Schedule C Expenses - Meals and Entertainment

Enter your deductible business meal expenses. This includes expenses for meals while traveling away from home for business. Your deductible business meal expenses are a percentage of your actual business meal expenses or standard meal allowance. See Amount of deduction, later, for the percentage that applies to your actual meal expenses or standard meal allowance. In most cases, the percentage is 50%. However, business meals are 100% deductible if the meals are food or beverages provided by a restaurant and paid or incurred after December 31, 2020, and before January 1, 2023.

Do not include entertainment expenses on this line.

Business meal expenses.

You can deduct all or a percentage of the actual cost of a meal if the following conditions are met.

• The meal expense was an ordinary and necessary expense in carrying on your trade or business;

• The expense was not lavish or extravagant under the circumstances;

• You or your employee was present at the meal;

• The meal was provided to a current or potential business customer, client, consultant, or similar business contact; and

• In the case of food or beverages provided during or at an entertainment event, the food and beverages were purchased separately from the entertainment, or the cost of the food and beverages was stated separately from the cost of the entertainment on one or more bills, invoices, or receipts.

See Notice 2021-25 for examples and more information. Notice 2021-25 is available at IRS.gov/irb/ 2021-17_IRB#NOT-2021-17.

Standard meal allowance. Instead of deducting the actual cost of your meals while traveling away from home, you can use the standard meal allowance for your daily meals and incidental expenses. Under this method, you deduct a specified amount, depending on where you travel, instead of keeping records of your actual meal expenses. However, you must still keep records to prove the time, place, and business purpose of your travel.

The standard meal allowance is the federal M&IE rate. You can find these rates for locations inside and outside the continental United States by visiting the General Services Administration's website at gsa.gov/travel/plan-book/perdiem-rates/mie-breakdown.

See chapter 1 of Pub. 463 for details on how to figure your deduction using the standard meal allowance, including special rules for partial days of travel.

Amount of deduction.

Business meals are 100% deductible if the meals are food or beverages provided by a restaurant and paid or incurred after December 31, 2020, and before January 1, 2023. In most cases, for other business meals, you can deduct only 50% of your business meal expenses, including meals incurred while away from home on business. However, for individuals subject to the Department of Transportation (DOT) hours of service limits, the percentage for other business meals is increased from 50% to 80% for business meals consumed during or incident to, any period of duty for which those limits are in effect. Individuals subject to the DOT hours of service limits include the following:

• Certain air transportation workers (such as pilots, crew, dispatchers, mechanics, and control tower operators) who are under Federal Aviation Administration regulations.

• Interstate truck operators who are under DOT regulations.

• Certain merchant mariners who are under Coast Guard regulations.

However, you can fully deduct meals and incidentals furnished or reimbursed to an employee if you properly treat the expense as wages subject to withholding. You can also fully deduct meals and incidentals provided to a nonemployee to the extent the expenses are includible in the gross income of that person and reported on Form 1099-NEC. See Pub. 535 for details and other exceptions.