When it come time to sell your corporation, you have two options. You can either sell the corporation stock or have the corporation sell the assets and distribute the proceeds. The tax implications of the two sales are very different. If you choose to sell the stock, you are the seller. The corporation is not affected by the transaction. The new owner steps into your shoes as the shareholder and takes over the existing corporation. If your share of the proceeds exceeds your basis in the stock, you'll have a capital gain to report on Schedule D.

    Read more ...

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.
Tuesday, 24th October 2017
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Tax Tips Personal

  • Divorced?

    Know the rules before claiming a dependent

    If you are a divorced or separated parent, the rules for determining which one of you can claim the children as dependents is confusing at best. A few years ago, the IRS created rules that provided a uniform definition of a child for purposes of claiming certain tax benefits such as the head of household filing status, the child tax credit, the dependent care credit, arid the earned income tax credit.

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Personal Quick Tip

  • Summer Day Camp

     

    Along with the lazy, hazy days of summer come some extra expenses, including summer day camp. But, the IRS has some good news for parents: those added expenses may help you qualify for a tax credit.

    Many parents who work or are looking for work must arrange for care of their children under 13 years of age during the school vacation. The Child and Dependent Care Credit is available for expenses incurred during the summer and throughout the rest of the year.