YouTube Vloggers & the 100% Meal and Entertainment Deduction Controversy

Someone asked me a very interesting question.

My channel is on Las Vegas travel. My tax person is telling me that I can only write off 50% of meals and entertainment while in vegas. It seems to me like that rule is meant if you are having a "business meeting." In the case of a vlogger, the meals and entertainment are a necessary expense to make the content about.

Are you guys able to write off your meals if they are part of your channel?

It’s an interesting question, and I’ve run it by other tax pros. What do you think?

So me knee jerk reaction is to default to the standard rules as set forth in the tax code…

Which are, in 2023 business meals are 50% deductible and entertainment is not deductible, currently.

As a side note, after 2025 entertainment becomes 50% deductible again.

So for a food and entertainment vlogger, things get a little interesting.

Because their business is presumably for reviewing food and entertainment venues.

So the question is, would the traditional rules apply to them?

The first question I would ask is whether or not it’s even really a business.

Is there income being generated?

Is there a profit? Or profit motive?

If not, then maybe it’s a hobby and then none of the expenses would be tax deductible.

Lets say for the sake of argument, there is a profit of say five figures per month. Some of these channels make a lot of money in case you didn’t know. I’m talking six figures per year. Wow!

Okay so in this case it’s clearly a business with a profit motive. The business should be able to deduct expenses that are ordinary and necessary to that business.

They could argue that meals, which are reviewed for vlogging purposes, should be 100% deductible.

They could attend a Bruno Mars show at the MGM, review it on their channel, then argue that it should be a tax deductible business expense.

This is all getting very interesting, but let’s look at the rules.

For business meals, according to the IRS, For 2023 and on, businesses can generally deduct 50% of the full cost of business-related food and beverages purchased from a restaurant.

For entertainment, this is what the IRS says.

Business entertainment is currently not tax deductible, until after the year 2025, then it becomes 50% deductible. This is when the Tax Cuts and Jobs Act expires.

Now with that being said, taking a position against, let’s call them established rules, is taking an aggressive position with the IRS, and that can result in the expense being disallowed. Resulting in taxes due along with penalties and interest.

It’s really something that needs to be considered on a case by case basis.

A fellow tax professional tells me, that she has a good vlogger client who makes over $100K on vlogging with a YouTube channel. “This client is definitely operating as a business”, she says. Client has taken trips to Disney World to review some of the food offerings on her YouTube vlog. She has determined that the Disney tickets are personal, but the food that’s being reviewed is a business deduction.

I’ve posed this question to other tax professionals, and not surprisingly the answers varied to “Yes”, it may be deductible, to “No” it’s absolutely not deductible.

Another tax pro says, It depends, if the business is in the business of actually providing entertainment, travel reviews, food reviews that sort of thing, then it is 100% deductible as production costs. Some of these YouTube channels and Patreon channels make thousands per month, or more.

Fellow CPA, Joni Becker says, “The code is clear that entertainment is no longer deductible. As to meals, you are going to eat anyway, the 50% is to cover the higher price of eating out. Aside, of course, from the current 100% for restaurant meals (for 2022). Of course, it only matters if you (or your client) are audited. At that point, how comfortable are you defending the business aspect of it. It's a very controversial subject right now”

Thanks Joni, I agree with that as well.

Personally, I think it should be without argument, but clearly the tax code hasn’t kept up with the new economy of vloggers and influencers.

My advice is to find a tax professional who understands your business, and especially the new economy, and is willing to go to bat for you in the event the IRS starts questioning your deductions. Not all tax professionals are willing to go against the traditional rules set forth in the IRS tax code.

Personally, I’m somewhere in the middle. I would have to take things on a case by case basis.

I think in most cases vlogs don't generate enough money to justify the expenses and people try to take advantage by trying to write off everything they can.

Maybe blame that on bad TikTok advice, but I digress.

On the flip side, if a vlogger or influencer receives a free meal, free hotel stay, free tickets…

This is all taxable income and should be reported as income on their tax return.

Just keep that in mind. If you’re trying to deduct everything, then you should be reporting everything as well.

Thanks for reading, and see you in the next blog post!