6 Tips for Deducting Travel Expenses

graphic of 6 tips for deducting travel expenses

Traveling is expensive, and as a small business owner, you’re probably doing quite a bit of it. You have plane tickets to buy, hotels to book, cars to rent – and you have to eat. The costs add up quickly. Being able to deduct your travel expenses can really help you out.

The next time you’re traveling for business, keep these tips in mind.

Make Sure the Trip is Primarily for Business

If you’re traveling within the U.S., and the purpose of the trip is primarily for business, then you can deduct 100% of your airfare. That means you can bring your family (although, their costs aren’t deductible) and spend some time sightseeing, but still deduct your airfare and other business-related expenses.

There’s no official rule defining “primarily for business”, but the general rule of thumb is that your business days should out number your personal days.

Remember, You Can Only Deduct Half of Your Meal Costs

When you’re traveling, you have to eat. So, make sure you deduct half the cost of your meals, and any meals you treat a customer or vendor to.

Look for Conventions

Is there a convention that would be good for your business that you’ve been dying to go to? Go ahead and register! If you can show that your attendance at the convention benefits your business, you can deduct the travel expenses.

How do you show that your attendance benefits your business? Simply by comparing the convention’s agenda with your own job duties and responsibilities.

Does the Convention Have to Be in the United States?

You can deduct convention expenses if the convention is in the North American area. The North American Area includes:

Barbados Canada Guyana Marshall Islands Panama
Antigua & Barbuda Costa Rica Honduras Mexico Puerto Rico
Aruba Curaçao Howland Island Micronesia Saint Lucia
Bahamas Dominica Jamaica Midway Islands Trinidad & Tobago
Baker Island Dominican Republic Jarvis Island North Mariana Islands USA
Barbados Grenada Johnston Island Palau U.S. Virgin Islands
Bermuda Guam Kingman Reef Palmyra Atoll Wake Island

If the convention is outside the North American area, you can only deduct the expenses if

  • the convention is directly related to your trade or business, and
  • it’s reasonable to hold the meeting outside the North American area.

Keep Good Records

When deducting travel expenses, keeping a shoebox full of receipts won’t cut it. You have to keep good records. That means you have to track:

  • the cost of each separate expense (including lodging, meals, and incidental expenses);
  • dates for leaving and returning for each trip;
  • the destination; and
  • the business purpose (or the benefit gained or expected to be gained).

You can keep these records in a calendar, diary, or app.

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Or, Use a Per Diem Rate

To cut down on record-keeping, use a per diem rate, instead. You can find current per diem rates by visiting the U.S. General Services Administration (GSA) website.

Don’t Stress About Cancellations

Sometimes, you have to cancel a flight or a hotel room, and nobody likes cancellation fees. But, if the travel would have been deductible, then any cancellation fees are also deductible.

**If you have any questions or concerns about deducting travel expenses, please talk to your accountant or a tax professional.**

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