Sometimes, travel is necessary in order to improve your business. The good news is that the IRS allows you to deduct many of the expenses that come with your business-related travel. You do need to be careful, though. Make sure that your expenses are truly related to business, and that your trip is more about business than about pleasure.
If you are on a temporary assignment (less than a year) or if you are traveling to a convention or trade show for business purposes, you can deduct a number of your travel expenses. Here are some of the expenses you can expect to deduct for business travel:
If you use your car to drive for business travel, the IRS will reimburse for each mile traveled. Make sure you keep accurate records of your mileage.
You can deduct your transportation costs if you don’t use your own car, including transport by airplane, bus and train. Additionally, you can deduct the costs of taxi rides and shuttle rides between the airport/station and your hotel and between the hotel and your work location.
Your hotel costs are tax-deductible.
In most cases your business meals while on a trip are limited to 50% of the cost, so keep that in mind as you eat out.
If you entertain a client or potential partner, and discuss business, you can usually deduct 50% of the cost. Be careful, though, there is a fine line between business entertainment and regular entertainment.
If you need to pay to have your clothes cleaned while on your business trip, you can deduct it.
Tips: When you provide tips to service providers and drivers, you can deduct those expenses.
Conference and trade show fees are also tax-deductible – as long as you can show that they are related to your business. As long as you are meeting potential clients or partners, making useful business contacts, or learning skills that will help you better run your business, you can deduct registration fees.
If you incur costs related to business communications (faxes, calls, extra cell phone charges, Internet access), you can deduct those costs.
As always, whenever you plan to claim a tax deduction, you need to make sure that you have plenty of documentation so be sure to keep you receipts. You might even want to take notes about the people you talked to and the business discussions you had (especially important if you want to deduct entertainment expenses). If you have questions about whether something truly qualifies as a deductible travel expense, you can visit IRS.gov for more information.