One of the most stressful times of your life is an annual event – filing taxes.
No seriously. Filing taxes is a stressful event.
And if you file them incorrectly, you can expect even more stress – especially if you have complicated business taxes. Claim the wrong expenses and you could get a nasty surprise from the IRS.
Don’t want an unexpected visit from the taxman?
Keep reading to find out what you need to know about business travel expenses – before you file your taxes incorrectly.
What Are Business Travel Expenses?
The IRS defines travel expenses as ordinary and necessary expenses of traveling for your work or business. An individual’s tax home is not where they live, but where their main place of business is located.
However, if an individual works at the new location for more than a year, it’s considered a long-term assignment, as opposed to business travel. In that event, travel expenses are not deductible.
Common Business Travel Expenses
There are many common business travel expenses that you can claim. Some of the more common ones include:
- Plane, train, bus, car, or taxi travel expenses
- Using your own vehicle while at your business destination
- Costs of shipping business supplies or display materials and personal luggage
- Costs of temporary accommodations
- Tips related to business expenses
- Business-related phone calls and faxes
- Laundry and dry cleaning
- Other ordinary and necessary expenses related to your business
For meal deductions, you don’t need to keep records and deduct the actual cost. Instead, you can use a standard meal allowance. The deduction is limited to 50% of the unreimbursed cost.
Additional Deductions to Consider
Do you own a timeshare? If so, some of your timeshare expenses are deductible, especially if you use it for business lodging.
However, many timeshare expenses aren’t deductible – like if you are earning rental income from the property.
Timeshares can be huge money pits. If you’re looking to get out of your timeshare, consult this source for more info on how to get started.
Another travel deduction you can write off is conference fees. Equipment rental for a conference along with registration fees can all be deducted.
How to Deduct Your Business Travel Expenses
How you deduct your expenses will depend on how your business is set up. Sole proprietors and single-member LLCs can use a schedule C tax form and fill out the expenses section.
Multi-member LLCs and partnerships can use a 1065 form and file deductions under the deduction section.
Finally, corporations can file their expenses under the deductions section of form 1120.
Always Track Your Business Travel Expenses
Next time you travel, don’t forget to keep your receipts so you can claim your business travel expenses. Log everything, keep track of travel dates and costs, and write down the reasons for the expenses. You don’t want to have to scramble and try to remember everything in the event of an audit.
If you like this article, check out more articles in our Business and Economy sections for additional business travel tips.