USA 2018 tax write-off - Meals for Employees

Question

We do a lot of work with 1099 contracted "employees". Does the food write-off count for w9 contractors or just w2 employees?

Answer 1

Publication 463 includes:

Exceptions to the 50% Limit

Generally, business-related meal and entertainment expenses are subject to the 50% limit. Figure A can help you determine if the 50% limit applies to you.

Expenses not subject to 50% limit. Your meal or entertainment expense isn’t subject to the 50% limit if the expense meets one of the following exceptions.

1. Employee's reimbursed expenses. If you are an employee, you aren’t subject to the 50% limit on expenses for which your employer reimburses you under an accountable plan. Accountable plans are discussed in chapter 6.

2. Self-employed. If you are self-employed, your deductible meal and entertainment expenses aren’t subject to the 50% limit if all of the following requirements are met.

   • You have these expenses as an independent contractor.
   • Your customer or client reimburses you or gives you an allowance for these expenses in connection with services you perform.
   • You provide adequate records of these expenses to your customer or client. (See chapter 5.)

   In this case, your client or customer is subject to the 50% limit on the expenses.

The self-employed option makes no sense if independent contractors are not covered. The last sentence indicates that you, as the customer of the contractor, may deduct half the actual or standard meal costs for which you reimburse the contractor. This is of course subject to the usual limitations.

What the overall section is saying is that your contractor or employee does not have to count meal reimbursements as income.