When travel is primarily for business or career-related education, then a portion of the trip may be tax-deductible. As long as most of your travel days are for business purposes, you can deduct the cost of travel.
Travel expenses as defined by the IRS, are the Ordinary and Necessary expenses of traveling away from home for your business, profession, or job. An Ordinary expense is one that is common and accepted in your field of trade, business, or profession. A Necessary expense is one that is helpful and appropriate for your business
Your trip must be primarily for business. Leisure days can be added to a trip and still be considered primarily for business. The more days and time per day spent on business will help substantiate the trip. There are no specific rules on how many days and how much time per day need to be spent on business for your trip to be considered business related.
Keep all the documentation for business-related travel, including confirmations of appointments, emails, phone records, registration to conferences, etc. The days spent traveling to and from a business trip are considered part of the trip. This includes the weekend if it is impractical to come home between weekday business meetings.
If Traveling with Your Spouse
If a spouse goes with you on a business trip or to a business convention, their travel expenses can only be deducted if your spouse
is your employee,
has a bona fide business purpose for the travel, and
would otherwise be allowed to deduct the travel expenses.
To be considered an employee, your spouse must be on the payroll and payroll taxes must be paid. If your spouse is not an employee and travels with you on vacation, you can still deduct the cost of your room at the single-occupancy-per-day rate, rather than half the rate. Meals can also be deductible. If you are paying for dinner or lunch for a customer or business associate and that person's spouse, the full cost of the meals might qualify under the 50% meal deduction.
Example: Bill drives to Boston on business and takes his wife, Joan, with him. Joan is not Bill's employee. Joan occasionally types notes, performs similar services, and accompanies Bill to luncheons and dinners. The performance of these services does not establish that her presence on the trip is necessary for Bill's business. Her expenses are not deductible.
Bill pays 9 a day for a double room. A single room costs 9 a day. He can deduct the total cost of driving his car to and from Boston, but only 9 a day for his hotel room. If he uses public transportation, he can deduct only his fare. Further, if Bill has dinner with a customer and spouse, the meal may be deducted under the 50% meal deduction.
When traveling outside of the United States, the transportation for business trips of one week or less may be deducted. However, only a portion of transportation costs for longer trips are deductible.
Example: You live in New York. On May 4 you flew to Paris to attend a business conference that began on May 5. The conference ended at noon on May 14. That evening you flew to Dublin where you visited with friends until the afternoon of May 21, when you flew directly home to New York. The primary purpose for the trip was to attend the conference.
If you had not stopped in Dublin, you would have arrived home the evening of May 14. You did not meet any of the exceptions that would allow you to consider your travel entirely for business. May 4 through May 14 (11 days) are business days and May 15 through May 21 (7 days) are non-business days.
You can deduct the cost of your meals (subject to the 50% limit), lodging, and other business-related travel expenses while in Paris.
You cannot deduct your expenses while in Dublin. You also cannot deduct 7/18 of what it would have cost you to travel round-trip between New York and Dublin.
You paid 0 to fly from New York to Paris, 0 to fly from Paris to Dublin, and 0 to fly from Dublin back to New York. Round-trip airfare from New York to Dublin would have been 0.
You figure the deductible part of your air travel expenses by subtracting 7/18 of the round-trip fare and other expenses you would have had in traveling directly between New York and Dublin (0 - 7/18 = 1) from your total expenses in traveling from New York to Paris to Dublin and back to New York (0 + 0 + 0 = ,150). Your deductible air travel expense is 9 (,150 - 1).
What Type of Expenses Are Deductible?
Following are expenses that you can deduct when you travel away from home for business:
Transportation Expenses
You can deduct Transportation Expenses when you travel by airplane, train, bus, or car between your home and your business destination. If you were provided with a ticket or you are riding free as a result of a frequent traveler or similar program, your cost is zero. If you travel by ship, additional rules and limits apply.
Transportation Fares
You can deduct Transportation Fares for transportation that takes you between
the airport or station and your hotel, and
the hotel and the work location of your customers or clients, your business meeting place, or your temporary work location.
Luggage and Shipping Expenses
You can deduct the cost of sending luggage and sample or display material between your regular and temporary work locations.
Auto Expenses
You can deduct the cost of operating and maintaining your car when traveling away from home on business. You can deduct actual expenses or the standard mileage rate, as well as business-related tolls and parking. If you rent a car while away from home on business, you can deduct only the business-use portion of the expenses.
Meals and Lodging
You can deduct your meals and lodging if your business trip is overnight or long enough that you need to stop for sleep or rest to properly perform your duties. Meals include amounts spent for food, beverages, taxes, and related tips.
Cleaning Clothes
You can deduct the dry cleaning and laundry expenses you incur while away on business.
Phone Calls
All business calls while on your business trip are deductible. This includes business communication by fax machine or other communication devices.
Tips
You may deduct the tips you pay for any expense listed above.
Miscellaneous Expenses
You can deduct other similar ordinary and necessary expenses related to your business travel. These expenses might include transportation to or from a business meal, public stenographer's fees, computer rental or Internet access fees.
Carol McAtee has created a standard of excellence in business financial services that is recognized worldwide. Her combination of Experience, Resources, and Integrity allows her to provide unmatched service to her clients. Carol McAtee provides a vast array of business and personal financial services. Among her specialties are:
Due Diligence
Business Organizational Services
Accounting Services
Tax Services
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Prior to the founding her own firm in 1989, Carol McAtee, graduated Magna Cum Laude from the accounting program at the University of Toledo. She subsequently served as an auditor and tax manager with a Big 5 accounting firm. http://www.accpas.com
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