When the 50% Limit Applies to Meal and Entertainment Expenses

Determining Travel and Entertainment expenses can be difficult at times for an employer.  Many payments or reimbursements do not fall into a clearly defined category, resulting in confusion on what exactly qualifies as 50% deductible and 100% deductible for the employee.  Where the Internal Revenue Service frequently examines travel and entertainment expenses and asks for appropriate substantiating documentation, it is important for employees to classify their expenses correctly.  Below is a flowchart which gives step by step instructions and examples to help you decide whether your expenses are eligible for 50% deductibility or 100% deductibility.      

Source: Thomson Reuters/RIA

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