The Business Meal Deduction: A Freelancer's Guide

The Business Meal Deduction: A Freelancer's Guide

Many freelancers and small business owners believe that, in order for a lunch to count as a "business meal", it needs to come with a white tablecloth and a French waiter serving you le plat du jour. Not true. 

All types of self-employed people — not just consultants and salespeople — should be claiming business lunches. The key is to know what counts.

In this guide, we’ll cover everything you need to know about writing off meals — what to claim, what to avoid, and how to keep records. 

Contents

What counts as a "business meal"?

The 2017 Tax Cuts and Jobs Act has left some folks confused about the rules of deducting business meals. The truth is, there are no new restrictions on business meals.

What got cut was client entertainment expenses — think concert tickets, or a round of golf. Meals are still tax-deductible.

Now that we've gotten that out of the way, let's talk about how to take that deduction. The IRS guidance on business meals notes that “the food and beverages" must be "provided to a current or potential business customer, client, consultant, or similar business contact.”

There's some ambiguity in the phrase “similar business contact”. So we'll breaking down what counts — and what doesn't.

✅ Taking a client out for lunch

This one’s obvious. If you go out for lunch with a client, work will come up in the discussion. You don’t even need to pay for the other person’s meal.

✅ Wooing a prospective client

Building and maintaining your network is critical to maintaining your business. Past coworkers and friends in similar industries could all eventually turn into prospective clients -- or introduce you to one.

You don’t need to sign contracts at the table for lunch with them to count as a business meal.

✅ Lunch with a coworker

For a self-employed person, this can be anyone in your line of work. Talking shop with them over a meal is bound to help you learn about your industry and catch up on best practices. It’s a write-off!

✅ Meeting with a potential referral

Many freelance work platforms offer rewards for getting others to sign up. Upwork, Uber, and others can pay up to $500 per referral. That’s serious money!

When you grab a meal with a friend who might be interested in signing up as your referral, that’s a tax write-off. 

✅ An in-depth business discussion with anyone

Don’t miss out on this one! It’s very important to stay on top of the latest news and trends in your industry.

Even if you’re meeting with someone who isn’t an actual client or a potential referral, it can still be a tax write-off -- you just need to learn new things about your space that help you do a better job.

In case of an audit, you’ll want to make sure to keep some record of what was discussed. A followup email or notes will do.

What doesn't count as a business meal?

Unfortunately, you can't deduct all the food that you consume on the job. These examples may seem like no-brainers, but they're not actually qualified deductions.

❌ Snacking while working

Rule of thumb: if eating on the job is *not* a requirement for employment, then it's not a deduction.

Say you’re a security guard on a 1099 contract, and you’re not supposed to leave your post all day. In that case, the snacks you buy are tax-deductible.

If you’re merely a busy professional trying to save time between meetings, consider it a personal expense.

❌ Stocking your home office with groceries

Sorry, folks. It’s very unlikely that your grocery bill is a tax deduction — even if you're outfitting a home office.

❌ Grabbing a solo lunch

Getting lunch by yourself doesn't count as a business meal, even if you hop on a call at the cafe. This includes getting a latte while working at your local coffee shop.

Rule of thumb: If you’re alone, it’s not deductible.

Want a cheat-sheet to make sure you're writing off the right meals? Check out this handy infographic.

The temporary 100% deduction for restaurant meals

Ready to wine and dine your clients? Here's one special consideration to keep in mind: In the 2021 and 2022 tax years, any business meals you get at restaurants are 100% tax-deductible.

Everyone’s calling this the “three-martini lunch” tax break. It's actually part of the Consolidated Appropriations Act of 2021, which bundled together a number of COVID relief measures. The thinking was, this tax break would help restaurants gutted by the pandemic.

Before, business meal deductions were capped at 50%.

Keeping records for your business meals

Contrary to popular belief, you don’t have to hoard receipts for your restaurant visits in order to claim the business meal tax deduction. For the IRS, bank and credit card statements are good enough.

Just in case you’re audited, you should also have digital breadcrumbs proving your meals were actual business expenses — a calendar event, an email thread, some notes from your discussion.

Justin W. Jones, EA

Justin W. Jones, EA

websitetwitter-link

Justin is an IRS Enrolled Agent, allowing him to represent taxpayers before the IRS. He loves helping freelancers and small business owners save on taxes. He is also an attorney and works part-time with the Keeper Tax team.

The Business Meal Deduction: A Freelancer's Guide

Justin W. Jones, EA

Justin W. Jones, EA

websitetwitter-link

Justin is an IRS Enrolled Agent, allowing him to represent taxpayers before the IRS. He loves helping freelancers and small business owners save on taxes. He is also an attorney and works part-time with the Keeper Tax team.

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Note: at Keeper Tax, we're on a mission to help freelancers overcome the complexity of their taxes. That sometimes leads us to generalize tax advice. Please reach out via email if you have questions.

Discover the tax write-offs you've been missing

Keeper Tax automatically finds tax deductions among your purchases. On average, people discover write-offs worth $1,249 in 90 seconds.

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Discover the tax write-offs you've been missing

Keeper Tax automatically finds tax deductions among your purchases. On average, people discover write-offs worth $1,249 in 90 seconds.

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