Feb 21, 2024
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Tax-Cuts & Jobs Act: Meals & Entertainment
WSDA preferred accounting and tax firm The Dental Group, LLC shares information for dentists regarding the treatment of meals and entertainment expenses effective this year.
A whole lot of new tax laws take effect in 2018 and many will have an impact on dentists. Most dentists are expected to see a net benefit; some will receive a substantial benefit and a few may see a net increase in tax (all things being equal). One of the more confusing changes in the new law is the treatment of meals and entertainment expenses effective this year.
Meals & Entertainment - What Can a Dentist Deduct?
Entertainment Expenditures: Previously were 50% deductible if documented and tied to legitimate business activities. This deduction is now entirely gone – no deduction for entertainment. Maintain an “Entertainment” (only) category in your QuickBooks or other chart of accounts to record any non-deductible entertainment expenses – to make sure these expenses are not mixed-in with partially or fully deductible meals expenses.
Business Meals: It appears that congress threw out the Business Meal deduction along with the Entertainment bathwater. We wondered about this and it turns out that congress did not intend to end the 50% deduction for documented business meals.* We expect congress, through a technical corrections bill, or the IRS through other means will reinstate this deduction – so be certain to continue to run business meals through your practice and be sure to keep the required documentation for each expenditure – chiefly, who, what topic(s), how related to your business or profession.
Overview of Meals & Entertainment 2018
This new “regime” of expense percentages will require an update to your chart of accounts. Employee outings and events should have their own category – and be a sub-category of Staff Expenses and are 100% deductible. On site meals “for the convenience of the employer” should likewise have its own category and are 50% deductible. “Business Meals” should have their own category and be presumed to be 50% deductible until further notice. Finally, Entertainment should have its own category to capture this now non-deductible expense.
The Dental Group, LLC, a WSDA preferred accounting and tax firm, provides a 10% discount to WSDA members and in some cases a even higher discount to WSDA members 0-10 years out of dental school.
Meals & Entertainment - What Can a Dentist Deduct?
Entertainment Expenditures: Previously were 50% deductible if documented and tied to legitimate business activities. This deduction is now entirely gone – no deduction for entertainment. Maintain an “Entertainment” (only) category in your QuickBooks or other chart of accounts to record any non-deductible entertainment expenses – to make sure these expenses are not mixed-in with partially or fully deductible meals expenses.
Business Meals: It appears that congress threw out the Business Meal deduction along with the Entertainment bathwater. We wondered about this and it turns out that congress did not intend to end the 50% deduction for documented business meals.* We expect congress, through a technical corrections bill, or the IRS through other means will reinstate this deduction – so be certain to continue to run business meals through your practice and be sure to keep the required documentation for each expenditure – chiefly, who, what topic(s), how related to your business or profession.
Overview of Meals & Entertainment 2018
This new “regime” of expense percentages will require an update to your chart of accounts. Employee outings and events should have their own category – and be a sub-category of Staff Expenses and are 100% deductible. On site meals “for the convenience of the employer” should likewise have its own category and are 50% deductible. “Business Meals” should have their own category and be presumed to be 50% deductible until further notice. Finally, Entertainment should have its own category to capture this now non-deductible expense.
The Dental Group, LLC, a WSDA preferred accounting and tax firm, provides a 10% discount to WSDA members and in some cases a even higher discount to WSDA members 0-10 years out of dental school.
