What Expenses Qualify as Business Travel Deductions?
Here are some tips to make sure you’re eligible for your maximum business travel deductions when it comes time to hit the road for work. As well, we list some travel expenses that aren’t deductible that you may want to steer clear of.
What Counts as Business Travel?
The fun folks at the IRS define business travel this way:
- You’re traveling away from home/your main place of work for business reasons. This includes going to a convention, if it benefits the business.
- You’re away from home for longer than a day, and need to sleep somewhere other than home to meet the demands of work.
Allowable Business Travel Deductions
The IRS says that travel expenses must be ordinary and necessary. They can’t be lavish (no renting a villa in Tuscany), extravagant (caviar for breakfast) or for personal purposes (hiring a symphony orchestra to lull you to sleep).
These are some of the expenses you can deduct:
- Travel by plane, train, bus or car between home and a business destination.
- Other fares for getting around, like a taxi from the airport to the hotel, or an Uber from the hotel to the client’s office.
- Shipping baggage or work materials (samples or display graphics).
- Lodging and meals.
- Dry cleaning and laundry.
- Business communications. Most everyone has a cell phone these days. But if you’ve travelled back in time and need to send a fax, that’s deductible.
- Tips.
- Any of the above expenses you reimburse employees for.
Travel Expenses That Aren’t Deductible
If you want to combine a personal vacation with a business trip, be careful. If you’re traveling for business, you can deduct the portion of the trip that’s for business. But the plane tickets for the wife and kids, and admission to Disneyland aren’t deductible.
Taking a client to Disneyland or to a sporting event or concert isn’t deductible. Unfortunately, ntertainment was ruled out as a deduction a few years back.
You have to plan your business trip. The eager business owner can’t just show up at the Metropolitan Gala, start handing out business cards, and call it networking. You need to plan your itinerary for each day.
Notes for Employers and Employees
If your employee is travelling on your behalf, you can deduct all those expenses listed above if you reimburse them. If you’re the employee, that reimbursement is not taxable. But if your employer doesn’t reimburse you, those expenses aren’t deductible on your personal taxes.
One Last Tip
Keep good records! This is an area where the IRS really likes to hold you accountable in an audit.
Links
Here is a guide on what to pack for your trip.
These cities are the top business travel destinations of 2024.
Lastly, you can learn more about our services here!
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