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Business Related Travel Deductions

November 6, 2022

Business Related Travel Deductions

When employees travel for business away from their tax home or main place of work, they can get business-related travel deductions for the trip. With inflation going up, it costs more than ever to go on business trips. Hotels, flights or trains, taxis, and public transportation can all add up quickly.

Business travelers may be able to get some of these costs back when they file their taxes by claiming business travel deductions. Let’s look at some things that every business traveler needs to know:

1. The travel time must be much longer than a normal day’s work, and the worker must need sleep or rest to keep up with work while away.

2. The money you spend on travel must be reasonable and necessary. They can’t be expensive or used for personal things.

3. If a temporary work assignment lasts less than a year, the employer can deduct travel costs (see below) paid or incurred by the worker.

4. If going to a convention helps your trade or business, you can deduct the cost of getting there. You can’t deduct the cost of getting your family there, though. You can’t deduct the costs if you went to the convention for investment, political, social, or other reasons that have nothing to do with your business or trade. Conventions held outside of North America have their own rules.

Some of the costs of traveling away from home that is tax-deductible are:

· You can get from your home to your place of business by plane, train, bus, or car.

· Fares for taxis or other types of transportation from an airport or train station to a hotel or from a hotel to a place of work.

· Shipping of bags and sample or display materials between regular work locations and temporary ones.

· When you use your car for business, you may have to pay more for mileage.

· Meals and lodging that are not related to entertainment.

· Laundry and dry cleaning.

· Calls and talks about business.

· Tips given to people who helped with any of these costs.

· Other normal and necessary costs related to business travel that are similar.

Self-employed people or farmers who can claim travel expenses

On Schedule C of Form 1040, Profit or Loss from Business, self-employed people can deduct travel costs (Sole Proprietorship).

Recordkeeping

Keeping your records in order makes it easier to fill out your tax return and helps you answer questions if your return is chosen for an audit or if the IRS sends you a notice. You must keep records, like receipts, canceled checks, and other papers that back up any income, deductions, or credits that show up on your tax return.