Ethan Brooks
The Internal Revenue Service (IRS) defines breakfast hours as the normal breakfast period during which food service employees work. The IRS also defines meal periods as short meal periods that last 30 to 45 minutes, during which employees are restricted to the business premises due to the nature of their work and are expected to be available for emergency calls.
| Characteristics | Values |
|---|---|
| Meals provided during working hours | Furnished for convenience if the nature of work restricts an employee to a short meal period (e.g. 30-45 minutes) |
| Meals provided outside of designated meal periods | Cannot exclude the value of these meals from an employee's wages |
| Meals provided during overtime | Exclusion applies if provided occasionally and not based on hours worked |
| Meals provided during emergency calls | Must show that emergency calls have occurred or are reasonably expected to occur during the meal period |
| Meals provided in an employer-operated facility | Exclusion applies if annual revenue equals or exceeds direct operating costs |
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What You'll Learn
Meals during working hours
Meals provided to employees during working hours may be excluded from wages if they meet certain criteria. The IRS considers meals provided during working hours as a fringe benefit. If an employee works during the normal breakfast and lunch periods, the value of their meals during those periods can be excluded from their wages. However, if meals are provided on their days off, the value of those meals cannot be excluded.
There are specific situations in which meals furnished during working hours are considered for the employer's convenience and can be excluded from wages. One such situation is when employees are required to be available for emergency calls during their meal period. In this case, the employer must demonstrate that emergency calls have occurred or are reasonably expected to occur, resulting in employees being called upon to work during their meal break. Another scenario is when the nature of the business restricts employees to short meal periods (e.g., 30 to 45 minutes), making it impractical for them to eat elsewhere within such a short timeframe. This could apply if the peak workload occurs during the typical lunch hour.
Occasional meals or meal money provided to facilitate employee overtime work may be excluded from wages. However, this exclusion does not extend to meals provided on a regular or routine basis or meal money calculated based on hours worked (e.g., $2.00 per hour for each hour over 8 hours). Additionally, meals provided at an employer-operated eating facility may qualify for the de minimis meals exclusion if the facility's annual revenue equals or exceeds its direct operating costs, encompassing food, beverages, and labour expenses.
It is important to note that, in general, only 50% of business-related meal expenses are deductible. However, individuals subject to the Department of Transportation's "hours of service" limits can deduct up to 80% of these expenses. Furthermore, employers can choose to utilise the IRS's simplified "high-low" rates for per diem spending, which vary based on the cost of living in different localities. Per diem rates simplify expense management for business trips, encompassing expenses for accommodation, meals, and incidental costs.
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Meals on days off
The IRS has specific guidelines for meals provided by employers to their employees, including those provided during working hours, on days off, and for overtime work.
When it comes to meals provided by employers on their business premises during an employee's day off, the IRS guidelines state that the value of these meals cannot be excluded from the employee's wages for tax purposes. This means that the value of the meal is considered taxable income for the employee and must be included when calculating their taxable wages. This rule applies even if the employer typically provides meals during the employee's normal work hours, such as breakfast and lunch periods.
For example, consider an employee named Carol, who works during the typical breakfast and lunch hours. While the value of her meals during work hours can be excluded from her wages, the same does not apply to meals provided on her days off. In this case, the cost of the meals on her days off must be included in her taxable wages.
It is important to note that there are exceptions to this rule. One exception mentioned in the IRS guidelines pertains to employees who are required to be available for emergency calls during their meal periods. If the nature of the business restricts employees to short meal periods, such as 30 to 45 minutes, and they are expected to be available for emergency calls, the value of the meals may be excluded from their wages. This is because the meals are furnished for the convenience of the employer, allowing employees to be readily available during busy or peak work periods.
Another exception applies to employer-operated eating facilities. The de minimis meals exclusion states that if the annual revenue from the facility equals or exceeds its direct operating costs, the meals provided may be excluded from the employees' wages. Direct operating costs include the cost of food and beverages, as well as labor costs associated with operating the eating facility.
