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mjdeosdade
New Member

I'm a contractor. i buy lunches for the crew of my sub contractor a couple of days a week so they don't have to leave the job site. can i deduct this expense?

 
7 Replies
_Beancounter
Level 3

I'm a contractor. i buy lunches for the crew of my sub contractor a couple of days a week so they don't have to leave the job site. can i deduct this expense?

It appears yes you may. See the test below.

Employer-provided meals are tax-free to the employee and 100% deductible by the employer if they are provided:

  • on the employer’s business premises, and
  • for the convenience of the employer.

If more than half of your employees to whom you furnish meals satisfy these requirements, you can treat all meals you furnish to employees on your business premises as furnished for your convenience.

The employer’s business premises generally means the location where employees work.

An employer also has a substantial business reason to provide free meals if the nature of the business makes it necessary to limit meal periods to short time periods, such as 30-45 minutes, and workers can't eat somewhere else in such a short time.

De Minimis Meals

You can take a deduction for any meal you provide to an employee if it has so little value that accounting for it would be unreasonable or impracticable. Examples of de minimis meals include:

  • coffee, doughnuts, or soft drinks
  • occasional meals or meal money that enable an employee to work overtime, or
  • occasional parties or picnics for employees and their guests.

Meals you furnish to promote goodwill, boost morale, or attract prospective employees aren't considered furnished for your convenience; but they are nevertheless tax-free for the employee if they are de minimis.

dematerial
New Member

I'm a contractor. i buy lunches for the crew of my sub contractor a couple of days a week so they don't have to leave the job site. can i deduct this expense?

Thanks for the answer! Is this still true in 2018?
I'm self employed and often hire contract labor for larger gigs. Are the meals/snacks I provide them on a job site 100% deductible?
csantos
New Member

I'm a contractor. i buy lunches for the crew of my sub contractor a couple of days a week so they don't have to leave the job site. can i deduct this expense?

I would like to ask the same question is this still valid for Tax Year 2018?
AdrianETS
New Member

I'm a contractor. i buy lunches for the crew of my sub contractor a couple of days a week so they don't have to leave the job site. can i deduct this expense?

Though the answer is correct as it applies to employers, it fails to answer whether this applies to a contractor relationship. You might want to be careful in taking such deduction in such said way as it may constructively admit to an employer-employee relationship conclusively requiring a payroll report. 

 

I do not believe the IRS will hammer on the expense being business-related or deductible but they could nail your client for failing to meet payroll requirements as this could be interpreted as a fringe-benefit to the contractor. It would simply open a new can of worms. 

 

You might want to take the deduction as a 50% allowable meal expense. Sec. 274(k), which was not amended by the TCJA, does not allow a deduction for the expense of any food or beverages unless (1) the expense is not lavish or extravagant under the circumstances, and (2) the taxpayer (or an employee of the taxpayer) is present when the food or beverages are furnished. Sec. 274(n)(1), which was amended by the TCJA, generally provides that the amount allowable as a deduction for any expense for food or beverages cannot exceed 50% of the amount of the expense that otherwise would be allowable.

Under the interim guidance, taxpayers may deduct 50% of an otherwise allowable business meal expense if:

  1. The expense is an ordinary and necessary business expense under Sec. 162(a) paid or incurred during the tax year when carrying on any trade or business;
  2. The expense is not lavish or extravagant under the circumstances;
  3. The taxpayer, or an employee of the taxpayer, is present when the food or beverages are furnished;
  4. The food and beverages are provided to a current or potential business customer, client, consultant, or similar business contact; and
  5. For food and beverages provided during or at an entertainment activity, they are purchased separately from the entertainment, or the cost of the food and beverages is stated separately from the cost of the entertainment on one or more bills, invoices, or receipts.
VolvoGirl
Level 15

I'm a contractor. i buy lunches for the crew of my sub contractor a couple of days a week so they don't have to leave the job site. can i deduct this expense?

FYI - This is a new forum layout.  Some posts that have June 2019 dates are really older posts from the old forum that got moved over.  So they might be for prior years.  When they migrated over the dates got changed to June 2019.

lauriemariposa
Returning Member

I'm a contractor. i buy lunches for the crew of my sub contractor a couple of days a week so they don't have to leave the job site. can i deduct this expense?

  1. HI,
  2. For "food and beverages are provided to a current or potential business customer, client, consultant, or similar business contact;" in AdrianETS's message below, if you are hiring an independent painter (not employee) and you provide him lunch is that tax deductible to the person doing the hiring?  The painter is NOT an employee.  
MarilynG1
Expert Alumni

I'm a contractor. i buy lunches for the crew of my sub contractor a couple of days a week so they don't have to leave the job site. can i deduct this expense?

If you have a Business, providing a contractor lunch could be a Business Expense.

 

Not for an individual, though.

 

Click here for more info on Business Meals.

 

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