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Understanding business travel deductions

Here are some tax details all business travelers should know

Business travel deductions are available when employees must travel away from their tax home or main place of work for business reasons. A taxpayer is traveling away from home if they are away for longer than an ordinary day's work and they need to sleep to meet the demands of their work while away.

Travel expenses must be ordinary and necessary. They can't be lavish, extravagant or for personal purposes.

Employers can deduct travel expenses paid or incurred during a temporary work assignment if the assignment length does not exceed one year.

Travel expenses for conventions are deductible if attendance benefits the business. There are special rules for conventions held outside North America .

Deductible travel expenses include:

Travel by airplane, train, bus or car between your home and your business destination.
Fares for taxis or other types of transportation between an airport or train station and a hotel, or from a hotel to a work location.
Shipping of baggage and sample or display material between regular and temporary work locations.
Using a personally owned car for business.
Lodging and meals .
Dry cleaning and laundry.
Business calls and communication.
Tips paid for services related to any of these expenses.
Other similar ordinary and necessary expenses related to the business travel.

Self-employed individuals or farmers with travel deductions

Those who are self-employed can deduct travel expenses on Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship) .
Farmers can use Schedule F (Form 1040), Profit or Loss From Farming .

Travel deductions for the National Guard or military reserves

National Guard or military reserve servicemembers can claim a deduction for unreimbursed travel expenses paid during the performance of their duty .

Recordkeeping

Well-organized records make it easier to prepare a tax return. Keep records such as receipts, canceled checks and other documents that support a deduction.

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Everything You Need to Know About the Business Travel Tax Deduction

Justin is an IRS Enrolled Agent, allowing him to represent taxpayers before the IRS. He loves helping freelancers and small business owners save on taxes. He is also an attorney and works part-time with the Keeper Tax team.

You don’t have to fly first class and stay at a fancy hotel to claim travel expense tax deductions. Conferences, worksite visits, and even a change of scenery can (sometimes) qualify as business travel.

What counts as business travel?

The IRS does have a few simple guidelines for determining what counts as business travel. Your trip has to be:

Mostly business
An “ordinary and necessary” expense
Someplace far away from your “tax home”

What counts as "mostly business"?

The IRS will measure your time away in days. If you spend more days doing business activities than not, your trip is considered "mostly business". Your travel days are counted as work days.

Special rules for traveling abroad

If you are traveling abroad for business purposes, you trip counts as " entirely for business " as long as you spend less than 25% of your time on personal activities (like vacationing). Your travel days count as work days.

So say you you head off to Zurich for nine days. You've got a seven-day run of conference talks, client meetings, and the travel it takes to get you there. You then tack on two days skiing on the nearby slopes.

Good news: Your trip still counts as "entirely for business." That's because two out of nine days is less than 25%.

What is an “ordinary and necessary” expense?

“Ordinary and necessary” means that the trip:

Makes sense given your industry, and
Was taken for the purpose of carrying out business activities

If you have a choice between two conferences — one in your hometown, and one in London — the British one wouldn’t be an ordinary and necessary expense.

What is your tax home?

A taxpayer can deduct travel expenses anytime you are traveling away from home but depending on where you work the IRS definition of “home” can get complicated.

Your tax home is often — but not always — where you live with your family (what the IRS calls your "family home"). When it comes to defining it, there are two factors to consider:

What's your main place of business, and
How large is your tax home

What's your main place of business?

If your main place of business is somewhere other than your family home, your tax home will be the former — where you work, not where your family lives.

For example, say you:

Live with your family in Chicago, but
Work in Milwaukee during the week (where you stay in hotels and eat in restaurants)

Then your tax home is Milwaukee. That's your main place of business, even if you travel back to your family home every weekend.

How large is your tax home?

In most cases, your tax home is the entire city or general area where your main place of business is located.

The “entire city” is easy to define but “general area” gets a bit tricker. For example, if you live in a rural area, then your general area may span several counties during a regular work week.

Rules for business travel

Want to check if your trip is tax-deductible? Make sure it follows these rules set by the IRS.

1. Your trip should take you away from your home base

A good rule of thumb is 100 miles. That’s about a two hour drive, or any kind of plane ride. To be able to claim all the possible travel deductions, your trip should require you to sleep somewhere that isn’t your home.

2. You should be working regular hours

In general, that means eight hours a day of work-related activity.

It’s fine to take personal time in the evenings, and you can still take weekends off. But you can’t take a half-hour call from Disneyland and call it a business trip.

Here's an example. Let’s say you’re a real estate agent living in Chicago. You travel to an industry conference in Las Vegas. You go to the conference during the day, go out in the evenings, and then stay the weekend. That’s a business trip!

3. The trip should last less than a year

Once you’ve been somewhere for over a year, you’re essentially living there. However, traveling for six months at a time is fine!

For example, say you’re a freelancer on Upwork, living in Seattle. You go down to stay with your sister in San Diego for the winter to expand your client network, and you work regular hours while you’re there. That counts as business travel.

What about digital nomads?

With the rise of remote-first workplaces, many freelancers choose to take their work with them as they travel the globe. There are a couple of requirements these expats have to meet if they want to write off travel costs.

Requirement #1: A tax home

Digital nomads have to be able to claim a particular foreign city as a tax home if they want to write off any travel expenses. You don't have to be there all the time — but it should be your professional home base when you're abroad.

For example, say you've rent a room or a studio apartment in Prague for the year. You regularly call clients and finish projects from there. You still travel a lot, for both work and play. But Prague is your tax home, so you can write off travel expenses.

Requirement #2: Some work-related reason for traveling

As long as you've got a tax home and some work-related reason for traveling, these excursion count as business trips. Plausible reasons include meeting with local clients, or attending a local conference and then extending your stay.

However, if you’re a freelance software developer working from Thailand because you like the weather, that unfortunately doesn't count as business travel.

The travel expenses you can write off

As a rule of thumb, all travel-related expenses on a business trip are tax-deductible. You can also claim meals while traveling, but be careful with entertainment expenses (like going out for drinks!).

Here are some common travel-related write-offs you can take.

🛫 All transportation

Any transportation costs are a travel tax deduction. This includes traveling by airplane, train, bus, or car. Baggage fees are deductible, and so are Uber rides to and from the airport.

Just remember: if a client is comping your airfare, or if you booked your ticket with frequent flier miles, then it isn't deductible since your cost was $0.

If you rent a car to go on a business trip, that rental is tax-deductible. If you drive your own vehicle, you can either take actual costs or use the standard mileage deduction. There's more info on that in our guide to deducting car expenses .

Hotels, motels, Airbnb stays, sublets on Craigslist, even reimbursing a friend for crashing on their couch: all of these are tax-deductible lodging expenses.

🥡 Meals while traveling

If your trip has you staying overnight — or even crashing somewhere for a few hours before you can head back — you can write off food expenses. Grabbing a burger alone or a coffee at your airport terminal counts! Even groceries and takeout are tax-deductible.

One important thing to keep in mind: You can usually deduct 50% of your meal costs. For 2021 and 2022, meals you get at restaurants are 100% tax-deductible. Go to the grocery store, though, and you’re limited to the usual 50%.

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🌐 Wi-Fi and communications

Wi-Fi — on a plane or at your hotel — is completely deductible when you’re traveling for work. This also goes for other communication expenses, like hotspots and international calls.

If you need to ship things as part of your trip — think conference booth materials or extra clothes — those expenses are also tax-deductible.

👔 Dry cleaning

Need to look your best on the trip? You can write off related expenses, like laundry charges.

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Travel expenses you can't deduct

Some travel costs may seem like no-brainers, but they're not actually tax-deductible. Here are a couple of common ones to watch our for.

The cost of bringing your child or spouse

If you bring your child or spouse on a business trip, your travel expense deductions get a little trickier. In general, the cost of bring other people on a business trip is considered personal expense — which means it's not deductible.

You can only deduct travel expenses if your child or spouse:

Is an employee,
Has a bona fide business purpose for traveling with you, and
Would otherwise be allowed to deduct the travel expense on their own

Some hotel bill charges

Staying in a hotel may be required for travel purposes. That's why the room charge and taxes are deductible.

Some additional charges, though, won't qualify. Here are some examples of fees that aren't tax-deductible:

Gym or fitness center fees
Movie rental fees
Game rental fees

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Where to claim travel expenses when filing your taxes

If you are self-employed, you will claim all your income tax deduction on the Schedule C. This is part of the Form 1040 that self-employed people complete ever year.

What happens if your business deductions are disallowed?

If the IRS challenges your business deduction and they are disallowed, there are potential penalties. This can happen if:

The deduction was not legitimate and shouldn't have been claimed in the first place, or
The deduction was legitimate, but you don't have the documentation to support it

When does the penalty come into play?

The 20% penalty is not automatic. It only applies if it allowed you to pay substantially less taxes than you normally would. In most cases, the IRS considers “substantially less” to mean you paid at least 10% less.

In practice, you would only reach this 10% threshold if the IRS disqualified a significant number of your travel deductions.

How much is the penalty?

The penalty is normally 20% of the difference between what you should have paid and what you actually paid. You also have to make up the original difference.

In total, this means you will be paying 120% of your original tax obligation: your original obligation, plus 20% penalty.

