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How does the Tax Cuts and Jobs Act impact meals and entertainment deduction for 2018?

Tax reform has had a significant impact on the tax deductions you can now claim for business entertainment and meals.

The chart below shows you how the Tax Cuts and Jobs Act treats meals and/or entertainment events.

* Technically, the TCJA made meals with clients and prospects not deductible. We understand that the tax writers will modify the law to make “so called non-entertainment meals” with clients and prospects deductible. We don’t know when we will see this change, but track your meals with clients and prospects as if the tax writers will truly make them deductible.

Here’s strategy you might use for now: deduct your client and business meals as if tax reform never took place.

Wow. Is this aggressive? Not if

  • the IRS comes out with regulations that follow a model set by the American Institute of CPAs, or
  • the Joint Committee on Taxation in its explanation of the Tax Cuts and Jobs Act (TCJA) states that client and business meals continue as deductions, or
  • lawmakers enact a new tax code section that authorizes client and business meal deductions.

How big is the “if” in the if? We have some insights that say business meals will be deductible for all of 2018. Of course, nothing is certain except the current uncertainty.

Let’s put it this way: if you do what you need to do to deduct the meals, then you are in a position to claim the business meals deduction when one of the above happens. So, make sure you have your 2018 business meals documented as follows:

  • The name of the person you had the meal with.
  • The name of the restaurant where you had the meal.
  • A short description of the business discussed.
  • If the meal costs $75 or more, keep the receipt that shows the name of the restaurant, number of people at the table, and itemized list of food and drink consumed.

 

 

 

 

 

 

 

 

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