The Tax Cuts and Jobs Act represents the most significant overhaul to the U.S. tax code in more than three decades, so millions of Americans are wondering which tax breaks they’ll still be able to use in 2018, and which ones have been eliminated or will no longer be useful.
Start reviewing where you are at now and make sure you have your financials and statements ready for filing. Listed below concern entertainment and employee meal expenses.
Change #1: Expenses for entertaining clients cannot be deducted at all.
Taking a client out for dinner or drinks, or to a show or event has been a time-honored tradition in business. It seemed like a no-brainer—the client was happy, and you could write it off at 50%, so your accountant was happy too.
But under the new rules, client entertainment expenses are a thing of the past, meaning the time has come to reevaluate how you justify this relationship-building tactic in your budget. This means if your business incurs expenses for amusement, you can no longer claim a 50% deduction. These activities include things like golf outings, sporting events, concerts, hunting and fishing trips, and country club dues.
Change #2: Employee meals are half as tax-deductible as they used to be
In the good old days—as in just a matter of months ago—meals provided for team members at the convenience of the employer were 100% deductible. Starting in 2018, employers will only be able to deduct 50% of what they spend to keep their team members’ tummies full.
Examples of these types of meals include catered lunches, company cafeterias, meals for company meetings, or food provided to enable an employee to work overtime.
What’s more is that, under the new laws, the deduction will be gone completely after 2025. So, unless Congress makes future changes, employers will no longer be able to deduct on-site employer-provided meals at all.
This did not change:
Meals purchased while a team member travels outside of the “tax home” will remain 50% deductible.
Please read our separate post on “Deducting Mortgage Interest in 2018” for a complete breakdown; the deduction is still there, but who can actually use it has been slashed greatly.
If you have any questions, or for more information, my Tax Problem Solver Team and I are always here to help. So please don’t hesitate to call 813-600-5889 or email me at larry@taxproblemsolver.com