Justin W. Jones, EA, JD

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Everything You Need to Know About the Business Travel Tax Deduction

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What tax write-offs can I claim?

At Keeper, we’re on a mission to help people overcome the complexity of taxes. We’ve provided this information for educational purposes, and it does not constitute tax, legal, or accounting advice. If you would like a tax expert to clarify it for you, feel free to sign up for Keeper. You may also email [email protected] with your questions.

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Here's how to claim work expenses when filing your taxes

You can claim work expenses if you're a freelancer or business owner, but W-2 employees are limited in what they can claim.

The way we work has shifted significantly over the past two years -- and if you were part of the Great Resignation, you might have even started your own business or opted for a freelance or a remote position. More people have had to navigate working from home and the workplace expenses that come with it. And currently, the best-known employment-related tax deduction -- for home office expenses -- is reserved for those who are both self-employed and have a dedicated home space for working.

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Still, there are a handful of other work-related expenses that both corporate employees and the self-employed may be eligible to claim on their taxes this season. Remember: For most taxpayers, the deadline to submit your 2021 federal tax return or request for an extension is Monday, Apr. 18, 2022.

Here's an overview of work expenses and deductions on your taxes.

Claiming work expenses: First, choose a deduction

Before you start going through every line item of every receipt, you may want to save yourself the trouble and figure out which you'll take: the standard deduction or the itemized deduction.

Standard deduction: The standard deduction is an all-encompassing flat rate, no questions asked. For tax year 2021, the flat rate is $12,550 for single filers and those married filing separately. The rate is $25,100 for married filing jointly. Taking this route is much easier than itemizing.

Itemized deduction: If you want to claim work expenses, medical payments, charitable contributions or other expenses, you'll use the itemized deduction. It's more time-consuming than the standard deduction -- and you'll need proof of the expenses you wish to deduct.

If you're going to claim and itemize your work expenses, you'll need to complete Schedule A of Form 1040 . You need to have sufficient proof for each itemized expense, which means tracking down receipts. If your standard deduction is greater than the sum of your itemized deductions, save yourself the trouble and take the flat rate.

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Common tax deductions to claim

Before you start adding up all the line-items, make sure you know what's covered and what isn't. Here are some of the most common deductions for folks working from home.

1. Home office deduction

The home office deduction may be the largest deduction available if you're self-employed. If you work 100% remotely as a W-2 employee, you do not qualify for this deduction. The other main requirement is that the space be reserved for and dedicated entirely to your work.

"Can you deduct a home office if you work at your kitchen table? Unfortunately, no," says Lisa Greene-Lewis, CPA, and tax expert with TurboTax said. "You not only have to be self-employed -- but have a dedicated space in your home that is exclusively related to your business. You can't deduct the space at your kitchen table if your family also eats dinner there."

If you have a dedicated workspace at home, you can use the IRS regular method or simplified option , though you can't use a combination of them in a single tax year. Some things that qualify for home office deductions:

Insurance: You can deduct a percentage of your home insurance that covers the business space in your home.
Utilities: Expenses for utilities, like electricity and gas, can be deducted -- but only the percentage used in your home office.
Depreciation: If you own your home, you can deduct the cost of wear and tear on the portion used exclusively for business.

All of these calculations are based on the percentage of your home that you use for business. To find the percentage, compare the size of space you use for business to that of your entire home, and then apply the percentage to the specific expenses. For instance, if your home is 1,800 square feet total, and your home office measures 300 square feet, your home office deductions could be applied at a rate of 16%.

Greene-Lewis says that if you take the simplified option, you can deduct $5 per square foot, up to 300 square feet, or $1,500 total. This would be an alternative to calculating the various individual home expenses.

If you're self-employed or own your own business, regular commutes from your home to work are considered non-deductible personal expenses. If you have to commute between multiple locations or travel for work, however, some of those costs may be deductible. Flights, hotel rooms, rental cars, meals and tips for service are all considered travel expenses , if they're business-related. If a passport is required for your travel, you can claim that as well.

In the past, mileage accrued while driving your own car for business travel was an expense you could claim on your taxes -- but the Tax Cuts and Jobs Act of 2017 eliminated that for employees. The self-employed and business owners, however, are still eligible for this deduction.

3. Work uniform

If you have to buy clothes that you only wear for work, some individuals may be able to write off the cost. For example, if you're a qualifying performing artist, you may be able to deduct the cost of costumes or other theatrical clothing that you can't wear everyday. You must fall under one of a few specific categories in order to claim this deduction, though, due to the TCJA tax changes.

4. Continuing education and certifications

If you're self-employed, or work for an employer and fall into one of these IRS categories , you may be able to can claim the enrollment cost of any required continuing education courses, classes or certifications. You may also be able to deduct professional organization dues and fees -- as long as the organization isn't political.

If you're a teacher, the Teacher Education Deduction lets you claim up to $250 of out-of-pocket costs related to teaching supplies. And Green-Lewis says if you and your partner are both teachers, you both can claim the deduction.

5. Supplies

If you own your own business, you can deduct the cost of some business supplies. And the deduction threshold is generous.

"Self-employed business owners can deduct up to $1,020,000 for qualified business equipment like computers, printers and office furniture," Greene-Lewis says.

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Is Your Working Vacation Tax Deductible?

Would it not be nice to take a fantastic trip to a big city with endless things to do, and have the IRS let you take a tax deduction for it? In fact, with careful planning and detailed record keeping, the “bizcation” dream could easily be made a reality.

If your trip is primarily for business reasons and the stay is long enough to require sleep to continue business activities, transportation expenses are generally fully deductible. On the days where you conduct business, you are able to deduct 50% of your business-related food and entertainment costs and fully deduct other ordinary and reasonable expense incurred to do your business — i.e., lodging, taxis, rental cars, etc.

Planning Your Work Trip Is Key

The key to maximizing the business travel deduction is to plan meetings wisely to schedule in some “me” time to do some sightseeing. Travel days count as business days. Weekends and holidays falling between business days also count as business days. So, if you fly in early on Thursday to get a lower airfare or another common-sense reason not merely to extend your stay for personal purposes, you have a fully deductible business day to enjoy a nice city. A work meeting on Friday and another on Monday would mean that the weekend nights are business days for purposes of deducting lodging and meals. Staying longer than the workdays will not allow additional deductions for lodgings or meals for those personal days, but the transportation cost to the city would still be fully deductible.

With Working Vacations, The Proof is Always in the Pudding

It’s very important that you substantiate the business justification for deducting any expense on your taxes. However, travel and entertainment deductions are often abused and closely scrutinized by the IRS. You should retain any and all documentation that provides insight into the business activity you conduct while on your trip. Receipts are just the bare minimum here — keep itineraries, meeting agendas, and the like. If you have a smart phone, there are many applications that make it easy and simple to keep detailed information on your phone while on the go.

Bringing the Family Along

If you want to bring your significant other or maybe even your kids, you have to do a little extra planning. The key here is that you are only able to deduct expenses that only you would deduct if you traveled alone. Only your airfare is deductible, you may not deduct the travel costs of family. However, if you drive, the expenses associated with that drive are deducted because the expenses would be the same if you did not have a car full of family. Additionally, only your meals and business entertainment and those of business associates are eligible for the fifty percent deduction.

The bottom line is that you must be reasonable when claiming travel and entertainment deductions and keep meticulous tax return records . If contested, you should be able to show that your “bizcation” remained primarily for business purposes and did not co-mingle personal expenses with deductible business expenses.

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How to Deduct Travel Expenses (with Examples)

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November 3, 2022

This article is Tax Professional approved

Good news: most of the regular costs of business travel are tax deductible.

Even better news: as long as the trip is primarily for business, you can tack on a few vacation days and still deduct the trip from your taxes (in good conscience).

I am the text that will be copied.

Even though we advise against exploiting this deduction, we do want you to understand how to leverage the process to save on your taxes, and get some R&R while you’re at it.

Follow the steps in this guide to exactly what qualifies as a travel expense, and how to not cross the line.

The travel needs to qualify as a “business trip”

Unfortunately, you can’t just jump on the next plane to the Bahamas and write the trip off as one giant business expense. To write off travel expenses, the IRS requires that the primary purpose of the trip needs to be for business purposes.

Here’s how to make sure your travel qualifies as a business trip.

1. You need to leave your tax home

Your tax home is the locale where your business is based. Traveling for work isn’t technically a “business trip” until you leave your tax home for longer than a normal work day, with the intention of doing business in another location.

2. Your trip must consist “mostly” of business

The IRS measures your time away in days. For a getaway to qualify as a business trip, you need to spend the majority of your trip doing business.

For example, say you go away for a week (seven days). You spend five days meeting with clients, and a couple of days lounging on the beach. That qualifies as business trip.

But if you spend three days meeting with clients, and four days on the beach? That’s a vacation. Luckily, the days that you travel to and from your location are counted as work days.

3. The trip needs to be an “ordinary and necessary” expense

“Ordinary and necessary ” is a term used by the IRS to designate expenses that are “ordinary” for a business, given the industry it’s in, and “necessary” for the sake of carrying out business activities.

If there are two virtually identical conferences taking place—one in Honolulu, the other in your hometown—you can’t write off an all-expense-paid trip to Hawaii.

