It’s surprising the number of people who want to know if they can deduct their Starbucks orders on their taxes. For this reason we want to answer that question and educate you on the IRS rules.
The tax code allows you to deduct 50% of the cost of meals (including that Starbucks coffee), if it is considered a business meal. In other words the meeting should be for business purposes. One other requirement to deduct business meals on your taxes is that the cost cannot be lavish or extravagant (which shouldn’t be an issue with most Starbucks orders).
The general rule of thumb is that the IRS will allow you to deduct expenses as long as they are ordinary and necessary. It is not only common, but expected, that part of doing business involves get togethers such as meeting up at Starbucks with current customers or developing relationships to acquire new customers.
Important Reminder
Don’t forget to save your receipts! It’s a good rule of thumb to keep records of all your income and expenses but to also hang on to your receipts. If you have your receipts you will be able to provide proof of your expenses in case of a tax audit.
Also, keep in mind that your credit card statement is not enough. A credit card statement only shows that a purchase was made not what it was for. If you have a business meal, be sure to that your receipt shows:
- Name and location
- Date
- Amount
- Business purpose
Now that you have this information you’ll be able to sleep a little easier knowing that you have all your ducks in a row the next time you invite someone to Starbucks.