By Matthew R. Staul, EA, MBA
The IRS defines travel expenses as the ordinary and necessary expenses related to traveling away from your tax home for business related duties. Your tax home is usually the main city where your work or business is located, even if your personal residence is outside of that area. For example, if a taxpayer lives in Hampton, but works in Richmond, stays overnight in hotels, and eats in restaurants during the week, those costs are not deductible because the tax home would be Richmond. Even though the taxpayer is staying the night in hotels during the work week, it would be classified as a commute since the overnight stays in Richmond are not considered a temporary ordeal.
What are the Main Deductible Travel Expenses? (IRS Topic No. 511)
1. Travel by airplane, train, bus or car between your home and your business destination. (If you’re provided with a ticket or riding free as a result of a frequent traveler or similar program, your cost is zero.)
2. Fares for taxis or other types of transportation between:
• The airport or train station and your hotel.
• The hotel and the work location of your customers or clients, your business meeting place or your temporary work location.
3. Shipping of baggage and sample or display material between your regular and temporary work locations.
4. If you are using your car while at your business destination, you can deduct actual expenses or the standard mileage rate, as well as business-related tolls and parking fees. If you rent a car, you can deduct only the business-use portion for the expenses.
5. Lodging and non-entertainment-related meals.
6. Dry cleaning and laundry.
7. Business calls while on your business trip. (This includes business communications by fax machine or other communication devices.)
8. Tips you pay for services related to any of these expenses.
9. Other similar ordinary and necessary expenses related to your business travel. (These expenses might include transportation to and from a business meal, public stenographer’s fees, computer rental fees, and operating and maintaining a house trailer.)
Important Things to Know
• Expenses considered lavish, extravagant, or for personal purposes are not tax deductible.
• Instead of keeping all receipts for business meals, you can use the standard meal allowance and deduct 50% of the unreimbursed expenses.
• If you are an independent contractor, you can deduct all business-related travel expenses on a Schedule C.
• If your spouse joins you on a business trip, their expenses are not deductible.
Matthew R. Staul is an enrolled agent with the Medical Management Consulting Group, Inc., a full-service consulting and accounting firm based in Virginia Beach. mmcgonline.com
