Mhde Askar weighs in on common misconceptions about business travel and the deductibility of travel expenses. Many business owners find it necessary or advantageous to travel for business purposes.
As an experienced international traveler and blogger, Mhde Askar has been asked once again to provide valuable tax tips for business travelers. He weighs in on common misconceptions about business travel and the deductibility of travel expenses.
Many business owners find it necessary or advantageous to travel for business purposes. If they can travel to such world-class destinations as New York, Las Vegas, or the Virgin Islands, so much the better. Business owners also know that expenses incurred while traveling for business are tax deductible. Mhde Askar emphasizes that this is true … to a point. Askar delves into the nuances of deducting travel expenses across the following categories:
Transportation – Business travelers can deduct airfare, train fare, bus fare, taxi fare, Uber or Lyft rides, car rental fees, tolls, and parking fees while on the road. Take note of a big exception – the gas to refill your rental car cannot be deducted. Many business travelers don’t realize, however, that the standard deduction for miles driven — currently 54.4 cents per mile — applies to rental cars as well as if you were driving your own car. This can help offset the gas expense if you incur one.
Lodging – Hotel lodgings are tax deductible, but many business owners do not realize that mini bar purchases and pay-per-view movies purchased from hotels are not. If you incur incidental expenses like these, make sure to get an itemized bill to avoid trouble.
Meals – Even if you have only one meeting while in town, it is still expected that you will eat three meals a day at restaurants. Before you splurge on the Lobster Thermidor, take note that only half of your dining expenses are tax-deductible.
Time Frame – Expenses for business travel apply to time frames of one year or less. If you do business in a new city for up to 11 months and 30 days, you can write off all your expenses. Over a year, the assumption is that you live there. Day-to-day expenses in your city of residence cannot be written off.
Family Travel – If you choose to take family or friends along with you on your business trip who have no role in your business activities, be careful — only your expenses can be deducted. Yes, your family can stay in the hotel or ride in the cab you will expense to the company, but if the family dines out, only your meal qualifies as a business expense for tax purposes. Ditto their plane and train tickets.
Unreasonable Expenses – This is a catch-all category, thinly defined for a reason. If the IRS suspects you are expensing a pleasure cruise on their dime, expect them to get physical. By all means have fun on your business trips but exercise common sense when reporting your taxable income.