Snacks and Incidentals on business travel

[Michael16]

I am a sole propeietor with no employees except for myself. I have occasional business travel as part of company work. When I purchase snacks (e.g., gum or water at an airport kiosk) or grocery items (food for snacks or light meals on business travel), should I deduct these as meal items on Schedule C? Might I be better served using the standard meal allowance to account for incidental purchases?

[KrisD15]

Yes, you have a choice.

For Tax Years 2021 and 2022, if the meals were purchased from a restaurant, they are 100% deductible, if not, such as from a vending machine, they are only 50% deductible. 

If using the per diem rate, the same rules would apply- 50% or 100% depending if they were purchased at a restaurant. 

When reporting the meal expense into the TurboTax program, you will be given two different options for where to enter the expense, restaurant (100%) or not from a restaurant (50%).

This provision will not be available for Tax Year 2023. 

According to the IRS: 

"For business travel, are there limits on the amounts deductible for meals?

Answer

• Generally, reimbursed non-entertainment-related meal expenses are deductible if your business trip is overnight or long enough that you need to stop for substantial sleep or rest to properly perform your duties. You can figure all your travel meal expenses using either of the following methods:
  • Actual cost. If you use this method, you must keep records of your actual cost.
  • The standard meal allowance, which is the federal meals and incidental expense (M&IE) per diem rate. The GSA website lists these rates by location. Note that lower rates apply for the first and last days of travel.
• The deduction for unreimbursed non-entertainment-related business meals is generally subject to a 50% limitation. You generally can’t deduct meal expenses unless you (or your employee) are present at the furnishing of the food or beverages and such expense is not lavish or extravagant under the circumstances.
• For more information on a temporary 100% deduction for food or beverages provided by a restaurant paid or incurred after December 31, 2020, and before January 1, 2023, refer to Notice 2021-25PDF. For more information on a special rule that allows the temporary 100% deduction for the full meal portion of a per diem rate or allowance, refer to Notice 2021-63PDF."

IRS SOURCE 

[Michael16]

If I have snacks and restaurant meals purchased on the same day, how do I make that distinction using the per diem rate?

[ShirlynW]

As mentioned by Expert KrisD15, generally, reimbursed non-entertainment-related meal expenses are deductible if your business trip is overnight or long enough that you need to stop for substantial sleep or rest to properly perform your duties. The deduction for unreimbursed non-entertainment-related business meals is generally subject to a 50% limitation. 

 You can use an optional method for deducting incidental expenses only if you did not pay or incur meal expenses on a day you were traveling away from your tax home. The amount of the deduction is $5 a day. You would enter this on line 24 a of the Schedule C.

To enter Business meals:

• Sign into your account
• Select “Take Me to My Return.”
• Search for “schedule c.”
• Then Click the jump to “schedule c.”
• Click Edit or start.
• Scroll down to Business Expenses
• Select start or edit “Other Common Business Expenses.”
• Start or update “Meals.”
• Start “Meals: 50% Limit.”