Deducting groceries for business?

[texastumbleweed]

My husband works at home and feeds his co-workers lunch quite often, I'd say 3-5 days a week.  This definitely adds up, but I'm not sure if I can deduct these expenses and if so, what percentage of a given grocery bill?  For example, a co-worker just came in and ate an egg and a banana...

[CmFtns]

I think this depends on if the business is providing these meals as compensation...
For you to deduct the expenses then your husband has to own the business

why are these meals being provided?

If your husband is just an employee and these were legitimate business meals then he would request "reimbursement" from the company and then the company would deduct the expenses. Therefore you cant deduct them because you didn't spend anything because you were reimbursed.

[texastumbleweed]

So my husband is a songwriter and different songwriters come to his studio behind our house to work with him each day.  They usually come inside to eat.  Obviously if they go out, we can deduct those expenses, but more often than not, the co-worker for the day ends up eating at our house because it is easier to get back to work.

Does that help explain the situation?

[CmFtns]

So my husband is a songwriter and different songwriters come to his studio behind our house to work with him each day.  They usually come inside to eat.  Obviously if they go out, we can deduct those expenses, but more often than not, the co-worker for the day ends up eating at our house because it is easier to get back to work.

Does that help explain the situation?

thanks that's a much better explanation of your scenario.

I believe if you are very careful then this could be considered a deductible business expense as groceries purchased for business entertainment purposes for clients or staff, but not the way you do it now. You would need to completely separate the "business food" and "personal food" and keep them on separate transactions (ideally on a seperate business only credit card) so you could keep perfect records to show in the event that the IRS questions your deductions. Also you will need to be able to show that this food provided on each occasion went along with business related discussions.

If it were me I would not try to deduct this expense due to the casual nature of "came in and ate an egg and a banana". I think it is sort of a gray area and it seems like it is a huge amount of work to keep that careful of records. Also, I wouldn't want to give the IRS any reason to bother me because it could turn into a big hassle.

I would like to see what some other people think of this because this is just my interpretation of the food deduction rules. There is not really specific rules on this situation.

[slowsynapse]

I think you can deduct at least a portion of these.  Publication 15-B oultines the allowance for De Minimis meal deductions:

De Minimis Meals

You can exclude any occasional meal you provide to an employee if it has so little value (taking into account how frequently you provide meals to your employees) that accounting for it would be unreasonable or administratively impracticable. The exclusion applies, for example, to the following items.

    Coffee, doughnuts, or soft drinks.

    Occasional meals or meal money provided to enable an employee to work overtime. However, the exclusion doesn't apply to meal money figured on the basis of hours worked.

    Occasional parties or picnics for employees and their guests

So you might be able to deduct some basic snacks and the concessional meal that you are providing at the place of business.

Link to IRS pub 15B: https://www.irs.gov/publications/p15b/ar02.html#en_US_2016_publink1000193705

[texastumbleweed]

So that link makes me think I could deduct even 100% of coffee and snack bars we put in the studio (definitely the most common thing we offer everyday), but I still don't know how to consider meals.

Also, I do my taxes on turbotax and I'm not sure there is even a way to enter a de minimis deduction....

[slowsynapse]

So that link makes me think I could deduct even 100% of coffee and snack bars we put in the studio (definitely the most common thing we offer everyday), but I still don't know how to consider meals.

Also, I do my taxes on turbotax and I'm not sure there is even a way to enter a de minimis deduction....

What is the entity you use to file taxes?  Are you a Sole Prop (1040 Schedule C) or do you have an S-Corp or LLC.  I have not done taxes for a lot of years but could take a look at the best place to put the De Minimis expenses in to a schedule C.  If there is no specific line, it could be listed in the other expenses.

[texastumbleweed]

yes, schedule C 1040.  There is also an LLC, but the deductions wouldn't apply to that separate business.

[slowsynapse]

Things like the coffee and snacks I would call "office expenses" and keep the receipts.  Those are ordinary types of business expenses and should be fine to write off.  I talked to a couple of my tax CPA friends and they agreed.  Office expenses are often included in personal property tax returns at the local level so you can manage that amount down by keeping it very low at year end.  If you don't keep "office supply inventory" records many jurisdictions allow for a 1/12 of the expense account valuation.  Just a small consideration when maximizing the tax dollars.

My dream job is to be good enough at guitar so people would actually want to come play with me :)  Hope they are having fun.

[K-ice]

My mom ran a business & I remember grocery shopping as a kid. Most was run thru as personal then she would seperate a few things at the end.

Those things were physically taken to the business, so it was quite clear.

It sounds like your coffee & snack bars are a good start. 

[jwright]

Keep a "snack bar" or table set up in the working area.  Purchase food in a separate transaction with the business account to stock up and document as a business expense.   It would generally be considered office supplies and not subject to the 50% limitation.

 I wouldn't allow them to eat your personal groceries, to much comingling to make me comfortable with a deduction there.

[mamagoose]

I would keep a fridge & snack bar in the studio, and shop for the food & bev to stock it using a business credit card. No different than Google providing snacks for their employees.