Self employed

Hi, cassieerne!  There are a lot of business expenses you can deduct, but some are limited, and some are not deductible under current tax law.

First, in general, IRS Publication 535, Business Expenses, is a great place to start when you are looking at what you can and cannot deduct against your business income.  To be deductible, a business expense must be
both ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary. Publication 535 then goes through several categories of expenses that you can deduct - you can find this publication at this link:  IRS Publication 535 

Your question specifically focused on meals and entertainment - and for that, we look to IRS Publication 463, Travel, Gift and Care Expenses, as found at this link:  IRS Publication 463 

Under current tax law, you can no longer take a deduction for any expense related to activities generally considered entertainment, amusement, or recreation. You can continue to deduct 50% of the cost of business meals if you (or your employee) are present and the food or beverages aren't considered lavish or extravagant.

So taking your client out to a golf outing? Not deductible under current tax law.  However, if you also take the clients out for a meal the day of the golf outing, then those meal expenses may be 50% deductible.  

Food and beverages that are provided during entertainment events are not considered entertainment if purchased separately from the entertainment, or if the cost of the food and beverages is stated separately from the cost of the entertainment on one or more bills, invoices, or receipts. However, the entertainment disallowance rule may not be circumvented through inflating the amount charged for food and beverages.  Note that meal expenses incurred after December 31, 2020 but before January 1, 2023 if provided by a restaurant were 100% deductible, but for the 2024 tax year they go back to being only 50% deductible.

Keep in mind that you need to keep adequate documentation for any meal expense you are deducting.  A restaurant receipt is enough to prove an expense for a business meal if it has all of the following information.

•The name and location of the restaurant.
• The number of people served.
• The date and amount of the expense.