“Tax Rules for Providing
Free Meals and/or Lodging to Employees”
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with all the details…
Sorry to be the bearer of bad tidings but here’s a fact you should know.
The tax rules on free meals for employees have changed to
create more revenue for the government and fewer fringe
benefits for employees.
The bad news in a nutshell:
The big change for meals is the drop in the employer
deduction, from 100% before 2018 to 50% for years
2018-2025… to zero in 2026 and beyond! Ouch!
But all is not lost.
Here’s the good news:
Section 119 of our beloved Internal Revenue Code Revenue Code allows your business to provide free meals and/or lodging to employees on a tax-free basis in limited circumstances.
“Tax-free” means no federal income tax for the employee and no federal payroll taxes withheld from the employee or owed by the employer (your business). Nice!
Your business can then deduct 50% of the cost of providing the free meals and the total cost of providing the free lodging.
To take advantage of the
tax-free treatment, you have to pass
some challenging tests.
(Leave it to the IRS to make things difficult.)
- The business premises test
- The convenience of the employer test
- The test for lodging
- Applying the lodging tests
And much more.
As you can imagine, this change in the tax law can get pretty complicated. That’s an excellent reason to take a minute and…
CLICK HERE to read my completely new article titled:
“Tax Rules for Providing
Free Meals and/or Lodging to Employees”