Likewise, if you need to rent a car to get around, you’ll have trouble writing off the cost of a Range Rover if a Toyota Camry will get you there just as fast.

What qualifies as “ordinary and necessary” can seem like a gray area at times, and you may be tempted to fudge it. Our advice: err on the side of caution. if the IRS chooses to investigate and discovers you’ve claimed an expense that wasn’t necessary for conducting business, you could face serious penalties .

4. You need to plan the trip in advance

You can’t show up at Universal Studios , hand out business cards to everyone you meet in line for the roller coaster, call it “networking,” and deduct the cost of the trip from your taxes. A business trip needs to be planned in advance.

Before your trip, plan where you’ll be each day, when, and outline who you’ll spend it with. Document your plans in writing before you leave. If possible, email a copy to someone so it gets a timestamp. This helps prove that there was professional intent behind your trip.

The rules are different when you travel outside the United States

Business travel rules are slightly relaxed when you travel abroad.

If you travel outside the USA for more than a week (seven consecutive days, not counting the day you depart the United States):

You must spend at least 75% of your time outside of the country conducting business for the entire getaway to qualify as a business trip.

If you travel outside the USA for more than a week, but spend less than 75% of your time doing business, you can still deduct travel costs proportional to how much time you do spend working during the trip.

For example, say you go on an eight-day international trip. If you spend at least six days conducting business, you can deduct the entire cost of the trip as a business expense—because 6 is equivalent to 75% of your time away, which, remember, is the minimum you must spend on business in order for the entire trip to qualify as a deductible business expense.

But if you only spend four days out of the eight-day trip conducting business—or just 50% of your time away—you would only be able to deduct 50% of the cost of your travel expenses, because the trip no longer qualifies as entirely for business.

List of travel expenses

Here are some examples of business travel deductions you can claim:

Plane, train, and bus tickets between your home and your business destination
Baggage fees
Laundry and dry cleaning during your trip
Rental car costs
Hotel and Airbnb costs
50% of eligible business meals
50% of meals while traveling to and from your destination

On a business trip, you can deduct 100% of the cost of travel to your destination, whether that’s a plane, train, or bus ticket. If you rent a car to get there, and to get around, that cost is deductible, too.

The cost of your lodging is tax deductible. You can also potentially deduct the cost of lodging on the days when you’re not conducting business, but it depends on how you schedule your trip. The trick is to wedge “vacation days” in between work days.

Here’s a sample itinerary to explain how this works:

Thursday: Fly to Durham, NC. Friday: Meet with clients. Saturday: Intermediate line dancing lessons. Sunday: Advanced line dancing lessons. Monday: Meet with clients. Tuesday: Fly home.

Thursday and Tuesday are travel days (remember: travel days on business trips count as work days). And Friday and Monday, you’ll be conducting business.

It wouldn’t make sense to fly home for the weekend (your non-work days), only to fly back into Durham for your business meetings on Monday morning.

So, since you’re technically staying in Durham on Saturday and Sunday, between the days when you’ll be conducting business, the total cost of your lodging on the trip is tax deductible, even if you aren’t actually doing any work on the weekend.

It’s not your fault that your client meetings are happening in Durham—the unofficial line dancing capital of America .

Meals and entertainment during your stay

Even on a business trip, you can only deduct a portion of the meal and entertainment expenses that specifically facilitate business. So, if you’re in Louisiana closing a deal over some alligator nuggets, you can write off 50% of the bill.

Just make sure you make a note on the receipt, or in your expense-tracking app , about the nature of the meeting you conducted—who you met with, when, and what you discussed.

On the other hand, if you’re sampling the local cuisine and there’s no clear business justification for doing so, you’ll have to pay for the meal out of your own pocket.

Meals and entertainment while you travel

While you are traveling to the destination where you’re doing business, the meals you eat along the way can be deducted by 50% as business expenses.

This could be your chance to sample local delicacies and write them off on your tax return. Just make sure your tastes aren’t too extravagant. Just like any deductible business expense, the meals must remain “ordinary and necessary” for conducting business.

How Bench can help

Surprised at the kinds of expenses that are tax-deductible? Travel expenses are just one of many unexpected deductible costs that can reduce your tax bill. But with messy or incomplete financials, you can miss these tax saving expenses and end up with a bigger bill than necessary.

Enter Bench, America’s largest bookkeeping service. With a Bench subscription, your team of bookkeepers imports every transaction from your bank, credit cards, and merchant processors, accurately categorizing each and reviewing for hidden tax deductions. We provide you with complete and up-to-date bookkeeping, guaranteeing that you won’t miss a single opportunity to save.

Want to talk taxes with a professional? With a premium subscription, you get access to unlimited, on-demand consultations with our tax professionals. They can help you identify deductions, find unexpected opportunities for savings, and ensure you’re paying the smallest possible tax bill. Learn more .

Bringing friends & family on a business trip

Don’t feel like spending the vacation portion of your business trip all alone? While you can’t directly deduct the expense of bringing friends and family on business trips, some costs can be offset indirectly.

Driving to your destination

Have three or four empty seats in your car? Feel free to fill them. As long as you’re traveling for business, and renting a vehicle is a “necessary and ordinary” expense, you can still deduct your business mileage or car rental costs even when others join you for the ride.

One exception: If you incur extra mileage or “unnecessary” rental costs because you bring your family along for the ride, the expense is no longer deductible because it isn’t “necessary or ordinary.”

For example, let’s say you had to rent an extra large van to bring your children on a business trip. If you wouldn’t have needed to rent the same vehicle to travel alone, the expense of the extra large van no longer qualifies as a business deduction.

Renting a place to stay

Similar to the driving expense, you can only deduct lodging equivalent to what you would use if you were travelling alone.

However, there is some flexibility. If you pay for lodging to accommodate you and your family, you can deduct the portion of lodging costs that is equivalent to what you would pay only for yourself .

For example, let’s say a hotel room for one person costs $100, but a hotel room that can accommodate your family costs $150. You can rent the $150 option and deduct $100 of the cost as a business expense—because $100 is how much you’d be paying if you were staying there alone.

This deduction has the potential to save you a lot of money on accommodation for your family. Just make sure you hold on to receipts and records that state the prices of different rooms, in case you need to justify the expense to the IRS

Heads up. When it comes to AirBnB, the lines get blurry. It’s easy to compare the cost of a hotel room with one bed to a hotel room with two beds. But when you’re comparing significantly different lodgings, with different owners—a pool house versus a condo, for example—it becomes hard to justify deductions. Sticking to “traditional” lodging like hotels and motels may help you avoid scrutiny during an audit. And when in doubt: ask your tax advisor.

So your trip is technically a vacation? You can still claim any business-related expenses

The moment your getaway crosses the line from “business trip” to “vacation” (e.g. you spend more days toasting your buns than closing deals) you can no longer deduct business travel expenses.

Generally, a “vacation” is:

A trip where you don’t spend the majority of your days doing business
A business trip you can’t back up with correct documentation

However, you can still deduct regular business-related expenses if you happen to conduct business while you’re on vacay.

For example, say you visit Portland for fun, and one of your clients also lives in that city. You have a lunch meeting with your client while you’re in town. Because the lunch is business related, you can write off 50% of the cost of the meal, the same way you would any other business meal and entertainment expense . Just make sure you keep the receipt.

Meanwhile, the other “vacation” related expenses that made it possible to meet with this client in person—plane tickets to Portland, vehicle rental so you could drive around the city—cannot be deducted; the trip is still a vacation.

If your business travel is with your own vehicle

There are two ways to deduct business travel expenses when you’re using your own vehicle.

Actual expenses method
Standard mileage rate method

Actual expenses is where you total up the actual cost associated with using your vehicle (gas, insurance, new tires, parking fees, parking tickets while visiting a client etc.) and multiply it by the percentage of time you used it for business. If it was 50% for business during the tax year, you’d multiply your total car costs by 50%, and that’d be the amount you deduct.

Standard mileage is where you keep track of the business miles you drove during the tax year, and then you claim the standard mileage rate .

The cost of breaking the rules

Don’t bother trying to claim a business trip unless you have the paperwork to back it up. Use an app like Expensify to track business expenditure (especially when you travel for work) and master the art of small business recordkeeping .

If you claim eligible write offs and maintain proper documentation, you should have all of the records you need to justify your deductions during a tax audit.

Speaking of which, if your business is flagged to be audited, the IRS will make it a goal to notify you by mail as soon as possible after your filing. Usually, this is within two years of the date for which you’ve filed. However, the IRS reserves the right to go as far back as six years.

Tax penalties for disallowed business expense deductions

If you’re caught claiming a deduction you don’t qualify for, which helped you pay substantially less income tax than you should have, you’ll be penalized. In this case, “substantially less” means the equivalent of a difference of 10% of what you should have paid, or $5,000—whichever amount is higher.

The penalty is typically 20% of the difference between what you should have paid and what you actually paid in income tax. This is on top of making up the difference.

Ultimately, you’re paying back 120% of what you cheated off the IRS.

If you’re slightly confused at this point, don’t stress. Here’s an example to show you how this works:

Suppose you would normally pay $30,000 income tax. But because of a deduction you claimed, you only pay $29,000 income tax.

