If you travel for business, you probably know that you can deduct some of the expenses related to that travel from your income taxes. But knowing which expenses are deductible, and under what circumstances might make your head spin. In this article we want make sense of business travel deductions so that you know what records to keep in order to maximize your deduction.
The basics of business travel deductions
In order for expenses related to your business travel to be deductible, your travel must take you away from your tax home or main place of work for business reasons. For the purposes of this deduction, you are “traveling away from home” if you are away for longer than an ordinary day’s work and you need to sleep to meet the demands of your work while away.
Travel expenses must be ordinary and necessary. They can’t be lavish, extravagant or for personal purposes.
Employers can deduct travel expenses paid or incurred during a temporary work assignment if the assignment length does not exceed one year.
Travel expenses for conventions are deductible if attendance benefits the business. There are special rules for conventions held outside North America.
Deductible travel expenses include:
- Travel by airplane, train, bus or car between your home and your business destination.
- Fares for taxis or other types of transportation between an airport or train station and a hotel, or from a hotel to a work location.
- Shipping of baggage and sample or display material between regular and temporary work locations.
- Using a personally owned car for business.
- Lodging and meals.
- Dry cleaning and laundry.
- Business calls and communication.
- Tips paid for services related to any of these expenses.
- Other similar ordinary and necessary expenses related to the business travel.
Travel deductions for the self-employed
If you are self-employed, you can deduct travel expenses on your Schedule C (Form 1040). If you are a farmer, you will need to use Schedule F (Form 1040).
Recordkeeping
If you will be claiming deductions for business travel, it’s important to keep good records of your expenses so that you can support your deductions. Keep receipts, canceled checks, credit card statments, and other evidence that supports your expenses so that you can claim your full dedcution.