Business Trip Deductions
If you are confused about what business trip expenses are deductible, you are not alone. A maze of IRS rules can befuddle even the most savvy business traveler. Taking the time to master the basics of business trip deductions before you travel can help you get the deductions you are entitled to without triggering an audit from Uncle Sam.
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Travel Deductions
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Air, rail, and bus fares are legitimate deductions along with auto mileage and a portion of car rental fees. Parking fees and taxi fare to and from the airport and the hotel you are staying at are deductible, according to IRS rules. If you drive your own car, you can claim depreciation based on the fraction of the time you use it, as long as it is for business purposes. Check with the IRS for the annual allowable amount for depreciation use and subtract the percentage of nonbusiness use.
Meals and Lodging
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You can deduct at least 50 percent of the cost of all business-related meals. On the receipt, note the name and location of the restaurant, cost of the meal, name of the person and business relationship as well as what was discussed. A meal can be 100 percent deductible if it is provided to the general public by your company, or if your company is using the event to promote itself.
The cost of your hotel stay is fully deductible as long as it is for business purposes. The IRS allows you to deduct an additional night of lodging for personal use if you can prove doing so reduces total travel cost by taking advantage of travel discounts offered by airlines on specific days.
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Business Expenses
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Any purchase of business-related supplies or expenses in doing business are deductible. Not only does this include fees accrued for long-distance calls, faxes and computer rental services but also items such as dry cleaning, toiletries and courtesy tips.
Shows, Seminars, Vacations
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You can deduct fees and related expenses for attending trade shows and conferences if they benefit your business, last a minimum of six hours a day, and if you attend a minimum of two-thirds of the event. If you are attending a meeting as part of a vacation, travel to and from the location is not allowed. The IRS only allows you to deduct the hotel and rental car costs for those days you actually see a client, attend a conference or participate in an activity to boost your career or company sales.
Record Keeping Tips
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The IRS requires you to keep a written or an electronic diary of expenses as they occur. Use backup documentation such as registration forms, confirmation receipts, mileage logs and notations on business-related communications. Include the time, date, place, amount and purpose of each expense. Establish a paper trail that might consist of notes taken at meetings or events or emails with those you met during business meetings.
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References
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