2023 Entertainment and Dining Relief Guidelines

Tax planning is an important part of owning and operating a successful business.The Dining and Entertainment Tax Credit has been a valuable way for many small business owners reduce their tax liability Per year. Unfortunately, the 2023 meal deduction will be cut in half from the 2022 deduction level.

Read on as we share the ins and outs of the 2023 dining and entertainment cuts. This information can help you take advantage of these valuable money-saving tax breaks. Some of you reading this have given up their office space and are conducting many meetings outside the restaurant.

How Business Owners Can Deduct Meals and Hospitality Expenses

The value of the dining and entertainment tax deduction has changed over the past few years.with approval Tax Cuts and Jobs Act of 2018 (TCJA), aka the Trump tax plan, you can no longer deduct hospitality expenses. If you want to entertain at a sporting event or treat your clients to a Broadway show, ticket costs are no longer deductible.

There are other ways to deduct some expenses that qualify for the meal and entertainment tax deduction.

2023 Allowable Deductions for Dining and Entertainment

It might be more helpful to discuss what is still tax deductible for the 2023 dining and entertainment tax credit. Here are some potential tax deductions that could range from a half to full deduction.

· Business meals with clients (50%)

· Office food (50%)

· Meals on business trips (50%)

· Conference meals (50%)

·Company holiday party food (100%)

· Food and drink available to the public (100%)

· Provide dinner for employees who work late (100%)‍

2023 Meal Reduction Guidelines

According to the IRS, most business meals are only 50% deductible through 2023. Let’s say you take your favorite client out for a nice dinner (to discuss business); you can deduct half the cost of the meal. On the other hand, if you dine out with clients who have no business purpose, the cost of that meal is not deductible.

To add to the confusion, meal expenses are 100% deductible for 2021 and 2022. This is a temporary change to help restaurants increase spending during the COVID pandemic.

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How to Document Your Meal Credit

Let’s say you’re deducting a business meal expense over $75; you’ll need to keep the receipt or documentation for the meal expense. For meals under $75, the IRS does not specifically require receipts to be kept to document expenses. Either way, you will still need to record your deductible meals, including the following information: date of meal, total including tax and gratuity, restaurant name, details of the business meal (attendees and their relationship to the restaurant) you things).

Your Guide to Entertainment Deductions

We mentioned earlier that most hospitality expenses are no longer deductible.

Here are some of the most common exceptions that may still be tax-deductible in 2023 – expenses for events such as company holiday parties or incentive travel, expenses related to business meetings, think tank meetings, professional associations and even conferences. Also, there is an exception to the entertainment deduction if you sell entertainment to customers. For example, if a bar owner pays for a band to perform for a customer, this may be a deductible business expense.

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How to Make Up Lost Meal Deductions for 2023

Make sure you have a retirement plan that works for your small business.seek to increase your contribution to your 401(k) plan. If you need a more valuable tax break, consider setting up a cash balance pension plan.