If you travel for business, you want to claim valid deductions, but the rules can be confusing. Following are just a few tax details business travelers should know.
- Business travel deductions are available when employees must travel away from their tax home or main place of business–and there are definitions to know for both.
- A taxpayer is traveling away from home if they are away for longer than an ordinary day’s work and they need to sleep to meet the demands of their work while away.
- Travel expenses must be ordinary and necessary. They cannot be lavish, extravagant, or for personal purposes.
- Employers can deduct travel expenses 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 the business. There are special rules for conventions held outside North America.
Deductible travel expenses include:
- 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 and a hotel, or 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
- Lodging and 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 the business travel
Those who are self-employed, farmers, and National Guard or military reservists also can deduct travel expenses.
Of course, well-organized records make it easier to prepare a tax return. Keep records such as receipts, canceled checks, and other documents that support a deduction.
IRS Publication 463 includes helpful information to guide you in claiming business deductions or talk with your R&A advisor. We are here to help!