Business travel expense deduction rules
Traveling for work has its ups and downs. If you travel for conferences, business meetings or other work responsibilities, these trips can start to feel like mini vacations. Eating out at restaurants, staying in hotels, exploring new places in between meetings—sounds like a good time, right? Well, at least until you get to the cost of those luxuries.
For most employees paying for a work trip is just a matter of being reimbursed by their company. However, for those owning a business there are rules and risks when it comes to business expenses. Travel expenses can provide business owners with significant deduction opportunities but there are restrictions on what can and cannot be deducted. Let’s dive into the dos and don’ts of business expense deductions.
How much can you write off?
When it comes to business travel write offs there are certain criteria that make an expense eligible for deduction. For starters you must be “away from home”, and your trip must be far away enough that it cannot be completed without taking time to sleep. Away from home includes both your home and the location of your main place of business, or your “tax home”.
Fifty percent of meal costs can be deducted along with tips on eligible expenses. Other deductible expenses include local transportation such as taxi, train and bus, as well as flights. Hotel expenses, baggage charges and car maintenance costs can also be written off. Even cleaning and laundry expenses can be deducted.
Travel expenses must also be business related and deemed ordinary, necessary and reasonable. That means no overly lavish hotels or other extravagances unrelated to conducting business. If traveling with a spouse or other persons outside of the business, you usually cannot write off their expenses. Furthermore, travel expenses associated with starting or acquiring a new business cannot be deducted as business expenses.
Get the deal done
Managing finances can be difficult when starting a new business and many business owners look for ways to deduct expenses whenever possible. Traveling for business is tax deductible. However, it’s important to manage your business travel expenses appropriately. The IRS scrutinizes travel expenses carefully for potential abuses, and no one wants to find themselves on the other end of a tax audit. An experienced accountant will ensure funds are being properly distributed.
If you’re seeking accounting services for businesses, look no further than GYL certified public accountants and business advisors. The accounting firm of GYL offers a full spectrum of accounting, audit, advisory and tax services for businesses. Whenever you need a second set of eyes before signing the deal, our team is there to help. Don’t let financial mistakes keep your business from growing, schedule a free consultation.