Business travel deductions are available when employees travel away from their tax home or principal place of work for business reasons. With inflation on the rise, business travel is more costly than ever. Hotel bills, airfare or train tickets, cab fares, and public transportation can all add up fast.
The good news is that business travelers may be able to off-set some of those costs by claiming business travel deductions when they file their taxes. Let’s take a look at a few details that every business traveler should know about:
- The travel period must be substantially longer than an ordinary day’s work, and a need for sleep or rest to meet the demands of the work while away.
- Travel expenses must be ordinary and necessary. They can’t be lavish, extravagant, or for personal purposes.
- Employers can deduct travel expenses (see below) paid or incurred during a temporary work assignment if the assignment length does not exceed one year.
- Travel expenses for conventions are deductible if attendance benefits your trade or business (you can’t deduct the travel expenses for your family). You can’t deduct the expenses if the convention is for investment, political, social, or other purposes unrelated to your trade or business. There are special rules for conventions held outside North America.
Deductible travel expenses while away from home include the costs of:
- Travel by airplane, train, bus, or car between your home and your business destination.
- Fares for taxis or other types of transportation between an airport or train station to a hotel, from a hotel to a work location.
- Shipping of baggage and sample or display material between regular and temporary work locations.
- Using a personally owned car for business, which can include an increase in mileage rates.
- Lodging and non-entertainment-related meals.
- Dry cleaning and laundry.
- Business calls and communication.
- Tips paid for services related to any of these expenses.
- Other similar ordinary and necessary expenses related to business travel.
Self-employed or farmers with travel deductions
Self-employed individuals can deduct travel expenses on Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship). Farmers should use Schedule F (Form 1040), Profit or Loss From Farming.
Travel deductions for the National Guard or military reserves
National Guard or military reserve service members can claim a deduction for unreimbursed travel expenses paid during the performance of their duty.
Recordkeeping
Well-organized records make it easier to prepare a tax return and help provide answers if your return is selected for examination or if you receive an IRS notice. You must keep records, such as receipts, canceled checks, and other documents that support an item of income, a deduction, or a credit appearing on a return.
Questions?
If you have questions about business-related travel deductions, don’t hesitate to call our office. We’re always here to help.