If the IRS determines that the deduction you claimed is illegitimate, you’ll have to pay the IRS $1200. That’s $1000 to make up the difference, and $200 for the penalty.

Form 8275 can help you avoid tax penalties

If you think a tax deduction may be challenged by the IRS, there’s a way you can file it while avoiding any chance of being penalized.

File Form 8275 along with your tax return. This form gives you the chance to highlight and explain the deduction in detail.

In the event you’re audited and the deduction you’ve listed on Form 8275 turns out to be illegitimate, you’ll still have to pay the difference to make up for what you should have paid in income tax—but you’ll be saved the 20% penalty.

Unfortunately, filing Form 8275 doesn’t reduce your chances of being audited.

Where to claim travel expenses

If you’re self-employed, you’ll claim travel expenses on Schedule C , which is part of Form 1040.

When it comes to taking advantage of the tax write-offs we’ve discussed in this article—or any tax write-offs, for that matter—the support of a professional bookkeeping team and a trusted CPA is essential.

Accurate financial statements will help you understand cash flow and track deductible expenses. And beyond filing your taxes, a CPA can spot deductions you may have overlooked, and represent you during a tax audit.

Learn more about how to find, hire, and work with an accountant . And when you’re ready to outsource your bookkeeping, try Bench .

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Fraud and Compliance

What are state tax implications for traveling employees.

Imagine a time when all work happened onsite at a business location within easy driving distance of your home – a simple time, to be sure. Today’s work reality is much more complex with workers in-office, remote, and everywhere in between. With more business travelers getting on the road again , some employees spend more time traveling than in any one office.

And while you might think that managing travel-related taxes within the U.S. would be relatively straightforward, it turns out state-to-state tax codes are far from united. This creates issues for travelers and businesses alike.

To comply with complicated state tax regulations, organizations need to enhance their processes and increase their understanding of where travelers are, how long they’ll be gone, and the type of work they’re doing. Not just in the U.S., but globally.

However, when a company’s process for understanding its travel footprint is inefficient, it can cause inconveniences for business travelers, complexity for travel and finance managers, or bigger business implications like fines.

How to Reduce Risk and Manage Tax Compliance in a Work-from-Anywhere World

Are employers required to withhold out-of-state taxes.

Whether an employer needs to withhold out-of-state taxes depends on various factors. But if you have business travelers, it’s crucial to know where your company stands.

The rules vary for withholding income tax on employees who temporarily travel outside of their resident state for work. This requires payroll managers to navigate different filing rules for all states, territories, and hundreds of municipalities.

For example, more than half of states that have a personal income tax require employers to withhold tax from a nonresident employee’s wages beginning with the first day that employee travels to their state for business. Other states have a threshold that must be reached before income tax is withheld for nonresident employees.

If your business travelers are wondering, “If I travel for work, where do I pay taxes?” The answer may not be simple. In some cases, employees could also be legally required to file an income tax return in every state they travel to for work — even if just for one day.

Get the guide: Enhance your compliance and spend management with SAP Concur solutions

How Do State Taxes Work for Business Travelers?

If your employees travel out of state – or out of the country – it’s imperative to stay on top of tax compliance for your travelers.

Remember that tax regulations are subject to change and it’s important to verify the latest rules for the locations where your employees travel for business.

States That Impose Income Tax on Business Travelers

The following states impose income tax on the first day nonresidents work in their state, so make sure you’re addressing tax compliance for any employee that travels to these places.

Massachusetts
Mississippi
New Jersey
North Carolina
Pennsylvania
Rhode Island

And these states impose income tax on nonresidents after a state-specific threshold is reached. The threshold varies by state.

California
Connecticut
New Mexico
North Dakota
South Carolina
West Virginia

States That Don’t Impose Income Tax on Business Travelers

The following states do not impose state income tax on business travelers. But again, it’s always important to stay up to date on tax rules, as they’re subject to change.

New Hampshire
South Dakota
Washington

See: How Hybrid Work Raises Your Tax Risk and Complexity

How Do You Stay Compliant with Business Travel-Related State Taxes?

So, how can you ensure that your company complies with state- or country-specific tax requirements for traveling employees? You can start by adopting a fully integrated technology solution into your company’s travel booking workflow.

Because it comes down to payroll teams to know — and navigate — state tax implications for traveling employees, consider choosing a solution that gives your team a comprehensive view of travel and spending, plus the ability to manage interstate payroll taxes.

Look for a solution that enables your teams to handle multi-state and cross-border payroll tax compliance. Even better if it can automatically track tax and payroll requirements as the employee travels to different locations.

For example, an organization using Concur Travel can also connect with an SAP Concur integration that makes it easier for businesses to comply with complex tax regulations .

To learn more about how you can help your company better navigate tax complexities, download our whitepaper, A Finance Leader’s Guide to Tax Compliance .

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How to Put Your Tax Refund to Work for You

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If you’re eagerly anticipating a tax refund in the coming weeks, you have good reason to be optimistic: The IRS reports that about 77% of tax returns filed last year generated a refund, and the average refund was $2,815.

Even though what can feel like a gift from the government is actually a delayed receipt of your own money, the best use of those funds is not always apparent. This year the question is even more fraught, with many households facing increasing financial pressure from inflation , rising interest rates and expiring government assistance programs tied to the pandemic. Advance child tax credits, for example, which offered families monthly checks based on their income and number of dependents, have ended pending further congressional action.

“For many people, the advance child tax credits became a part of their budget, so you should consider saving your tax refund and using it to supplement your monthly budget going forward,” says Tommy Blackburn, a certified financial planner in Newport News, Virginia. “That can help with monthly cash flow,” he adds.

Another option is to adjust your withholding to every paycheck so you don’t pay more tax than you need to. But, Blackburn adds, some people prefer to receive a lump sum each year as a method of forced savings.

While your refund priorities depend on your particular situation, there’s room in almost every budget to spend at least some portion of your refund check on something fun, too. Here is a road map to help you decide what you should do with the money:

Save for the next emergency

“First, think about your near-term security,” suggests Vince Shorb, CEO of the Las Vegas-based National Financial Educators Council, which supports financial wellness educators. “There are a lot of things going on, from COVID to inflation. I want to make sure people have food on the table and gas to get to work,” in the event of an emergency like job loss or unexpected expense, he says. That means putting money into an emergency savings fund before any other priority, including paying off debt.

“With inflation, you want to save a little bit more than normal to plan for those crazy gas and food prices. We don’t know what will happen next,” says Scott Alan Turner, a CFP in Aledo, Texas. While financial experts often cite the goal of having three to six months of expenses tucked away, a more realistic goal can be saving $500 to $1,000, or at least half of your refund. Given rising prices, Turner says it’s better to save more if you can.

“If your industry is shrinking, you’ll need a larger emergency fund,” Shorb says, because it could take longer to find a new job if you lost your current one.

Unload high-interest debt

With interest rates widely expected to rise this year, credit card and other variable-rate debt would likely become more expensive, which makes using refund money to pay it off a smart move, says Mike Biggica, a CFP in San Francisco. He suggests paying off any debt that carries an interest rate of 6% or higher and also focusing on student loans, medical debt and anything else that carries a variable rate.

Maggie Klokkenga, a financial coach and CFP in Morton, Illinois, suggests using an online debt calculator to see how making extra debt payments can speed up the debt payoff process . That can help you decide whether to first pay off your smallest debts or larger, high-interest ones. “You can see how quickly you can have everything paid off,” she says.

Make room for other goals, too

If you already have your emergency fund and high-interest rate debt addressed, then Klokkenga suggests putting the refund cash in high-yield online savings accounts dedicated to different goals, such as a vacation to Cabo or retirement. “When it’s not in your checking account, it’s harder to get to and gives you a pause before you can get the money,” she says.

Increasing your contributions to existing retirement accounts such as a 401(k) is another solid option, Biggica says. “For folks who are not already maxing out their 401(k), that increase in contribution makes them feel more secure and responsible.”

In some cases, you can front-load your contributions, Biggica adds, which means you reach the annual contribution limit before the end of the year. As a result, your take-home pay will be higher by November or December, which offers flexibility to pay for end-of-year costs like holiday spending.

Splurge within limits

After taking care of emergency savings and debt payments, there might not be enough left from the refund to make a huge purchase like a car, but Turner suggests squeezing in something enjoyable. “Go out and celebrate with something frivolous and entertaining: a nice steak dinner, new designer jeans, concert tickets,” he suggests. His guideline: Plan to spend about 10% on fun. For the average refund recipient based on last year’s IRS numbers, that’s about $280.

It probably won’t fund a vacation, but it could significantly glow-up your weekend plans.

This article was written by NerdWallet and was originally published by The Associated Press.

How to get your maximum VAT refund when traveling abroad

While a European vacation is undoubtedly an unforgettable experience, it can be expensive.

That's why savvy travelers have various strategies in place to save money on flights, hotels and rental cars (hopefully by reading some of TPG's great money-saving advice ).

One of the most overlooked ways travelers miss out on saving money is by forgetting to apply for a VAT refund.

