Business Travel Tax Deductions

Many of the expenses involved in a business trip are tax deductible

Those who have to do a lot of traveling for work will be relieved to know that you can deduct many of those expenses and thus significantly lower your tax bill.

What travel expenses can I claim?

According to the IRS, you can claim the “ordinary and necessary expenses of traveling away from home for your business, profession, or job.”

Be warned: the expenses cannot be “lavish or extravagant” in the eyes of the IRS. Obviously no personal expenses are deductible either. It might make sense to exclude questionable expenses from your return as they can increase the chance of you getting audited.

The travel expenses you can deduct include

  • travel by airplane, train, bus, or car between home and the destination
  • the use of a car while at your destination
  • taxi fare or other transportation costs while at the destination
  • meals and lodging
  • tips for related services
  • dry cleaning and laundry
  • business calls while on the trip
  • other similar ordinary/necessary expenses related to the business travel

A word about the business meals deduction

Generally you can only deduct 50% of business-related meal or entertainment expenses. This includes meals while traveling away from home on business.

If you choose to deduct a meal as a travel expense, you cannot also deduct it as an entertainment expense.

What kind of travel qualifies?

According to the IRS, you can claim business trip travel deductions “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.”

Basically your tax home is your main place of business. So travel back and forth between your tax home and the normal home where you live – even if it’s a large distance – does not count as a business trip and thus those expenses cannot be deducted.

Also, you cannot only deduct expenses for a business if it is for a temporary work assignment. Expenses associated with travel to and from an indefinite work assignment, or a work assignment lasting more than one year, are not deductible.

Travel to a convention does count as a business trip and you can deduct those expenses, but you must be able to demonstrate that the convention benefits your business.

One final note – job seekers can also deduct travel expenses, but you must be looking for a job in your trade or business. If you’re looking to find a job in a different trade, you’re out of luck.

How to claim the deductions

You can claim these deductions using either Form 2106 [Employee Business Expenses] or Form 2106-EZ [Unreimbursed Employee Business Expenses].

You must also claim the expenses on Schedule A [Itemized Deductions], which you attach to your 1040.

All this can be done when you efile taxes online.

Photo via Angelo Juan Ramos on Flickr.

Leave a Reply

Your email address will not be published. Required fields are marked *