Maximizing the Deductibility of Expenses for Business Travel

Maicher CPA Pllc helps clients find tax deductions.   Summer’s here and so is a period of peak travel.   If you are a business owner, there are tax deductions, potentially large ones, for certain expenses arising from business trips – if certain conditions are met.  

  1. The General Rule.   Certain expenses incurred in business travel are deductible when business owners must travel away from their tax home or main place of work for business reasons.  Taxpayers are “traveling away” if they are away for longer than an ordinary day’s work and they need to sleep to meet the demands of their work while away.  (Note that what constitutes “tax home” or “main place of work” can get somewhat technical and is an issue for which Maicher can provide advice.).   
  2. The “One-Year Rule.”  In order for the expenses to be deductible, the travel must also be for a “temporary work assignment” away from home/main work place. Work assignments exceeding one year are deemed not “temporary” and expenses are therefore not deductible. 
  3. What travel expenses are deductible?   In general, travel expenses must be “ordinary and necessary” and “primarily related to business” though not exclusively related to business.  Additionally, at least one, documented, business appointment should be made before the trip.  Do not fall prey to the notion that handing out business cards extemporaneously during a vacation trip makes travel expenses deductible.  Common examples of deductible travel expenses include, among other things:
  • travel by airplane, train, bus or car (rental or owned) between home and the business destination;
  • fares for other transportation (e.g. taxis, rental cars, etc.) between an airport/train station and a hotel as well as from a hotel to a work location;
  • lodging;
  • meals (up to 50%);
  • dry cleaning and laundry; and
  • business calls and other business communications.

4. Record keeping requirements.   Good records are essential for ensuring the deductibility of travel expenses.  Generally, taxpayers should keep: (a) a log of who they met with and the meeting’s business purpose and (b) receipts/other documents evidencing expenses. While receipts are not required for expenses less than $75, a log should be kept of the date and place that expenses are incurred.    

Take-away:  Maicher proactively advises business owners about what qualifies as deductible business expenses, including those arising from business travel be it during the summer or other seasons.   Call Maicher to make sure you’re maximizing business deductions.  

Sources:

IRS Publication – Topic No. 511, Business Travel Expenses (April 6, 2023). 

IRS Publication – Understanding Business Travel Deductions (February 7, 2023).

Making the Most Out Of Your Business Travel, Forbes (May 7, 2021).