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Employee Meals: When Does the 50-Percent Limit Apply? |
Don't reduce your deduction if you aren't required to
In most cases, an employer is only allowed to deduct one-half of the expense that is paid to employees for meals. However, in some instances, the full amount is allowed.
If you have an eating facility on your business premises, and you provide meals to at least half of your employees as a convenience to you, then the full amount of the meals is deductible as a business expense.
An allowance you pay to your employees for meals is allowed in full as an expense to you if you include the reimbursement as compensation to your employees.
If you pay a per diem to your employees for meals, and they account to you for the cost, or you pay them a per diem at the federal per diem rate, you are only allowed a deduction for 50 percent of what you pay. The cost is not included on their W-2.
De minimis costs for food or beverages are also allowed in full as a business expense. A de minimis cost is one in which the frequency you provide the benefit is so small that accounting for it would be unreasonable or impractical. De minimis costs for meals include a holiday party, group meals or picnics, traditional holiday gifts of turkeys or hams, or coffee and donuts.
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