With more and more business and consumer transactions going digital, it's getting harder to create a paper trail for tax purposes. Writing off meals as a business expense is not as legal as many people think, and when it is, you'll want to make sure you have proof of the purchase. Learning how to get a receipt from a restaurant will help you have fewer problems if you're ever audited and help you submit the expense reports your company requires for reimbursements.
Consider Also: Self-Employed Tax Deductions, Benefits & More
Are Meals Deductible?
Many people believe that if they "talk business," they can write off a meal. This is generally not true – the IRS has rules governing what constitutes a business meal, including how far you are from home, who you're with and what percent of the meal you can write off.
Check the current rules at the IRS website for meals and entertainment deductions. For example, due to the COVID-19 pandemic, Congress passed the Consolidated Appropriations Act, making 100 percent of business meals (vs. the prior 50 percent figure) tax-deductible. This was done to help struggling restaurants, explains small-business consulting firm, Cain Watters & Associates. The Taxpayer Certainty and Disaster Relief Act of 2020 also removes the percentage limit for 2021 and 2022.
If you and your business partner go to lunch each day and talk about work, you can't deduct that. You didn't need to go to lunch for that discussion. If the two of you are out of town at a conference, you'll need to buy lunch each day. Even if you don't talk business or you dine alone, you can write off those meals.
If you are taking a client or potential client to lunch or dinner to talk about a new contract, that is deductible, to the limits of the law.
Consider Also: Form 1040: What You Need to Know
Who Can Deduct?
With the passage of the Tax Cut & Jobs Act, employees can no longer claim expenses required by their company that are not reimbursed. For example, if you are a salesperson who is an employee (not a contractor), you can't write off meals while you're on the road, even if you're taking a client to lunch. Your company should reimburse you for that.
If you are self-employed, you will be able to claim any meals that qualify as business expenses on Schedule C of your 1040.
Consider Also: What Is a Schedule C Form: Who Needs to File & How to File
How to Get Receipts
By law, restaurants and other food-service providers are required to provide receipts when you purchase food and beverage. Even if you use a food delivery service or order online before you go to the restaurant, you should be able to get a digital or paper receipt. Before you order your food, ask your server if you can get the type of receipt you want (digital, paper or both).
If you get a paper receipt, write the name of the person or persons you dined with and the purpose of the business meal. If you want to go one step further, ask the person who dined with you to sign the receipt. In some cases, more than one person at the meal will want a receipt.
If this is the case, ask the server for separate checks. This way, each person gets their own check, can pay their own amount and get their own receipt. If you forget to do this, or the restaurant won't do it, take a photo of the itemized receipt for your tax records.
If, for some reason, you don't get a restaurant order receipt with a food order (you might forget or the delivery driver might not have it), you might be able to use your credit or debit card statement or financial app to verify that you made a food purchase.