Important Tax Deduction Change
As my colleague Marc Palker, of MPP Associates Inc., recently reminded me, beginning January 1, 2023, the deductibility of meal and entertainment expenses will change drastically. These deductions temporarily changed for tax year 2021 and 2022. For those years, you can deduct 100% of your meal expenses if the meals are food and beverages provided by a restaurant, and were paid for or incurred before January 1, 2023. For tax year 2023, many of the meal and entertainment deductions reduce from 100% deductibility to 50% deductibility. Changes in 2023 include:
- Client Business Meals: 50% deductible if ordinary and necessary in carrying on business, taxpayer is present, provided to current or potential client or consultant and not lavish or extravagant
- Entertainment Related Meals: 50% deductible if charges for the meal are stated separately from the cost of entertainment, no deduction otherwise
