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Providing Meals
for Your Employees
When Does the 50% Deduction Limit Apply?
In most cases, such as business travel and
entertainment. an employer is only allowed to deduct half of the expense
that is paid for employee meals. However, in some instances, the full
amount is allowed.
If there is 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% 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 benefit is so small and infrequent that
accounting for the costs 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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