Tax Tip: MEALS & ENTERTAINMENT

As with mileage, it is important to keep good records of all your meal or entertainment expenses throughout the year. In addition to the price of the meal (how much), the IRS wants to know the 4 W’s:

  • who you were with – names of your guests
  • why you met – reason for your meeting
  • where you were – restaurant or meeting place
  • when you were there – the date

Write these items on your receipts or keep a detailed log. Should the IRS decide to audit your company, they will throw out any meal expenses that do not comply.

Entertainment is the same and will often be connected to a meal.  Again, records with who, why, where, and when must be kept.

The same rules apply when travelling.  You can use the federal per diem rate for meals and/or lodging.  With the exception that self-employed individuals must use actual lodging receipts. Current per diem rates start at $111 for Lodging and $52 for Meals and incidentals, but vary depending on what city you are in. Check with your bookkeeper and/or accountant for specific rates.