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Emergency call meals
The IRS considers meals provided to employees who are expected to be available for emergency calls during their meal period as furnished for the employer's convenience. This means that the value of these meals can be excluded from the wages of the employees.
To qualify for this exclusion, the employer must demonstrate that emergency calls have occurred or are reasonably expected to occur during the meal period. Additionally, these calls should have resulted or will result in employees being called upon to perform their jobs during their designated meal time.
For example, consider a hospital that maintains a cafeteria on its premises where employees can get meals at no charge during their working hours. If the nature of the hospital's business restricts employees to short meal periods (e.g., 30 to 45 minutes) and they are expected to be available for emergency calls, the hospital can exclude the value of these meals from employee wages.
It is important to note that the exclusion does not apply to meals provided on a regular or routine basis or meal money figured on an hourly basis. The IRS also specifies that the meals should not be considered lavish or extravagant, and the cost of transportation to and from the meal is not included in the business meal expense.
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Short meal periods
The IRS defines short meal periods as those lasting 30 to 45 minutes. If an employee is restricted to such a short meal period due to the nature of their work, and not just their employer's preference, and they cannot be expected to eat elsewhere within that time, then meals provided during working hours are considered for the employer's convenience. This means that the value of these meals can be excluded from the employee's wages.
For example, a hospital that provides meals for its employees on its premises so that they are available for emergency calls during their meal periods can exclude the value of these meals from their wages. This is because the nature of hospital work restricts employees to short meal periods, and they cannot be expected to leave the hospital premises during this time.
It is important to note that if employees are allowed to have meals on the business premises without charge on their days off, the value of those meals cannot be excluded from their wages. Additionally, employers must be able to show that emergency calls have occurred or can reasonably be expected to occur during the meal period, and that employees are called upon to perform their jobs during their meal break.
In summary, short meal periods of 30 to 45 minutes that are dictated by the nature of the work and prevent employees from eating elsewhere can be considered for the employer's convenience. As a result, the value of meals provided during these short meal periods may be excluded from the employee's wages, as long as certain conditions are met.
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Occasional meals
The IRS allows employees to deduct the cost of occasional meals under certain conditions. If an employee is required to be away from their usual place of work for substantially longer than a typical workday, they may deduct meal expenses if they need to stop for substantial sleep or rest to properly perform their duties. This rest period must be longer than a brief nap and cannot be satisfied by resting in a car.
For travel meal expenses, employees can use either the actual cost method or the standard meal allowance method. The actual cost method requires employees to maintain records of their meal expenses, while the standard meal allowance follows the federal meals and incidental expense (M&IE) per diem rates listed by the GSA. It is important to note that lower rates apply for the first and last days of travel. Additionally, employees can only deduct 50% of their business-related meal expenses unless they are subject to the Department of Transportation's "hours of service" limits, in which case they can deduct 80%.
Businesses can also deduct the full cost of business-related food and beverages purchased from restaurants for the years 2021 and 2022. This is a temporary enhancement to the usual 50% deduction limit. To qualify, the meals must be provided by restaurants, which include businesses that prepare and sell food for immediate on-premises or off-premises consumption. The meals must be provided to a business owner or employee, and the expense must not be lavish or extravagant.
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Frequently asked questions
The IRS does not define specific breakfast hours, but it does allow employers to exclude the cost of occasional meals provided to enable an employee to work overtime. This exclusion does not apply to meals provided on a regular basis or calculated based on hours worked (e.g., $2.00 per hour for each hour over 8 hours).
Employers can generally exclude the value of meals provided during working hours from employee wages, including meals provided for the employer's convenience due to short meal periods or to ensure employee availability for emergency calls during the meal period.
Meals provided to employees on their days off cannot be excluded from their wages, according to IRS guidelines.
Hospitals or healthcare facilities that provide meals to employees during breakfast hours to ensure their availability for emergency calls during the meal period may exclude the value of these meals from employee wages, even if employees are not required to remain on the premises.
