2018 Changes to Meals and Entertainment Expenses

With the passing of the Tax Cuts and Jobs Act, there are numerous changes to traditional tax law and the 2018 tax return season will be quite a bit different compared to previous years. There are significant changes to the deductibility of meals and entertainment. Here is a quick summary of some of the changes to meals and entertainment set to take place in 2018.

  • Entertainment expenses are no longer deductible. Tickets to concerts or sporting events, golf outings and other similar entertainment expenses have historically been 50% deductible by businesses. Starting in 2018, these expenses are no longer deductible. This will cause many business owners to reconsider the benefits that these types of expenditures have provided in the past.
  • Business meals with clients are still 50% deductible. It is very important however to substantiate the business nature of the mail and the parties involved to ensure deductibility.
  • Prior to 2018, employers were able to deduct 100% of employer provided meals for the convenience of the employer. Starting in 2018, these meals are now 50% deductible.

Historically, most companies have combined meals and entertainment expenses in their general ledger, but because of these new changes, it is important that they be tracked separately in your general ledger. These changes may be difficult to understand so the best course of action is to discuss your tax situation with a CPA. Give us a call at 847-827-8100 or check gurdakgroup.com if you’d like to discuss your situation in more detail.