Official Guidance on the Tax Cuts and Jobs Act Changes for Meal & Entertainment Deductions

Pittsburgh PA Tax Deductions

Entertainment & meal expense deductions were one of the biggest changes in the Tax Cut & Jobs Act (TCJA) that was passed a few short months ago. You may be wondering how it will affect your deductions and write offs come April '19 and the IRS has just issued more guidance on the new rules.

The Tax Pros at W Cotton Mather CPA can assist with tax preparation and deduction explanations for residents of Pittsburgh and the surrounding communities. Contact us today at (412) 931-1617. 

According to IRS.gov:

The 2017 TCJA eliminated the deduction for any expenses related to activities generally considered entertainment, amusement or recreation. That mean no sports tickets, theater tickets, or any other events that might "woo" a potential client.

As for meals:

Taxpayers may continue to deduct 50% of the cost of business meals if the taxpayer (or an employee of the taxpayer) is present and the food or beverages are not considered lavish or extravagant. The meals may be provided to a current or potential business customer, client, consultant or similar business contact. It is important to note that any food or beverages that are provided during an entertainment event that have been purchased separately from the event are not considered entertainment and can be deducted as mentioned.

Prior to 2018, a business could deduct up to 50 percent of entertainment expenses directly related to the active conduct of a trade or business or, if incurred immediately before or after a bona fide business discussion, associated with the active conduct of a trade or business.

The Department of the Treasury and the IRS expect to publish proposed regulations clarifying when business meal expenses are deductible and what constitutes entertainment. Until the proposed regulations are effective, taxpayers can rely on guidance in Notice 2018-76.