The Tax Cuts & Jobs Act - Dining, Meals, and Entertainment Expenses for 2018 & 2019

Hey, Mark Kohler here with an important tax and legal update. We've got to talk about meals, dining, entertainment, all the above. 2018 is new territory. Now business owners pay attention because this is so important. We've got a lot of changes and an important tax update from the IRS that just came out a month ago, October of 2018. So the Tax Cuts and Jobs act is great. 80% of Americans are going to see tax savings in some way, form or fashion, especially business owners. But where the government giveth, the government taketh away. So let's talk meals, dining, entertainment, Alright? First and foremost, entertainment gone, Entertainment expense, going to the theater, the golf course, the spa, going out and just having fun. Talking business with a potential client or customer is no longer a write off. Now we're hoping for some additional regulations and updates on this from the irs, some tax notices, but nothing yet. However, we got some clarity on meals because when the Tax Cuts and Jobs act came out, at first they had gutted meals more than expected. And some of you saw my initial videos earlier in 2018 on that topic. This is the update, this is the new rule. And it's easier to explain where we're at now by looking at where we came from. So, so quickly let's remember 2017 and earlier, what did it look like? Well, there was really when it came to food. Now remember, entertainment's gone, that's the new territory. But when it was meals before, it was kind of two areas. There was dining and then there was meals or food in the office. So I'm just going to put food in the office. Now in these two categories, in the good old days, you could go out and have a conversation with a client or a customer or an employee and go out to eat. And as long as you talk business with someone, with others, then I'm going to put talk with others. You got a 50% write off. You could go dutch, you didn't have to buy their meal, you could buy your own, they buy their own, but you still got to write off 50% of it. So you track all your meals and that's the same rule, track all your meals out with others and then you could cut it in half. That was the old rule. Now also when you were traveling, even by yourself, you could write off 50%. That's right. You didn't even have to talk business with anybody. And the rule was outside of a normal commute. So if I was outside of my city limits and it was somewhere I normally didn't go, and you ran through the drive through of Wendy's or Burger King. Hey, you could write that meal off because you didn't have the ability to pack a lunch. You were outside of your normal commute. You were good. You, you could write off 50% of those meals. Then when you bought food for the office, donuts on Wednesday, bagels on Friday, put food in the fridge, the water cooler, the coffee maker, the company cafeteria, all that stuff was 100%. That was the good old days. Now here's the new rules. Let's put them in red. Talking with others. When the tax cuts and job act first came out, this was cut. No more. We're okay because of the new revenue ruling. 2018 76. Or I should say IRS notice. 2018 76. It's not a revolution. You purists out there, CPAs, accountants, you know what I'm saying? 2018 76, notice we're okay. You can still write off dining with others. And even while you're entertaining, as long as you can separate the food from the entertainment. So if you go to the golf course and you go golfing, you can't write off the green fees, but you could literally write off the food on the golf cart or at the back at the clubhouse. As long as you can separate that from the golfing expense. That could be going out to dinner in the theater, it could be going to the spa and having lunch. As long as you can separate the food from the entertainment, that food is still a write off. Again, assuming you're talking business with a client, customer, employee, potential contact, even travel, we're still okay. No problems there. This is the biggie. Cut in 50%. So if you're going to buy food for the office and even sodas in the fridge, you can only deduct 50% of that. Kind of a pain right now. The only way you can write off 100% food now is this exception. And this is that fourth area I was talking about. So kind of this new ground of area that's dissected from this. And it's where you're having a company party, a motivational meeting, training. But more than 50% of the people that are there have to be bona fide employees and not family members or owners. So you've got to have a little larger organization. It can't just be you and your spouse and kids at a board of directors meeting thinking you can write off 100%. It's not going to work. This is going to be. I'm going to put company functions, company functions with more than 50% non owners now when that's the case, you can get back to 100% write off for the food. Now, I want to provide an important distinction because people call me about this. Let's talk about one other area of 100%. That's it. Let's say you're a realtor doing an open house and you're going to provide food, an open house to sell a home. Or you're going to be a presenter at a conference and you're going to have food at the conference for your attendees. That's 100% write off because it's part of a sales presentation, that open house, sort of some sort of function for your customers. You can write off 100%, but there has to be a sales presentation or a sales motive. You can't just have a party for your customers without some sort of sales aspect to it. Now that's again a gray area. You're going to the more you can present and sell something, the better. But this is the new area for meals and entertainment and food in the office company parties. Hopefully this makes a lot of sense. And please watch this video again. The main takeaway that I want to encourage all you business owners is write down all your food. All your food when you're traveling for business, meeting with others, food in the office, that's all going to be on a specific line that you're going to cut in half. But when you do pay for food at an event, a function, or for your an employee party or even for your customers, put that on a separate line. Call that event food or employee training food or company party food because your accountant needs to know that that's 100%. You're leaving money on the table if you don't allocate that properly in your QuickBooks. So exciting stuff. Keep living the dream. Lots of good stuff there as a business owner to keep track of and help put more money on the bottom line. Thanks so much for watching that video and I want to be your source for tax and legal strategies. It's hard enough to live the American dream without being out on the web on Google, trying to find answers to complex questions and just clicking a mouse hoping you got it right. My team and I want to be a huge resource to you, the law firm, accounting firm, my education resources on my site. Please continue to follow these strategies. I know they'll save you thousands now click here if you want to be a part of my newsletter. It's awesome. Weekly updates and deadlines and strategies and tips. Also subscribe to my YouTube channel you'll love it. And make sure to click the bell icon so you get a little ping whenever there's a new video. 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