All aboard! Or maybe we should say, “You are free to move about the cabin.”
Either way, you get the picture we’re trying to paint for you. It’s travel season!
As the holidays quickly approach, the reality of holiday travel expenses quickly approaches, too. You may have traveled for Thanksgiving, started planning your end-of-year festivities, or something else entirely.
All this talk of booking tickets has us thinking about business travel expenses. Regardless of your holiday travel plans, there’s a chance you did some traveling throughout the year that may just end up qualifying as a deduction on your tax return.
So, before you take your next business trip, make a point of perusing these nine travel expenses and learning how they may qualify as deductions for your business tax return—and when they don’t. You might just be surprised.
You’ve got your wallet, keys, phone, and toothbrush, right? Then all aboard!
There are a few filters you should run your travel expenses through before trying to write them off on your tax return.
The broad definition for business travel, as defined by the IRS, is as follows:
“You’re traveling away from home if your duties require you to be away from the general area of your tax home for a period substantially longer than an ordinary day’s work, and you need to get sleep or rest to meet the demands of your work while away.”
What is a tax home, exactly? Well, it’s the city or area where your business or work is located. Any travel that takes you away from the usual area where you work for a chunk of time might qualify.
(The only exception is if you work and live in different areas. On the IRS’s website, they toss out an example of somebody who lives in Chicago but works in Milwaukee during the week, staying in hotels and eating at restaurants. Because they don’t do work in Chicago, travel costs to get there wouldn’t be deductible.)
With that out of the way, let’s get into the types of expenses associated with business travel that you can typically deduct.
Did you book a plane ticket to get to your destination? Deductible. Did you decide to drive? Keep the receipts.
Basically, any cost associated with your travel from home to your destination is going to be considered a deductible travel expense, whether you take an airplane, train, bus, or car. Your gas, rental car, tickets, and any other costs you incur when physically moving yourself from point A to point B are all deductible.
However, if you’re already going to be reimbursed by your company, your ticket has been paid for, or you’re using miles you incurred through a frequent flyer or other loyalty program, you can’t deduct what the cost would have been otherwise. The only expenses you can deduct are expenses that came out of your pocket.
If you’re in town for a conference and you’re planning to take a cab or an Uber, you can probably write it off.
In fact, the cost of any transportation you take while at your business destination is deductible. So, if you’ve taken a plane or train into town, keep record and evidence of your taxi, bus, and subway rides for the duration of your stay. Most trips, from your hotel to the work location, from one customer to another, or from your hotel to the airport, are deductible.
We wish you could get away with just using one carryon on a business trip, but it’s often not possible.
If you do need to transport baggage or work related materials to your temporary work location, you can count it as a business expense. This may include display materials for a convention you’re attending, pamphlets and other materials for a prospective client, or specific documents or products that need to be shipped directly to a customer you’re meeting with.
If you’ve opted to travel by car to your work destination, get ready to write off some expenses while you’re there.
Specifically, you’ll be able to deduct business-related tolls and parking fees—regardless of whether you’re using your personal car or a rental. Additionally, if you’re using your own car, you can deduct the actual expenses or the standard mileage rate.
If you’re on a trip for business, you’ll need to eat and sleep at some point, right? Right. You can feel free to deduct the costs of meals and lodging, whether that might be a hotel at the conference hotel or a conveniently located Airbnb.
Depending on the length of your business trip, you may need to get a suit pressed or a shirt dry cleaned. Fortunately, many hotels offer this in-house service or will happily recommend a reliable dry cleaner nearby. Regardless of the service you need, you can successfully deduct it as a business travel expense.
Any business calls you make during your trip are probably deductible. Additionally, any other communications you need to make, like faxing a document at your hotel or at a nearby UPS, are deductible.
You’re not on the hook for gratuities.
From tipping your cab driver to throwing down 20% on your dinner, any tips that you pay while on your trip count as travel expenses. So, any of the previous services you may have tipped on, keep the receipt (or make a detailed record) and you’ll be able to write them off.
Oh great, so what does this mean?
It just means that you can deduct basic expenses that might reasonably come up with your work. The IRS specifically mentions computer rental fees, public stenographer’s fees, and transportation to a business meal, but there are a heap of others.
What doesn’t count: A ridiculously lavish meal, extravagant hotel, or something that’s clearly for personal purposes, like a movie ticket.
It’s time you start treating your travel expenses like they’re a part of your business—because they are. Keep close records and read the full article from the IRS, then follow up with us to answer the rest of your questions.
Smart deductions don’t just save you money now, but they’ll also help your business grow in the future. And that’s something we bet you won’t want to write off.