How to Deduct Business Travel Expenses

If you travel away from home for your business, profession, or job you can deduct your expenses. However, not all of these expenses are deductible. In this article we’ll take a look at what qualifies as a travel expense and how to deduct the most.

5 things to know about business travel expenses

The 2020 tax season has begun and you should get ready to ensure that your return can be optimized. If you travel for business (we know, COVID-19 put a damper on it, but travel is picking back up again!) — collect all the paperwork you might need to deduct  your business travel expenses. You’ll find the list below. And let’s see what else you should know about deductible expenses.

1. What is a tax home? 
Your tax home is the city or general area where your main place of business or work is located no matter where your family home is. If you’re from Baltimore, but your permanent workplace is in Philadelphia you can not deduct your hotel, food, and travel back home expenses as business travel expenses. 

2. What are the “ordinary and necessary” expenses?
Your expenses should be ordinary and necessary to be deductible. 

What is an ordinary expense? An ordinary expense is common and accepted in your business. What is a necessary expense? A necessary expense is one that is helpful and appropriate for your trade or business.

We know that it’s not easy to define what expenses can qualify as ordinary and necessary. To make sure that you’re maximizing your deductions and increasing your tax refund, contact the TFX tax experts. You can have a phone consultation, or you can get your tax return prepared by an experienced CPA — it’s your call. 

3. Your business trip should be planned in advance
Make a plan, book the tickets and the hotel. Make reservations, and make sure that someone from your office has the copy. It’s also a good idea to put a date on it. It’ll help to prove your trip was intended as a business trip.

4. List of deductible travel expenses 
Below is a non exhaustive list of deductible travel expenses. Please note that the deductible travel expenses are not limited to the ones included in the list:

• Transportation expenses such as traveling by airplane, train, bus or car in order to reach your business destination. Note — if your employer paid for your ticket, or you are a frequent traveler, and you traveled for free you cannot deduct these expenses.
• Taxis, trains, or other types of transportation that you might use to move between airports or train stations, your temporary workplace or your clients’ workplaces.
• Shipping expenses are deductible as well. You can ship your baggage or some samples.
• If you use your car while at your business destination, you can deduct actual expenses or the standard mileage rate, business-related tolls and parking fees. You can deduct the business-use expenses if you rent a car as well. 
• Lodging, meals, and tips are deductible.
• Dry cleaning and laundry are deductible.
• You can deduct business communication expenses such as calls or fax while on your business trip. 
• Other similar ordinary and necessary expenses related to your business travel. 

5. How to deduct travel expenses when traveling outside the U.S.?
If you are on a trip abroad you should spend at least 25% of your time conducting business to qualify for deductions. If you spend less than 25% of your time conducting business,  you can still deduct travel expenses but only proportionally to the time you spend on your business. 




Article written by Veronica
(Photo by phuongphoto​ via Flickr)