A: The cost of coffee or a meal you have while meeting with clients, customers, or colleagues is not fully deductible. You are allowed to deduct only 50% of the cost as a business expense.
There are a few exceptions to the 50% limit. They are:
If you are self-employed your meals are not subject to the 50% limit if all three of the following apply:
1. You incur the expense as an independent contractor.2. Your client reimburses you, or gives you a meal allowance
in connection with the services you perform.
3. You have adequate records of the expenses, whether paid by you or by your client.
The 50% limit does not apply if you provide meals to the general public as a means of advertising or promoting goodwill in the community or if you pay for a package deal that includes a ticket to a qualified charitable sports event.
Note: If you are an employee, you are not subject to the 50% limit on expenses for which your employer reimburses you. You are not required to claim any of the reimbursement as income on your tax return.
Cindy Hockenberry, Enrolled Agent
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