What You Need to Know About Business Travel Deductions

It seems that everyone is traveling these days. You may have decided that the time has come to resume business travel. While it will come as no surprise that the costs of travel have increased drastically, you may be surprised to know that some of your business travel expenses may be deductible.  Here are some things you need to know about business travel expenses.

  1. Business travel expense deductions are available if you or your employees must travel away from the tax home or main place of work for business purposes.
  1. The travel period must be substantially longer than an ordinary’s day work so that there is a need to sleep in order to meet the demands of the job while away.
  1. The travel expenses incurred must be ordinary and necessary. The expenses cannot be lavish, extravagant or incurred for personal purposes.
  1. If the travel expenses are incurred in connection with a temporary work assignment, the expenses can be deducted so long as the work assignment does not exceed one year.
  1. Travel expenses incurred to attend a convention in North America, can be deducted if attending the convention benefits the business. There are special rules for conventions held outside North America which are beyond the scope of this article.
  1. Self-employed individuals may deduct business travel expense if the expenses so qualify.
  1. Travel expenses which are eligible for a deduction include:
  •           Travel costs between your home and the business location.
  •           Transportation expenses between the airport/train station/bus station and the hotel, and between the hotel and       business location.
  •          The costs of shipping baggage and materials needed to perform the work between the regular work location and the destination business location.
  •         Lodging and business meals.
  •         Business calls and communications.
  •         The business use of a personally owned automobile.
  •         Dry cleaning and laundry expenses.
  •         Tips paid for services related to any of the above business expenses.
  •         Other similar ordinary and necessary expenses related to the business travel.

If travel business expenses are deducted, it is important that records documenting the expenses be maintained. In the event of an audit, you will need the records to prove that you are entitled to the deduction claimed. For additional information regarding business travel expenses and record keeping requirements see: https://www.irs.gov/pub/irs-pdf/p463.pdf

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