We all know how quickly travel costs can add up in a short period of time. From the airfare to the hotel to the rental car to meals, traveling is never an inexpensive adventure. That’s why small business specialist Bert Seither recommends you should explore the possible IRS tax deductions you can claim on travel costs.
Generally speaking, travel expenses are tax deductible if they are specifically incurred for business purposes. These expenses have to be for ordinary and necessary expenses for a business you own, your job with an employer, or your general profession. Expenses that are considered extravagant or those paid for personal reasons cannot be deducted, though. You must be traveling to a location that’s away from the general vicinity of your home for a substantial period of time longer than a typical day’s work. You may also be required to get rest or sleep in this location that you need to perform the work on your plate to qualify for this write-off. Trips may include meeting with a client in a different city, attending a seminar related to your work in another state, or traveling to another office that your employer or business has outside of the area in which you reside.
According to Bert Seither, deductible travel costs may include the costs of taking a plane, train, bus, or automobile to the destination where you’ll be working. The expenses related to using your own car during such a trip and any cab fares you incur are tax deductible as well. Plus, hotel, meals, and entertainment costs that involve the discussion of business-related topics qualify as a write-off. Other types of these expenses often include computer rental fees, costs to use public transportation, and various relevant expenses that are unique to workers or business owners in different industries.
Along with IRS tax deductions, a business may reimburse an employee for all travel-related expenses incurred on a business trip. Whether you’re a W-2 employee or a 1099 self-employed individual, it is extremely important to record your travel costs that go along with business-related activities. Costs and receipts can pile up in just a short amount of time. That’s why it’s vital to save and properly organize all of your documentation and proof of each expense you cover when traveling. This information should then be given to your employer or reported on the appropriate tax return if you are self-employed.
Bert Seither says that the bottom line is to take full advantage of all tax-saving opportunities out there, no matter what your employment status is. The last thing you want to be doing is putting more money into Uncle Sam’s pockets instead of having it for yourself to be more financially stable.