Deductible business travel expenses can turn necessary expenditures into tax savings. When you must travel to meet with clients, make presentations to customers, attend conferences, and deal with other business activities, it costs money. Indeed, business travel can be a significant expense for small businesses.
The good news is that many business travel expenses are tax-deductible.
Before you hit the road, take note of what costs qualify as deductible business expenses when traveling. When you can take qualified business travel deductions, you will be able to reduce your taxable income and save money.
Here are tips about deductible travel expenses, how to organize your receipts, along with answers to common questions about business travel deductions.
Business Travel Expenses for Small Businesses
Airfare & train tickets: The cost of your plane or train ticket to and from your business destination is tax deductible.
Bus fare & passes: Public transportation, private shuttles, and ride-share services are another class of business travel expense that is tax deductible.
Chauffeur & rental car services: If you tax a taxi, hire a ride share like Lyft or Uber, or rent a car while traveling for business, these are deductible travel expenses.
Dinner & meals: Money you spend on food, beverages, taxes, and related tips, is 50% deductible while traveling for business. You don’t need to be dining with a client or be attending a business function to take this deduction. If you grab lunch at an airport or have dinner in your hotel room, these are valid deductible travel expenses.
Fees: Various fees for checking baggage, choosing an airline seat, using WI-FI, paying for early check in, insurance waivers, and using the ATM are tax deductible on business travel.
Hotels & lodging: The cost of your travel accommodations is deductible if your business trip includes an overnight stay.
Shipping: You may need to send things like oversized baggage, liquid samples, or display material to your destination ahead of your trip, all of which are tax deductible.
Telephone: All business communication including by fax machine, oversees business calls, and cell phone expenses are deductible business travel expenses.
Miscellaneous: In some cases, dry cleaning, phone calls and computer rentals can be written off.
Tips: You can also deduct gratuities given to porters, baggage handlers, and other service providers while traveling.
What are not deductible business expenses on business travel
Watch out for meals or lodging expenses that are “lavish or extravagant” that the IRS might label as “unreasonable.” You may not be able to deduct them.
Personal entertainment expenses on trips aren’t deductible. You can’t take in a movie after a long day of meetings and call it a deductible business-related cost.
An important factor in determining if the trip is primarily business or personal is the amount of time actually spend on business activities. If your trip was primarily personal, none of you travel costs are deductible.
The IRS may check the nature of your travel to ensure your trips are not vacations in disguise. Be sure to retain all material, receipts, emails and communications with business contacts, calendars, etc. that can help you establish the business nature of your travel.
Lastly, it is vital that you document your expenses properly to take full advantage of deductible business expenses
- Organize your itinerary in advance
- Keep a wallet for exclusively your business
- Keep your receipts and write notes
- Maintain a travel log
Common Questions About Business Travel Expenses
Can employees deduct unreimbursed travel expenses?
Under that Tax Cuts and Jobs Act, starting in 2025, these are no longer deductible on the federal return.
Can you deduct your business travel expenses if you fly to a location for four days of business meetings and stay on for an additional three days of vacation?
Only the expenses that occurred during the business days are deductible, not those incurred for the personal vacation days.
Can you deduct home expenses while you travel?
If you have to hired a pet sitter or a house sitter, you cannot deduct these expenses when traveling for business.
Does having your spouse join you impact deductible business expenses?
Take extra care to maintain evidence of the business nature of your trip should the IRS suspect you are disguising a vacation. Additional costs incurred by having your non-employee spouse travel with you are not deductible. However, if the cost to rent the room or a car would be the same with or without your spouse, you may still likely deduct the full cost.
The information provided in this blog post is for general informational purposes only and is not intended as legal advice. Every business and financial situation is unique, and the strategies discussed may not be applicable to your specific circumstances.
For personalized guidance, please schedule a consultation appointment with a Principal at Bernstein Financial Services to h