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December 5, 2012

What Can Be Deducted on Your Taxes as a Business Expense?

by AvenueWest Managed Corporate Housing

Business Travel is defined by the IRS as “travel away from your tax home that is substantially longer than an ordinary day’s work and that requires you to sleep or rest while away from home.” Travel Expenses have been defined as “ordinary and necessary expenses incurred while carrying on your trade or business.” Your tax home is the primary location where you conduct business. If you work from your home, there are special rules that apply for tax deductions. Below are some of the items you can deduct when traveling:

  1. Transportation. 
    Business Travel Deductions - Limited for Cruise Ships

    Business Travel Deductions – Limited for Cruise Ships

    Travel from your tax home to the destination where you will be conducting business can be deducted for trains, planes, and buses. Cruise travel is limited in the amount of deductions you may receive and you must provide documentation that your activities were business related.

  2. Car/Truck. 
    Business Travel Deductions - Car or Truck

    Business Travel Deductions – Car or Truck

    Costs for operating and maintaining your car and/or truck may be deducted either using the actual expenses or the IRS Standard Mileage Rate. You can also deduct costs for tolls and parking if you use the IRS standard rates.

  3. Taxi/Commuter Bus/Limousine. 
    Business Tax Deductions - Transportation to/from airport and lodging and/or business

    Business Tax Deductions – Transportation to/from airport and lodging and/or business

    You may deduct your costs associated with travel by taxi/bus/limo as long as it was used to take you from/to the airport to/from your hotel/corporate apartment or a business location.

  4. Baggage/Shipping.  
    Business Travel Deductions - Lodging & Shipping of Baggage and/or business materials

    Business Travel Deductions – Lodging & Shipping of Baggage and/or business materials

    If you need to ship your baggage to your temporary work location and/or ship business materials from your regular work location to the temporary work location, you may write these expenses off as well.

  5. Lodging and Meals. 
    Business Travel Deductions - Meals

    Business Travel Deductions – Meals

    While traveling for business, you may deduct all meals and lodging while on a business assignment. The IRS has established per diem rates for daily expenses or you can submit your actual expenses.

  6. Conventions and Trade Shows. In order to deduct these costs, you must prove that the convention/trade show has to do with your business. If you have a sales booth this would work. If you were just an attendee, you need to be able to show how this related to your business.

Business travel deductions are based on the individual’s business travel circumstances. You should always keep the receipts for all transactions purchased while traveling for business. Also, keep all records of company reimbursement as you might still be able to qualify for deductions. The type of travel might vary for deductions as well (i.e. domestic vs. international or day vs. overnight business travel).

Click here for more detailed information on business travel deductions. Always refer to the IRS website for more information and forms for business travel deductions or you can speak with your tax accountant/consultant.

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