Are Meals Dining Out With My Wife Deductible?
Home Business Taxes - Limitations

by L. Kenway BComm CPB Retired

This question about the deductibility of meals with my wife is often asked ...

Deducting personal expenses can reopen Statute-Barred years.

Know the rules so you don't land in hot water years later!

Why can't I deduct my meal expense with my wife? ... We talk about business over the meal. I seek her input on various strategies and direction the business should take.

A Financial Post article written by Jamie Golombek on August 23, 2019 provides an excellent example of how making this claim can get you into trouble. (See https://business.financialpost.com/personal-finance/taxes/deducting-personal-expenses-as-business-ones-lands-taxpayer-in-hot-water-years-later).

Here are the highlights:

"... he [the taxpayer] testified that “whenever I had a meal that didn’t involve a potential prospect, my wife and I talked about the business so that it could be included for tax purposes.” ...

[The judge's opinion] "As for the meals with his wife, “ensuring that they talked about the business during some portion of the meal so as to render the expense deductible” was not good enough to claim a tax deduction since the meals have to be incurred for the purpose of earning income." ...

[The Court's decision] "The judge found there were actually two misrepresentations. The first was that the taxpayer claimed advertising expenses although he had not engaged in advertising. And the second, perhaps more egregious one, was that the taxpayer claimed meal expenses for meals he had with just his wife. “That readily appears to be a situation of claimed business expenses that actually are personal expenses,” the judge wrote."

Can I deduct my lunches while I was running errands or working at my desk?

Eating lunch at your desk while you are working is NOT a business expense.

A similar question to taking your wife out to dinner, is can you claim your lunches when you are "working"?

The short answer is NO. You cannot deduct meals and entertainment for ONLY yourself unless you are traveling away from home for business purposes ... as it relates to personal living expenses.

Meals eaten during an ordinary business day where no business meeting was conducted are not deductible. The idea is that you would still have to eat if you were not self-employed.

That means the trip to town for supplies where you also grabbed lunch "while you were working" ... is NOT a business expense. The trip to town can be logged in your auto log though.

I discuss this topic in more depth under Meals and Entertainment Limitations.

bean counting tip! Which business entity is best for you?

GOOD TO KNOW

General Rule - As a general rule, ask yourself three questions before you claim a business expense:

(1) If an arms length employee submitted this expense to you on an expense report, would you approve the expense and reimburse the employee." If the answer is no, you likely can't deduct it either.

(2) How did this expense generate business income?

(3) Would I not have incurred this expense if I didn't have my business? For example, would you stop taking your wife out to dinner if you didn't have your business? Probably not which would make this a personal expense.