Travel expenses – what can you deduct?
For business-related travel, transportation is a deductible expense: trains, planes and automobiles to get to your business destination, and taxis, buses and rental cars while you’re there. If you travel by boat, it can’t be “luxury” travel. The Staten Island Ferry is all right, but the Carnival Breeze? You’ll be limited to a standard per diem rate.
Lodging and meals are also deductible, but you must keep track of your meal expenses separately. Meals are only 50% deductible, even when you’re travelling. Keeping good records is necessary for all your travel expenses. You should be able to show what days you were travelling, where you went each day, details on each expense you are deducting, and the reason why it was a business trip – reading “The Art of the Start” on the beach at Waikiki is not enough.
If that’s too much hassle, you can use a standard per diem rate for meals and lodging. You can look up the rates for different cities on GSA, since San Francisco is more expensive than Des Moines. Can you bring your significant other along to keep you company? Sure, but your sweetie’s expenses are NOT deductible – you’ll have to divide the cost of shared expenses such as taxis and hotel rooms. And if you decide to tack on a few personal vacation days to enjoy the city lights in New York, those expenses are also not deductible – only expenses for the time you were doing business.
About the author: Mariette Knoblauch, CPA, specializes in individual and small business income tax filing at The Ballard Beancounters.