Travel Expense Deductions 101
The IRS defines Business Travel as traveling away from you tax home that is “substantially longer than an ordinary day’s work” and that requires you to rest or sleep away from home.
To deduct these expenses, you need to have slept away from home and you travel must be temporary (less than a year).
What Expenses Are Deductible While Traveling for Business?
When traveling between your tax home and business destination you can deduct the cost of travel by train, bus or airplane.
Other business travel deduction includes:
Taxi, commuter bus, airport limousine: The costs of travel between the airport and hotel or to a business location can be deducted from your taxes.
Meals and lodging: The cost you spend on meals and lodging while you are away from home on a business can be submitted an actual expense or use per diem rates, as determined by the IRS.
Car/Truck: The IRS has a standard mileage allowance. If you use your car or truck for business travel within this allowance, you can deduct the cost of maintenance, operating, tolls and parking expenses from your taxes.
Shipping and baggage: The costs of delivering baggage or shipping business materials between your regular work location and tax home and temporary business location are deductible.
How Do You Document Travel Expenses?
Keep your receipts! It is the most important part of deducting travel expenses. You don’t need to have papers copies, but you should have more that just a line item on a credit card to show.
Your receipts should be a specific as possible and include:
- Expense details
- Amount spent
- Business purpose
In this article, you will also learn about:
Can You Write off Flights for Work?
The IRS states that travel by airplane between your home and your business destination. If you were provided an airline ticket or you’re riding free as a result of a frequent traveler or similar program, your cost is zero and you have nothing to deduct.
Can You Write off Tolls for Work on Taxes?
You can claim the price of a toll, if you incur that expense while traveling away from you tax home for a business-related reason. This is cost should not be associated with your regular commute to and from your regular place of business. You can write off your actual expenses for using car for business or you can use the Internal Revenue Service’s standard mileage rate, which was 54.5 cents per business mile for tax year 2018 and 53.5 cents per business mile as of the 2017 tax year.
Can You Write off Mileage?
Drives for business, medical reasons or in support of a charitable organization, you can deduct that mileage on your taxes.
As of January 1, 2018, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 54.5 cents per mile for business miles driven
- 18 cents per mile driven for medical purposes
- 14 cents per mile driven in service of charitable organizations
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating a vehicle, and the rate for medical purposes is calculated with variable costs in mind.
You can only claim the deduction if you use your personal vehicle for your business, medical, or charitable purposes. If you use a vehicle that was purchased by a business, you cannot claim business mileage.
Can You Write off Hotel Expenses for Work?
To claim your hotel stay as a deduction on your taxes, the IRS requires you to travel away from you “tax home” – the area where most of your work takes place. Employees that are required by their companies to travel for business can deduct unreimbursed expenses from travel including all of their hotel expenses and half the cost of their meals. However, if the company provides a per diem allowance or reimburses the employee, only the amounts paid over and above these reimbursements can be legally deducted.
You may also deduct these same expenses when you are traveling as part of a job search or interviews.
The self-employed can take advantage of these same deduction that employee do, on their Schedule C self-employment tax with Form 104. They frequently have higher travel deductions because there is no employing company to reimburse their expenses. If these expenses are billed through to the client, the same rules apply as with an employee on an expense account: payments made by clients count as regular income, and only the excess is deductible.
Make sure you save your receipts. Get a receipt from the hotel front desk and save any documentation you have explaining the business merit of your trip.