The Business Meal Deduction: A Freelancer's Guide
All types of self-employed people should claim business lunches, as long as they know which lines not to cross. 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.
Justin W. Jones, EA, JDJustin 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.
What counts as a "business meal"?
The 2017 Tax Cuts and Jobs Act 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. (50% of their cost can be deducted.)
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.
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✓ Business meal with a coworker
Going out with a business colleague with the express goal of discussing business is deductible. Just make sure to keep notes of your conversation.
✓ A networking opportunity
Don't miss out on this one! It's very important to stay on top of the latest news and trends in your industry.
Meeting with other professionals to network or swap tips is a great way to grow your business. After all, most people get referrals from someone they already know! Just make sure to keep notes of your conversation.
In case of an audit, you'll want to make sure to keep some record of what was discussed. A follow-up email or notes will do.
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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 coffee while working at your local coffee shop.
Rule of thumb: If you’re alone, it’s not deductible.
What tax write-offs can I claim?
Keeping records for your business meals
It's good to keep records of your business meals in case of audit. This is an expense category often scrutinized by the IRS, so it's best to keep notes on your business meals using a platform like Keeper.
FAQ
No, unfortunately. Both parties have to be present in person for a business meal to take place. Rule of thumb: The meal probably is not deductible if you’re alone (even if you’re technically having a conversation).
It can! Wooing a prospective client or having a networking meeting over dinner is a business meal. Just keep a record of the meeting — a follow-up email or written notes from your conversation will do just fine.
Not generally. However, there is one exception: groceries during business travel. Grocery costs are tax-deductible once you’re away from home and traveling for business. As long as you’re away overnight, you can deduct 50% of your grocery costs (as long as they’re not lavish or extravagant). The same is true for meals, snacks, beverages, and even coffee.
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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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