VAT is a Value Added Tax . Let's say, for example, you just went on a shopping spree in Rome or splurged on gifts at the El Corte Ingles department store near Las Ramblas in Barcelona. You more than likely paid VAT on your purchases, but the good news is that visitors to the European Union can often get a refund on that tax. Think of it as the traveler's tax break.

Despite the obvious savings that can come with VAT refunds, the amount of money Americans leave on the table each year in unclaimed refunds is estimated to be in the billions. Don't be one of those travelers.

Getting your VAT refund is worth the time and effort it takes, especially if you're traveling within the EU .

The rules surrounding VAT refunds have somewhat changed in recent years, so it's important to read up on the latest rules (including the U.K.'s discontinuation of VAT refunds for international visitors since Brexit). Here's everything you need to know about getting your maximum VAT refund when traveling in Europe.

What is a VAT?

VATs and goods and services taxes (GSTs) are common worldwide; more than 160 countries have them.

In the EU, the VAT is similar to the sales taxes imposed in the U.S., but there are also some big differences. One of the biggest: VAT rates are much higher than those you pay in state and local sales taxes in the U.S.

The EU's minimum standard VAT rate is 15% — far more than the combined state and local sales tax rates you'll find anywhere in the U.S. However, the average standard VAT rate in the EU currently sits around 21%. All EU countries have standard VAT rates above the 15% threshold; Luxembourg has the lowest rate at 16%, and Hungary has the highest at 27%.

"The VAT is a major income revenue for the tax authorities in Europe," said Britta Eriksson, a VAT expert and CEO of Euro VAT Refund , a Los Angeles-based company that helps companies manage VAT in their overseas operations. "[VAT] represents almost as much as the income tax in terms of revenue for the government."

Many EU countries offer lower VAT rates on certain goods. Sweden, for example, has a standard VAT rate of 25%. However, for some food items, restaurant services and even hotels, a reduced VAT of 12% is offered.

France has reduced the VAT on certain agricultural products and even some cultural events to 5.5%. In other nations, items such as books, newspapers, and bike and shoe repairs receive a reduced VAT rate of only 6%.

As you can see, these "special rates" vary from country to country, so make sure you do your homework before your trip. The EU also exempts some goods and services from VAT; some exemptions include educational services, financial services and medical care.

What are the refund rules?

Prices in the EU always have the VAT included. If you're visiting an EU country, you'll generally have to pay the price of an item, VAT and all, and get your refund after the fact.

There are several requirements to follow to claim your refund. For instance, you must take your new item or items home within three months of the purchase. VAT refunds are not available for large items like cars. EU visitors also cannot get a VAT refund for services like hotel stays and meals.

Some countries require that your purchase exceeds a certain amount to be eligible for a VAT refund. Like the VAT rates, this minimum purchase amount varies from country to country.

For example, in France, the minimum amount is now 100.01 euros (about $107) for the total amount of purchases you buy on the same day in the same shop. In Belgium, the minimum is 50 euros (about $54); in Spain, there is no minimum purchase amount to claim a VAT refund.

One important thing to note is that you can only claim a VAT refund on new items. Your merchandise must be new and still in its packaging when you leave Europe. The goods can't be unpacked, consumed or worn. If you want to claim your refund, you should pack away whatever you purchase and wait until you get home to open it.

Getting your refund

Thousands of European stores do what they can to accommodate tourists seeking refunds and will usually have signs in the window reading "tax-free" or "VAT-free" shop.

As you pay for your item, inform the clerk that you're an EU visitor and intend to get a VAT refund. The store will have some paperwork for you to fill out. Have your passport ready to prove your visitor status. You may also need to show your airline ticket as proof you're leaving Europe in the allotted time in order to claim a VAT refund.

Some stores will refund your VAT, but in most cases, you'll likely have to take your refund forms and get your refund processed elsewhere.

Many stores work with third-party agencies, such as Global Blue or Planet , to process VAT refunds, and these agencies usually have facilities in major cities where you can take your completed forms and get your refund.

When purchasing your items, check to see if your merchant is partnered with these agencies.

On departure day, be sure to take your receipts, the refund forms the shops filled out, the items you bought and all your other travel documents with you to the airport so that you can present everything to customs.

If you're touring multiple EU countries during your trip, you'll complete this process at the last EU country you visit. That means if you visit France and Italy before ending your trip in Spain, you will apply for the VAT refund on your purchases in Spain.

Customs may inspect your purchases, so make sure they're available and not in your checked baggage. Also, make sure the goods are unused and unworn.

If all goes well, the customs office will stamp your refund forms. If either the store or one of the third-party refund agencies has already given you your refund, you'll have to mail this stamped form back to them to prove you left Europe within the mandated three-month period. Otherwise, you risk having your refund canceled and your credit card charged for the VAT you owe.

If you haven't done so already, you can also get your refund at the airport. The big refund agencies have facilities at all the major EU airports, sometimes at a currency exchange. Just show them your stamped customs forms and your passport to get your refund, minus a fee.

No VAT refund in the UK

Before we share some advice on getting your VAT refunds, we want to remind everyone that the U.K. no longer has VAT-free shopping for international tourists. In fact, Great Britain is now the only European country that doesn't offer the savings opportunity for international visitors.

The VAT retail export scheme was eliminated when the U.K. exited the EU in 2021. It resumed briefly before being axed, supposedly for good, in 2022.

Although there's some optimism that VAT refunds could return to Britain in the future — the U.K.'s tourism industry is lobbying for its return — it's not an option for now.

While VAT refunds are no longer available in England, Scotland and Wales, you can still claim refunds if you're visiting Northern Ireland. There are also several exceptions and rules to know; for example, it doesn't apply to services like hotel bills. You can find the list of restrictions here . You should also be aware that some merchants and refund companies in Northern Ireland charge a fee for using tax-free shopping. Still, if you're planning a visit, you could save some money on your shopping.

Tips for maximizing your savings with a VAT refund

Here are some do's and don'ts for getting your VAT refunds.

Research the country

Before your trip, look up the VAT rules for the country you're visiting and check the standard and reduced VAT rates, as well as the minimum purchase points.

As we mentioned earlier, the rates and rules of what qualifies for a VAT refund can vary depending on where you visit, so make sure you're aware before you get there.

Remember that many countries outside the EU also charge a VAT, and their refund policies can differ greatly from what you'll find in Europe.

Research the store

Stores aren't required to provide VAT refund assistance of any kind.

"If you have a store that doesn't have this program, then getting a refund is very complicated," Eriksson warned.

Keep an eye out for stores displaying "tax-free" or "VAT-free" signs. Ask the store employees which third-party agencies they partner with for refunds. Also, ask how they process refunds and what fees they charge. As we noted above, some retailers in some countries may charge a fee to visitors using tax-free shopping.

Allow extra airport time for your refunds

Don't expect to be the only traveler at the airport seeking a VAT refund before heading home. Expect to wait in line for a bit. Plan ahead and give yourself extra time at the airport, as the line can be long.

If you're strapped for time after leaving customs, some agencies will let you drop your stamped forms in one of their mailboxes, and they'll issue your refund later.

Consider shipping your purchases home to avoid VAT entirely

If you don't want to deal with any of this stuff, Eriksson suggests another option.

"You can also have the store ship [your items] to you directly," she said. "Then, they won't charge you VAT."

But there's a catch.

"You still have to pay for the freight," Erikkson added.

Shipping costs from Europe to anywhere in the U.S. can get wildly expensive. So, you have to weigh that shipping cost against the VAT and the time and effort it would take to get your refund to decide if it's worth it.

Make sure the refund is worth the trouble

"If you buy expensive clothing and china, then it's absolutely worth it," Eriksson said.

While many VAT countries have purchase minimums for refunds, in others, any purchase a visitor makes qualifies, no matter how small. So, you should ask yourself if it's worth applying for a VAT refund for that cheap tchotchke you bought as a souvenir.

Bottom line

All this talk of forms, looking for signs, standing in line and getting stamped can take the impulse out of your impulse buy. However, it could save you a lot of money in the long run.

If you pay attention and budget your time wisely, you might get back enough money through VAT refunds to help pay for your next visit across the Atlantic.

Complete Your Job

Social Security Number If you do not have your Social Security number one month before your DS-2019 ends, visit a local Social Security Administration office and check on the status of your application. It does not have to be the same office as the one where you filed your application.

W-2 Form Completion Before your last day, give your correct contact information and Social Security number to your employer so they can mail your W-2 form (an earnings statement that you will use to complete your tax return).

Final Paycheck Collect your final paycheck. If your employer cannot give it to you in person, it will have to be mailed to you or deposited into your bank account. Ask when you will receive it and make sure your employer has the necessary information to get it to you.

Next Year Find out if it is possible for you to return next year and work for the same employer. The end of a successful season is a great time to get hired for next year!

Letter of Recommendation Ask for a letter of recommendation. This can be an advantage when you are looking for future work.

Contact Information Keep your employer’s contact information in case you need to contact them after you return home.

Take Care of Your Bank Account

We encourage you to keep your bank account open until you have received your last paycheck.

If You Close Your Account Make sure that your employer has given you your last check or made the last direct deposit of your pay. If money is still outstanding, make sure your employer has your home address to mail you your last paycheck. Go to the bank and make sure you close your account properly. Bring your papers (passport, J-1 visa, and DS-2019) for identification. Make sure all fees are paid and that you withdraw all funds from the account. Ask if the bank needs your home country address.

