With the summer travel season nearly upon us, here are some tips and rules about deducting business travel expenses:
- Travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job.
- You are 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 and before returning home.
- Deductible travel expenses while away from home include, but aren’t limited to: travel by airplane, bus, train, or car, meals and lodging, tips you pay for services related to these expenses.
- The government does allow a standard meal allowance / per diem rate that you can deduct in lieu of actual meal expenses. The per diem rates vary based upon location and can be looked up on the GSA website. You will base your deduction for meal and entertainment for each trip based on the per diem rates or actual expenses incurred.
- For domestic travel, the trip needs to be primarily for business. For foreign travel, the threshold is exclusively for travel (subject to various exceptions on what actually constitutes exclusivity.)
- You may deduct travel expenses, including meals and lodging you incurred in looking for a new job as long as you have established yourself in your present trade or business.
- You can deduct travel expenses paid or incurred in connection with a temporary work assignment away from home. The temporary assignment cannot be considered indefinite or cannot be expected to last longer than one year. You also need to intend to return back to your original home to continue working at the end of the assignment.
- Travel expenses incurred in connection with a job-related moveare claimed on a Form 3903.
According to the IRS, “Good records are essential. Refer to Topic 305 for information on recordkeeping.”
For more information on travel expenses, please refer to IRS Publication 463.