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Meals for staff tax deductible?

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  • Meals for staff tax deductible?

    I'm an employed physician by a large physician group (receive a W2 but also have 1099 income from other sources). I work in a outpt setting where the nurses and other ancillary staff are employed by the hospital system so they are not considered my employees. I have bought the staff lunch on a few different occasions - food all onsite. Is this considered tax deductible? Seems like it could be since the food was brought on site but the fact that they are not my employees makes it less clear to me. Any help would be appreciated.

  • #2
    They would be deductible as employee business expenses, subject to a 50% reduction and then the 2% haircut. If you were the employer buying meals for the whole office, they would be 100% deductible from your business income.
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3
      Johanna, can you explain this a little more.  OR provide a link to IRS site that references?  I am in a similar situation (buy lunch when our ER is very busy, and often bring food to work for staff).  Same set up described, not my direct employees but brought to my work place.

       

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      • #4
        Johanna, can you clarify this also if is due to the fact that skiMD is W2 and 1099...  in other words if you are only W2 could you deduct this?

         

        thanks

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        • #5
          squirrel and MDThinker - sure, I'll clarify:

          Meals and entertainment are typically only 50% deductible. The rationale is that you have to eat, anyway, so you don't get a full deduction for, say, taking someone out to lunch or buying lunch for some co-workers. There are a couple of exceptions to this rule to allow a 100% deduction:

          1. Meals provided on the employer's premises for the employer's convenience, if more than 50 percent of the employees are furnished meals for the employer's convenience

          2. Employer-provided social/recreational expenses primarily for the benefit of employees who are not highly compensated, such as a summer picnic or holiday party.


          #2 would fall under the typical scenario of buying lunch for the office staff. However, you are not the employer, but a co-worker who is a hierarchical boss. In this scenario, the meals bought out of pocket for "your" office staff would be 50% deductible as an employee business expense.

          So back to the expense paid by a W2 employee...The IRS describes deductible employee business expenses in the introduction to Form 2106 online as follows:

          "Employees file this form [2106] to deduct ordinary and necessary expenses for their job.

          • An ordinary expense is one that is common and accepted in your field of trade, business, or profession.

          • A necessary expense is one that is helpful and appropriate for your business. An expense does not have to be required to be considered necessary."


          Does the above definition make the argument for the deductibility of a hospital-employed doctor buying lunches for the office staff? In my opinion, and for our clients, it does. Of course, these expenses, reduced by 50%, are included in the 2% limitation section of Schedule A (total all other expenses subject to this limitation and deduct the amount in excess of 2% of your AGI. Some doctors are able to overcome this threshold, some aren't.
          Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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