If You Keep Your Account Open Talk to your bank about keeping your account open to make sure you understand all the rules, including minimum balance requirements to avoid fees. Make sure you can still withdraw money from your account in your home country. Give your contact information to the bank in case they need to contact you, and bring the bank’s contact information home with you.

Leave Your Living Space

- Let your landlord know when you will be leaving, and be sure you’ve met the terms of your lease agreement. - It is important to leave your place the same way you found it, in good condition and clean. This helps ensure that all of your security deposit is returned to you. This is true for employer-provided housing as well. - If you’ve bought household items that you will leave behind, consider donating them to charity, giving them to neighbors or coworkers, or having a yard sale.

File a Tax Return

You are required to pay federal, state, and sometimes local taxes. The good news is that you may be entitled to a refund of some or all of the taxes you paid while you worked in the United States.

W-2 Form This form is sent by your employer by January 31 after the tax year ends. If you held more than one job, you’ll get a W-2 from each employer. Make sure that you give your employer(s) your home address so they can send the W-2 to you. Regardless if you file your taxes yourself or use a service, you will need your W-2.

Deadlines You are required by law to file a U.S. tax return, even if you are back home by the end of the tax year. Tax returns must be filed by April 15 for the previous tax year (January 1 to December 31). This means that if you work over the winter, you will file two tax returns: one for what you earn through December 31, and the second for the money you make from January 1 through the end of the program.

Having Someone File Your Taxes For You You can use a company to file the tax return for you. CIEE offers a convenient service through Taxback.com, which makes it easy to file. The cost is 10 percent of your refund, and the company offers customer service in 25 languages. For more information email or visit CIEE’s dedicated Taxback website .

Filing Taxes For Yourself The earlier you file your tax returns, the sooner you will receive your refund. If you decide to complete the tax returns yourself, you will need the following forms in addition to your W-2:

1040NR-EZ form – This form is specifically for non-resident aliens. It can be obtained, together with instructions for filling it out, on the Internal Revenue Service website . State income tax form – This form varies from state to state. You will need to complete the form for the state(s) in which you have worked. A list of state tax sites is available at the Internal Revenue Service website .

Your Opinion Matters

We’d like to hear what you have to say about the CIEE Work & Travel USA program. We want to do all we can to make this experience the best it can be for international visitors, and your feedback helps us do this. Soon after you get back to your home country, we’ll ask you to complete an online evaluation – tell us about your job, your housing, and your experience in the United States.

In order to be certain that you receive the evaluation, make sure CIEE has your correct email address, and add [email protected] to your email account's "safe sender" list.

Stay Connected with CIEE

Once you have completed your CIEE Work & Travel USA program, you’ll become one of more than 300,000 students who have benefitted from our programs. Through the CIEE Alumni Global Network, you can join a diverse and dynamic community that represents nearly every field of industry and country on earth.

To learn more about the benefits and opportunities you’ll enjoy as a CIEE alumnus, visit the CIEE Global Alumni Network website .

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Money and tax

Claim tax relief for your job expenses

Travel and overnight expenses.

If you have to travel for your work you may be able to claim tax relief on the cost or money you’ve spent on food or overnight expenses.

You cannot claim for travelling to and from work, unless you’re travelling to a temporary place of work.

You can claim tax relief for money you’ve spent on things like:

public transport costs
hotel accommodation if you have to stay overnight
food and drink
congestion charges and tolls
parking fees
business phone calls and printing costs

For hotel and meal expenses, you’ll need to send receipts that include the date of your stay or of the meal and the name of the hotel or restaurant.

You may also be able to claim tax relief on business mileage.

You can claim for this tax year and the 4 previous tax years.

How to claim

Use this service to:

check if you can claim
make a claim if you’re eligible

If you complete a Self Assessment tax return , you must claim through your tax return instead.

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USA Work And Travel Tax Refund

If you are a member of the US Work and Travel program , you may be interested in knowing about your tax liability and whether you are eligible for a tax refund. In this article, we take a closer look at program features and tax requirements for members, as well as a guide on how to apply for a tax refund.

Taxation of participants in the Work And Travel program in the USA

It is important to understand that as a participant in the Work and Travel program, you will be treated as a non-resident alien for tax purposes. This means that you will not be taxed on your worldwide income, but only on income earned in the United States. However, if you spend too much time in the US, you may be considered a resident for tax purposes, and then your worldwide income will be taxed.

As a nonresident alien, you must file a tax return using Form 1040NR, which is specifically designed for non-U.S. citizens or green card holders. The form will require you to report your US source income and any taxes withheld by your employer. In addition, you may also need to file a state tax return, depending on the state in which you worked.

It is worth noting that some participants in the Work and Travel program may not earn enough income to file a tax return. In 2022, the minimum income threshold for filing a tax return is $12,550. However, even if you are not required to file a tax return, you can still do so to claim a refund of taxes to which you are entitled.

USA Work And Travel Tax Liability

One of the most important aspects of your tax liability as a non-resident alien is tax withholding. Your employer is required to withhold a certain amount of tax from your paycheck, which will then be paid to the IRS on your behalf. The amount of tax withheld will depend on your income as well as any double tax treaty between the United States and your country.

As a general rule, non-resident aliens are subject to a withholding tax of 30% on their U.S. income. However, the rate may be lower depending on the terms of the tax treaty. If you think your tax withholding rate is too high, you can claim a refund of the excess tax withheld when you file your tax return.

Taxation procedure Work and Travel program

When it comes to claiming a tax refund, the process can be a little tricky. If your employer withheld taxes from your paycheck, you may be entitled to a refund of some or all of those taxes. To request a refund, you must file a tax return and state that you are requesting a refund. The amount of your refund will depend on the amount of tax that was withheld from your paycheck and any deductions or credits you are entitled to.

There are several key deductions and offsets that you can claim as a non-resident alien.

1. Standard deduction

The standard deduction is $12,550 for the 2022 tax year. This deduction is available to all taxpayers, regardless of their resident status. In addition, you may claim a deduction for any expenses associated with your work in the United States, such as travel expenses or work-related equipment.

2. Foreign tax credit

Another important credit is the foreign tax credit, which allows you to offset your US tax liability with the taxes you paid in your home country. This loan can be tricky and you will need to meet certain requirements to be eligible for it. For example, you will need to pay taxes in your home country on the same income that you are taxed on in the United States.

Tips for tax refunds for Work and Travel members

Work and Travel members are eligible for a tax refund

Claiming a tax refund as a Work and Travel member can be a little tricky. However, with some guidance and careful planning, you can be sure that you are meeting your tax obligations and getting the maximum tax refund. Here are some key tips to keep in mind:

1. Keep a close eye on your income and expenses.

It is important to keep proper records of your income and expenses while you are participating in the Work and Travel program. This will help you accurately report your income and claim any deductions or loans you are eligible for.

2. Understanding your tax withholding.

Make sure you understand how much tax is withheld from your paycheck and if you qualify for a lower withholding rate under a double tax treaty. If you believe that the tax you have withheld is too high, you can claim a refund of the excess tax withheld.

3. Know your tax obligations.

As a nonresident alien, your tax liability in the United States will be different from that of US citizens and green card holders. Make sure you understand the specific requirements that apply to you and consider consulting with a tax professional if you have any questions.

4. Don’t miss the tax filing deadline.

The deadline for filing a U.S. tax return is usually April 15 of the year following the tax year. However, if you are a non-resident alien and had no U.S. source income in the previous year, you can wait until June 15 to apply. Be sure to file your tax return on time to avoid penalties and interest.

5. Consider using tax software or a tax professional.

Filing a tax return as a non-resident alien can be tricky, especially if you’re claiming deductions or credits. Consider using tax software or a tax professional to make sure your return is accurate and that you are claiming all the deductions and credits you are entitled to.

Don’t miss your tax refund opportunity!

In conclusion, as a participant in the Work and Travel program in the United States, it is important to understand your tax obligations and the possibility of a tax refund. By keeping proper records, understanding your tax withholdings, and taking advantage of available deductions and credits, you can be confident that you are meeting your tax obligations and maximizing your tax refund. If you have any questions about your particular tax situation, consider consulting with a tax professional for advice.

Olena Molko

Freelancer, author, website creator, and SEO expert, Olena is also a tax specialist. She will tell you everything you need to know about taxes, finances, and digital life. She aims at making quality information available to the most, to help them improve both their personal and professional lives. Full bio – https://taxtaxation.com/full-bio/

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Trips you can and can't claim

When you can and can't claim deductions for the cost of transport while working and between home and work.

Last updated 25 April 2023

Trips while working and between workplaces

You can claim a tax deduction for the cost of transport on trips to:

perform your work duties – for example, if you travel from your regular place of work to meet with a client
attend work-related conferences or meetings away from your regular place of work
deliver items or collect supplies
go between 2 or more separate places of employment, such as if you have more than one job (but not if one of the places is your home)
regular place of work to an alternative place of work that isn't a regular place of work (for example, a client's premises) while still on duty, and back to your regular place of work or directly home
home to an alternative place of work that isn't a regular place of work to perform your duties, and then to your regular place of work or directly home (this doesn't apply if the alternative place of work has become a regular workplace).

