IRS: Per Diem Is Food Provided by Restaurants

For tax years 2021 and 2022 taxpayers are allowed to deduct 100% of business meals provided by restaurants (per § 274(n)(2)(D) of the Internal Revenue Code).  One question that I had was how the per diem would be treated.

Taxpayers have a choice for deducting meal expenses.  They can take actual expenses or they can use the per diem meal allowance.  These rates are published by the General Services Administration (GSA) for the continental United States.  While actual expenses tend to give a higher deduction, the per diem is a good tool for individuals who keep poor records (but can prove their business travel).  Do note that you must use one method for the entire year (actual or per diem); you cannot use actuals where you have records and the per diem where you don’t.

For most tax years, meals are at 50% of actual expenses.  Say you spend $1,000 on business meals; you’re tax deduction is $500.  But as noted above for tax years 2021 and 2022 you can deduct 100% of meals provided by a restaurant.  Today, the IRS released Notice 2021-63.  It states:

Solely for purposes of § 274(n)(2)(D), a taxpayer that properly applies the rules of Rev. Proc. 2019-48 may treat the meal portion of a per diem rate or allowance paid or incurred after December 31, 2020, and before January 1, 2023, as being attributable to food or beverages provided by a restaurant.

This is excellent news for individuals using the per diem rate.  You, too, get the benefit of the 100% meals deduction for 2021 and 2022.


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