You are at a photography conference and stop to grab lunch one of the days, and the waitress asks if you would like a receipt. Initially, you might think, nah, it’s only a little bit of money. It’s just lunch. But doing that would actually hurt you when it comes to tax write-offs. Yep, you read that right, even meals can be considered a tax write-off if it meets certain criteria!
Learn how to track meal expenses for taxes in this week’s blog.
It’s easy to not think about the food we eat being a tax write-off. Especially if we are new to the whole small business thing. However, it is a write-off, to an extent. Let me explain. For a meal to be considered a business expense, it has to be fully related to your job. For example, a business meeting at a restaurant, a meal with a client, a meal while traveling for an educational conference.
All of these situations occur due to a business purpose.
So ask yourself, am I only here eating this meal because of a task centered around your business and you have to eat. You can’t be out running errands for work and for personal and stop to grab lunch in between. The full purpose of eating needs to be for a business reason. If you can answer yes to that, then you can track that meal as a business expense.
The IRS scrutinizes business meal expenses closely so make sure it is a clear answer.
Now, if it is a business expense you, unfortunately, can’t deduct the entire amount. Meal expenses can only be deducted at 50 percent. No matter what the situation is, any business meals fall under this. So when you are sending those numbers to your accountant make sure you clarify if the amount you send them is before or after the 50 percent is calculated. It’s unfortunate that you can’t deduct it fully, but at least it is something.
A little is better than nothing.
And as for those receipts. Make sure to say yes when the waitress or cashier asks if you would like one. It is very important to collect your receipts, so if you would ever get audited, you could present the different expenses and have proof behind your numbers. Either save them in a box for each year or take a picture of it and store it digitally.
No matter what, make sure it is saved.
If you found this blog post on how to track meal expenses for taxes helpful and are curious where else you can find tax breaks in your business, click here to grab my 15 business tax category breakdown PDF. In this guide, I’ll walk you through the 15 most common categories and what expenses fall under each of them.
~Heather Marie
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