Example: travel between 2 separate workplaces

Aaron works part time at a supermarket and also works part time as a house cleaner. On Tuesdays Aaron drives his car directly from his job at the supermarket to his regular cleaning clients.

As the trip is between 2 separate places of work, neither of which is Aaron's home, he can claim a deduction for the transport expenses he incurs for that trip.

Example: travel to an alternative place of work

Brock works for a large company with 2 offices in Melbourne. He usually works from the city office but occasionally he's required to attend training at the company's office in Box Hill. When Brock travels to the Box Hill office, he catches a tram at his own expense.

Brock can claim a deduction for the cost of the tram between the Melbourne office and Box Hill office as it's an alternative place of work. He can also claim the cost of any trips between the Box Hill office and his home.

However, if Brock works from the city office every Monday to Thursday and from the Box Hill office every Friday as a standard arrangement, then the city office is his regular place of work every Monday to Thursday and the Box Hill office is his regular place of work every Friday. Brock can't claim a deduction for trips between his home and either of his regular places of work.

Trips between home and work

You can't claim trips between your home and place of work, except in limited circumstances .

These trips put you in a position to start work and earn income but are not part of performing your work duties. The cost of these trips is a private expense.

This is the case even if you:

live a long way from your regular place of work
work outside normal business hours – for example, shift work or overtime
do minor work-related tasks on the way to work or the way home – for example, picking up the mail
go between your home and regular place of work more than once a day
are on call – for example, you are on standby duty and your employer contacts you at home to come into work
have no public transport near where you work
do some work at home
work from your home running your own business and travel directly to a place of work where you work for somebody else.

Example: public transport not available

Tim works at his local cinema. His shift often finishes late into the night. The only available bus doesn't operate past 7:00 pm so Tim has to drive to and from work.

The cost Tim incurs to drive to work is not deductible. This is because Tim incurs the cost to put him in the position to earn his employment income, not in the course of performing his work duties.

Example: working from home and travelling to regular place of work

Ravi works in the accounts department of a large retail chain. At the end of each month, Ravi's workload increases. To keep on top of his work, Ravi does some work at home before he goes into the office or when he gets home from the office in the evening.

Ravi can't claim a deduction for the expenses he incurs when he travels between his home and the office on these occasions.

Ravi works at home for convenience and doesn't incur the cost of travelling from his home to the office in the course of performing his work duties. He incurs the expenses to be in the position to start work. The transport costs are a private expense.

Example: travelling while on standby duty

Nadena is a registered nurse at a hospital. During a typical fortnight, Nadena has 9 shifts and one standby shift. If another nurse calls in sick when Nadena is on standby duty she may be called in to work that shift.

The standby shift may be at night, early morning or during the day, depending on her roster cycle.

Nadena can't claim a deduction for travel between her home and the hospital when she is called into work while she is on standby duty.

She incurs the expense in travelling from her home to the hospital, not in the course of performing her work duties. The transport costs are a private expense. This is the case even if the shift is outside normal business hours or there is no public transport available.

Example: travelling to a distant regular work location

Aldo lives in North Queensland with his family. He is an employee on a long-term project in Sydney. His employment contract states that his place of work is the office on the project site in Sydney.

As Aldo lives in North Queensland and only needs to be physically on site during certain stages of the project, he has an informal agreement with his employer to work from home whenever he's not required on site.

When it's necessary for Aldo to be on site, he's generally at the project site for no longer than 2 weeks at a time. When Aldo needs to be on site, he flies to Sydney at his own expense.

The project site in Sydney is Aldo's regular place of work and he can't claim a deduction for the cost of travelling from North Queensland to Sydney.

Aldo doesn't incur the transport expenses in the course of performing his work duties. He incurs the expenses to put him in the position to start work.

His travel costs to stay in Sydney, such as accommodation and meals, are also private because Aldo chooses to live in North Queensland and work in Sydney.

When you can claim trips between home and work

There are some circumstances where you can claim a deduction for the cost of trips between home and work. You must check that you meet the eligibility conditions:

Home is a base of employment

Transporting bulky tools and equipment, itinerant or shifting places of work.

You may also be able to claim a deduction for a trip that includes an alternative place of work that isn't a regular place of work – see Trips while working and between workplaces .

You can claim a deduction for the cost of a trip from home to your place of work if your home was a base of employment. You must meet all 3 of these conditions:

You're required to start your employment duties at home then travel to your regular place of work to complete those particular duties.
Undertaking the work in 2 locations is necessary due to the nature of your employment duties.
The trip to your regular place of work isn't part of a normal trip to work that would have occurred anyway.

Example: home is base of employment

Tom is the IT Security Director of a data storage company. He's on call 24 hours a day to be notified of a security breach. His employer installs a secure terminal at his home so he can work from home if he receives a call out of hours. Normally, Tom would provide advice over the phone to the staff on site, and sometimes he would log into the secure terminal at his home to correct the issue.

At times, Tom starts working on a security issue from the home terminal but is then required to drive into the office out of hours to resolve the issue. On these occasions the transport expenses he incurs for this journey are deductible, as his home has become a base of employment. However, his regular daily trip into the office is not deductible.

You can claim a deduction for the cost of trips between home and work if you need to carry bulky tools or equipment and all the following conditions are met:

the tools or equipment are essential to perform your work
they are awkward to transport because of their size and weight
they can only be transported conveniently using a motor vehicle
there is no secure storage for such items at the workplace
you don't transport the tools or equipment as a matter of choice (for example, if your employer provides secure storage and you choose to take the tools home instead).

If you claim a deduction, you will need to keep a record of:

all work items you carry
the size and weight of all work items
evidence that the items you carry are essential to your work
evidence that your employer did not provide secure storage at the workplace.

Media: Transporting bulky tools and equipment https://tv.ato.gov.au/ato-tv/media?v=bd1bdiubx7d1ys External Link ( Duration: 00:52)

Example: carrying bulky equipment is necessary

Masahito is an employee of an orchestra, where he plays double bass.

The orchestra plays in a number of venues and Masahito often travels directly from home to the various venues. He practises regularly at home, this is also the only place available to store his instrument when not being used.

The double bass is over 2 metres tall and 75 cm wide when in its case and is awkward to transport.

Masahito can claim a deduction for the car expenses he incurs when travelling between his home and workplaces. The need to transport his cumbersome double bass by car to the different workplaces means that the trips are not ordinary home to work travel.

Example: carrying bulky tools is unnecessary

Merinda works as a fitter and turner on a mine site. She drives to the mine site each day.

The mine site has a building where staff can store their tools when not on duty. The staff have their own secure tool lockers.

Merinda requires a number of tools to do her job, so her toolkit is large and heavy. Although there is room to store the toolkit in her locker, she takes it home every day.

Merinda's toolkit would be considered bulky, but she has a secure place to store it at work. It is her decision to transport her tools between home and work each day.

As there is no practical need for Merinda to transport the bulky toolkit between home and her regular place of work, her trips remain ordinary private trips. She can't claim a deduction for her car expenses.

If you do itinerant work (you have shifting places of work), you can claim transport expenses you incur for trips between your places of work and your home. The following factors indicate you do itinerant work:

You travel because it's a fundamental part of your work, not just because it's convenient to you or your employer.
You have a 'web' of workplaces you travel to throughout the day and no fixed place of work.
You regularly work at more than one work site before returning home.
You are often uncertain of the location of your work site.
Your employer pays you a travel allowance because you need to travel continually between work sites, and you use this allowance to pay for your travel.

Example: one work site each day

Chloe is a substitute teacher, who travels to different schools when teachers are away. She sometimes attends a school for just one day, and at other times for a few weeks.

Chloe is not doing itinerant work. While she may not know where she's going to work each day, she will only ever work at one location for the day. She can't claim a deduction for her trips between home and work.

Example: multiple work sites each day

Mitchell is an apprentice roof tiler. He is sent to various sites each day, going to the first site from his home and returning home at the end of the day from the last site.

Mitchell is doing itinerant work because he is regularly working at multiple sites during the day. He can claim deductions for the transport costs of his trips:

between home and work each day
between each site during the day.

However, if Mitchell routinely goes to only one site and works there for several days until the job is finished, he is not doing itinerant work.

Claiming a trip

To claim a tax deduction for the transport expenses of a work-related trip, you must:

have spent the money yourself and weren't reimbursed
have records of your expenses.

How you work out your claim amount depends on whether you made the trip:

in your car or other motor vehicle
by taxi, ride-share or public transport .

If you travel overnight to perform your work duties, you can generally claim a deduction for the cost of your flights and your expenses for accommodation, meals and incidentals.

If your travel is partly private, you can only claim a deduction for the transport expenses you incur in the course of performing your work duties.

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How to Use Work Clothes as a Tax Deduction

If you have to buy a smart new suit for your paralegal job or uniforms for your National Guard duties, it might seem these are obvious work expenses and valid tax deductions. Not necessarily, according to the Internal Revenue Service (IRS). Work clothes that can double as street or evening clothes are no more deductible than anything else in your closet. To claim a deduction for buying clothes, the clothes have to be mandatory for your job and unsuitable for everyday wear.

