The rules for winery meal deductions in 2024
The rules for deducting business meals for your winery have changed over the years, leaving a lot of confusion for business owners.
The short story? After The Tax Cuts and Jobs Act of 2017 and IRS-released Notice 2018-76, meal deductions are here to stay. (Entertainment deductions are out.)
However, the percentage that you can deduct is still muddy and varies depending on the “who/what/when” of the meal.
Note: You can no longer deduct 100% for all business meals anymore. This was for 2021 and 2022 tax years only!
Let’s clarify a few of the rules around meal deductions for your winery in 2024.
How to categorize your winery meal deductions
Not all winery meals are created equal.
Your winery chart of accounts should include three categories for meals:
Business Meals
Employee Meals
Travel Meals
Each category has its own rules regarding deductibility and should be kept separate on the chart of accounts.
Varying meal deduction % based on category
Let’s go through the various rules:
Business Meals - Generally 50% deductible
Business meals are generally meals focused on nurturing your winery's growth. This includes meals with clients, suppliers, distributors, and other business associates.
A good rule of thumb is that the meeting’s main purpose should be business-related, and the act of eating food should be incidental or secondary.
Generally, you can deduct 50% of the cost of business meals as long as they are not lavish or extravagant, and you or an employee are present.
Note that you cannot expense a meal that someone from your business did not attend.
You’ll need to keep detailed records of the date, amount, and purpose of the meal. The IRS requires you to maintain your receipts and include the names and business relationships of everyone present. The easiest way to keep track of this information is to write it directly on the printed receipt. If you don’t get a physical printout of the receipt, make sure you submit the notes to your bookkeeper and they can ensure the note is included in the transaction in your bookkeeping system.
Here at Northwest Wine Accounting, we use Dext to manage our clients' receipts. You can snap a picture of the receipt with your phone or forward a digital receipt to Dext via email. With either method, you can include a description of the meal along with your receipt. You can see how to add notes to a receipt you're sending to Dext via email here.
Employee Meals - Generally 100% deductible
Employee meals can be broken out into two occasions: meals provided on-site and off-site.
Employee Meals Provided on Premises: Meals provided to employees on-site are generally fully deductible (100%) if they are for the convenience of the employer. This includes meals provided during crush or bottling events.
Employee Parties/Meals Out: Employee appreciation events, such as parties or meals out, are deductible up to 100% if they are primarily for the benefit of employees and not lavish or extravagant. Some clients like to keep track of these meals separately in an account called “Employee Appreciation.”
Travel Meals - Generally 50% deductible
When owners or employees are traveling for business purposes, you can typically deduct 50% of the meal. However, meals during overnight travel may be fully deductible.
Again, it’s important to keep documentation (including receipts) of every meal, all attendees, and the purpose of the travel.
You might also want to consider a “per diem” strategy to get an even bigger deduction on travel meals and other expenses. You can read more about per diem in our blog post “What can you deduct for your winery in 2024?”
Personal Meals - 0% deductible
Finally, the last category to address is personal meals. Unfortunately, that croissant you pick up on the way to work is not deductible.
Meals consumed by the business owner, even if purchased on the way to work or at lunch during a workday, are typically not deductible as business meals.
FAQs about winery meal deductions
You may find yourself in a few unique situations, such as your spouse attending a “business lunch” or buying food at an entertainment event. Here are a few helpful Q&As.
What if my spouse or someone else attends the business lunch? You can still expense their meal as the IRS considers this incidental. If your spouse is technically an employee of your business, you can expense your meals together as long as the main purpose of the meal is to discuss or further the growth of your business. We caution you to show restraint here.
Can I deduct an entertainment expense, like tickets to a baseball game with a potential client? Unfortunately not. The Tax Cuts and Jobs Act of 2017 nipped this in the bud. However, if you buy hot dogs for you and your vendor at the baseball game, you can expense this.
Are taxes and tips included? Yes, taxes and tips are included as long as they are reasonable.
Can I leave an extravagant “tip” to claim more money back? Please don’t.
Can I deduct the cost of transportation to and from the meal? That's a good question, and yes! You can deduct 50% of the cost of transportation to and from the venue where the meal is consumed.
What proof do you need for tax season?
When tax time rolls around, your tax accountant is going to ask to see receipts.
This means that you should keep detailed receipts for all meal & event expenses, including the amount, date, location, and business purpose.
As we mentioned above, this is where Dext is your friend. Get those receipts into digital format in one single place, along with your notes on who attended each meal and the business purpose, and you will be ready if the IRS ever comes knocking.
Where to get more help with winery meal deductions
To recap, you can still deduct business meals for your winery in 2024, as long as you follow the rules above and keep thorough documentation of each meal.
The flat 100% deduction no longer applies—this was for tax years 2021 and 2022 only.
Finally, if you need further clarification or want help managing the expenses in your winery, you can get in touch with us anytime. Our experienced winery accounting team is always here to help.
Otherwise, the IRS is a great place to look. We hope this helps!
