Can I Write Off Lunch on My Taxes?

General Conditions for Meal Deductions

Deducting business meal expenses for tax purposes requires meeting specific criteria established by the Internal Revenue Service (IRS). A meal expense must be considered “ordinary and necessary” for the business, meaning it is common and accepted in the taxpayer’s trade or business, and helpful and appropriate for that business. This foundational requirement is outlined in Internal Revenue Code (IRC) Section 162, which governs business deductions generally.

The expense cannot be lavish or extravagant under the circumstances. This rule ensures that only reasonable costs associated with business meals are considered for deduction.

The taxpayer, or an employee of the taxpayer, must be present when the food or beverages are provided to qualify for the deduction. The food or beverages must be provided to a current or potential business customer, client, consultant, or similar business contact. Furthermore, the meal must be directly associated with the active conduct of the taxpayer’s trade or business. This means the meal occurs during, or immediately before or after, a bona fide business discussion. A substantial business discussion must take place during, or in close proximity to, the meal.

Deductible Limits for Meals

Most business meal expenses are subject to a 50% deduction limit, a common rule in tax law. This limitation generally applies to meals with clients, customers, or business contacts where a business discussion occurs. For example, a lunch meeting with a prospective client to discuss a new project would typically be 50% deductible.

There are specific, narrow exceptions where 100% of a meal expense may be deductible. Meals provided for the convenience of the employer on the employer’s business premises can be fully deductible. This often includes meals provided to employees during extended work hours or for specific business needs.

Certain de minimis fringe benefits, such as occasional office parties or picnics for employees, are also 100% deductible. Meals included in an employee’s taxable compensation are fully deductible by the employer. Another exception applies to meals sold to customers, like a restaurant selling food, where the cost of goods sold includes the cost of ingredients.

Meals provided to employees through an eating facility located on the employer’s premises and operated by the employer may also be 100% deductible, provided certain conditions are met. These conditions include the facility being used primarily by employees and the meals being for the convenience of the employer.

Specific Qualifying Meal Situations

Meals consumed while traveling away from home on business, specifically during overnight travel, can be deductible. These expenses are generally 50% deductible, provided they meet the general conditions for business meals. This includes meals purchased while on a business trip, such as breakfast, lunch, and dinner.

Meals taken with clients, customers, or other business contacts where a bona fide business discussion occurs are a common deductible situation. The primary purpose of the meal must be business-related, and the business discussion must be substantive. These types of meals are typically subject to the 50% deduction limit.

Meals included as part of a deductible business conference or seminar may also be considered for deduction. If the conference itself is deductible as a business expense, and meals are integral to the event, their cost may be deductible. These meals typically adhere to the 50% deduction rule, aligning with most business-related meal expenses.

Required Records for Meal Expenses

Maintaining meticulous records is a fundamental requirement for substantiating meal deductions. Taxpayers must keep contemporaneous records, meaning documentation created at or near the time the expense occurred. This practice helps to ensure the accuracy and reliability of the expense information.

For each meal expense claimed, specific information must be recorded. This includes the amount of the expense, which can be verified with receipts or bank statements. The time and place of the meal, such as the date and restaurant name, are also necessary details.

The business purpose of the meal is a critical piece of information that explains what was discussed and how it relates to the taxpayer’s business. This description helps to establish the “ordinary and necessary” and “directly associated” criteria for the deduction. Finally, the business relationship of the person(s) with whom the meal was shared, such as a client, prospective client, or employee, must be documented.

Taxpayers should retain various forms of documentation to support their meal deductions. Original receipts from the restaurant or vendor are highly important. Credit card statements can corroborate the expense, but typically lack the detailed information found on a receipt. Detailed logs or calendars, which capture the required information for each meal, are also valuable. These comprehensive records are essential for demonstrating eligibility and the accurate amount of the deduction to the IRS if audited.