Tips for Tax Deductions While Traveling for Business | Bennie Fowler Sr. |
Are you wondering what you can write off on your taxes while traveling for business? It’s pretty simple as long as the primary reason for your travel is for business. You just need to follow a few guidelines for your trip to qualify as a business trip. First, you need to leave your house for more than one business day and conduct business at a different location. The trip needs to be ordinary, meaning you can’t rent a Lamborghini and try to write it off as an expense. The trip needs to be planned and all meetings documented.
If you’re traveling outside the United States, at least 25% of your time must be spent conducting business. If you didn’t spent enough time conducting business, you can still write off travel costs proportional to how much time you spent conducting business. You are eligible to claim deductions on any plane and bus tickets, laundry, dry cleaning, hotel, rental cars and half of eligible meals and entertainment.
All travel days count as work days, so you are eligible to write off your hotel stay even if you didn’t conduct business on those days. You can also write off your hotel for the weekends when it doesn’t make sense to fly home for the weekend and fly back on Monday. When dining out, make sure you write on your receipt the nature of business you conducted while eating.
If you don’t like flying or renting a car, you still have travel deductions if you drive your own car. There are two ways to claim your deduction. You can add all your actual expenses including, gas, tires, insurance, parking fees, and multiply by the percentage of business being conducted. The other way is to add all your miles and multiply that by a certain amount per mile decided by the IRS.
If you’re breaking the rules, the IRS can impose a fine on you. This penalty can be 20% of your deduction, and you still need to pay back the amount you weren’t entitled to. If you are unsure if a deduction is eligible, you can fill out a Form 8725 with your explanation. This will help you avoid a penalty, but you may still need to pay taxes on the income.