Step 1: Which work clothes are necessary and usable only for work?

Step 2: document your employer’s policies, step 3: save your receipts, step 4: claiming the deduction.

Smiling flight attendant closes compartments before take off

Key Takeaways

Certain job-related expenses, such as theatrical costumes, hard hats, and other safety gear, may be deductible.
Items that can be worn outside of work, including overalls, white dress shirts, and bibs, are not deductible, even if required on the job site.
Include clothing costs with other miscellaneous itemized deductions on the Schedule A attachment to your tax return.
The total of all miscellaneous deductions must exceed 2 percent of your adjusted gross income to be deductible.

If you’re a salaried employee, you may be surprised to learn that your deductions include certain job-related expenses.

Determine which work clothes are necessary for your job but not suitable to wear outside of work. However, just buying clothes specifically for work and never wearing them at any other time isn't good enough. The IRS has accepted deductions for theatrical costumes, hard hats, and other safety gear.

Among the items that do not qualify are overalls, white dress shirts, and bibs even if required on the job site. For example, even though your company requires you to wear a suit each day, you cannot deduct their cost since you can wear the suits to weddings, job interviews, and other occasions that don't relate to work.

Keep a copy of your employer's policy. For example, a pilot was able to present written proof that his employer required him to wear shoes not suitable for everyday use and to incur costs of having them polished regularly when the IRS questioned his deduction. The pilot was ultimately able to deduct the cost of the shoes as well as the expense of keeping them polished.

TurboTax Tip: Keep a copy of your employer's policy and save your receipts to provide proof of expenses.

If the IRS asks any questions, receipts provide proof that you spent the money on the clothes you are claiming a deduction for. Receipts for the amounts you spend maintaining your work clothes, such as for dry cleaning, shoe-shining and tailoring services are equally important since these costs are deductible too.

Include your clothing costs with your other "miscellaneous itemized deductions" on the Schedule A attachment to your tax return. Work clothes are among the miscellaneous deductions that are only deductible to the extent the total exceeds 2 percent of your adjusted gross income. Add all the deductions in this category together—other deductions include work-related travel, work tools and professional journals—and subtract two percent of your adjusted gross income. This is the amount you can deduct.

Remember, when you use TurboTax, we’ll help you determine which clothing qualifies for this deduction, and we’ll calculate how much you can deduct.

Most military uniforms can be worn off duty, so are not a guaranteed deduction unless the rules prevent you from wearing them outside of work. If you receive a clothing allowance or other type of reimbursement, then you must reduce your deductible expense by the amount of allowance you receive.
You can find your adjusted gross income on line 8b of your Form 1040.

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Tourist Refund Scheme (TRS)

Need a hand.

How to get Tax Refund in USA as Tourist, Resident for Shopping ? FAQs

America is one of the best places to buy clothes, electronics, etc. You get the best value for the money spent. If you are a tourist from Asia or Europe, you will find the prices much cheaper when you buy things in the US at outlet malls.

Many are not aware that you may be able to get tax refunds as a tourist if you buy in some states like Texas in the US. In this article, we will cover all the details on how to get tax refunds, the requirements and conditions, and address some commonly asked FAQs.

Do you get a Tax Refund for Shopping in the US at Malls or Online Stores?

It depends on the US state you do shopping in. If you shop in certain states like Texas, you will likely get a tax refund for your purchases in the US as a tourist. The US Government or US Tourism websites do not have a published list that says that you get a Sales Tax Refund when you buy things in a certain US state.

It is unclear if you would get a tax refund if you buy stuff online. You need to check with the online retailer on this, as this depends on where you ship your goods and how the seller will charge you state tax. Also, even if you get a refund, there are way too many conditions to get a decent refund back. We will look at these details in later sections of the article.

Tax Refund: State Sales Tax vs. Federal Sales Tax?

In America, there is no Federal Sales Tax (national-level sales tax). When you buy goods in the US, the respective State or Local Government charges you State Sales Tax . The US Federal Govt., usually imposes customs duty or tariffs on the federal level and is not charged directly to the end consumer.

The sales tax you pay for shopping in the US goes to the respective state govt. or local govt and does not go to the federal government. So, you usually get the State Sales Tax or Local Govt. Sales tax as a refund if you are exporting the goods outside of the US.

Below is a reference image from Taxfoundation.org that shows approximate State tax by the state for your reference.

Sales Taxes in the US by State for Year 2023

As you would usually get the State Tax as a refund, it is important for you to review the respective tax you paid for you to get an estimate. You can see that in the purchase receipt. There will be a section that clearly tells as Sales Tax. That is nothing but the State Sales Tax.

Below is one of the purchases in Houston, Texas, done by me for your reference. You can see the Sales Tax highlighted to get an idea.

Sales Tax Receipt for Refund in US as Tourist Sample

The US Government does not refund Sales Tax to Visitors

US Customs and Border Protection has clarified on the CBP website that says the below:

“The United States Government does not refund sales tax to foreign visitors. Sales tax charged in the United States is paid to individual states, not the Federal government …” . – US Customs and Border Protection(CBP) Website

It means that the US Federal Government on a country level does not refund any sales tax and you need to check with the respective US State, where you made the purchase from.

Check the below screenshot from the US CBP Website that clarifies the tax refund status from the US Govt. side.

US Sales Tax Refund Clarification by CBP Website - 2023

Hence, it is important to be clear that the Sales Tax refund completely depends on the US State, where you purchased your goods as a visitor and has nothing to do with the US Govt. or Federal Govt. We will look at some states and requirements to get a tax refund in the next section.

Requirements to get Tax Refund in USA as Tourist or Resident

The requirements to get a tax refund varies by the US State. Also, they are slightly tricky to get a decent refund, as they force you to purchase more at a single store. Most of the requirements or conditions are common for foreigners and US Citizens. The only difference is where they can claim a tax refund and when.

Below are the general requirements for Tax Refund for Tourists

Minimum Amount : Depending on the state, there is a minimum amount of tax you need to have per receipt or purchase from a brand store or outlet store. In Texas, you need to have a minimum of $12 tax per receipt or combined receipts from the same brand stores. Technically, in Texas with an 8.25% sales tax, you need to purchase for at least $150 USD in a single store or brand outlet to be eligible for the refund.
Original Receipts : You need to submit original receipts at the Tax refund counter. They do not accept duplicate, photocopy, or reprint sales receipts. You need to submit the first original receipt that is printed. No digital or e-mail receipts are accepted unless it is an online purchase item from a brand store and if the receipt has the delivery address of the goods in that state. You need the packaging slip of delivery for online purchases.
Within 30 days: You need to have the purchase done within 30 days from the day of your international travel or departure date from the US.
International Travel : You get a refund only if you are traveling outside of the US, and the items you buy will stay outside of the US. Technically exporting it to another country. That’s why they ask for the original receipt and take it for a refund. It means that the sale is final in the US, and there are no returns for the same goods you bought here in the US.
Physical Inspection : You need to show your item purchased for physical inspection and it has to be in new and unused condition with all the tags.
Passport, I-94 / Entry Stamp : You need to show your Visa/ Passport and I-94 with an entry stamp on it if holding a foreign passport.
Departure Information / Flight Tickets : You need to show your international departure info or flight ticket itinerary. For US citizens, you need to show the boarding pass to get a tax refund.
Items should Depart US & State: The items purchased in the US must be taken with you and should depart the state you purchased in and America.
Food or Services: No refund for food or services purchased.
Participating Stores: You get Tax Refund only if you purchase goods from the participating stores. This depends on the state as well. In Texas, they claim the stores’ list is over 6,500+ stores…but watch out for the brands. I purchased from a few brands that were not eligible for a refund, such as Abercrombie & Fitch.
Instant Cash : If you want instant cash, it is a 50% processing fee for a tax refund.
Check / PayPal : If you want a check or can get a refund to PayPal, then it is 35% of the tax refund. Also you may also be charged $4 USD for every single store or brand purchase.
Refund Locations: Both US Citizens and non-US citizens can claim tax refunds at all major international airport terminals. They usually would have a Tax refund desk at these locations. Check the airport for the details on the terminal. Also, if you are a non-US citizen, then you can even claim tax refunds at certain mall locations in the state. Check the state website for the exact locations in a state. For example, for Texas, here are the refund locations .
Tax Refund Policies: Tax refund policies can vary by state, and there is no standard sales tax percentage set as well. You should check the Sales Tax and Tax Refund policies in that respective state before you shop to ensure you get a tax refund. For instance, if you shop in Delaware, there is no sales tax, so no refund. For policies in Texas, check out Requirements for Sales Tax Refund in Texas

Tips for Tax Refund as a Tourist or Resident in the US

Overall, a Tax refund is definitely a good thing, if you are doing a lot of shopping and taking it home. The only downside is that you have to give the original receipt of purchase. I did shopping for over $900 USD, but could not get a sizable tax refund as I did not know all of these facts and conditions. If you plan it ahead of time, you may be able to get a decent tax refund. Below are some tips

Duplicate Receipt / Re-prints : When you buy your item, request a duplicate receipt or re-print of the receipt. You can use this duplicate receipt for a warranty in your home country or international location.
Take a Photo of Original Receipt: Take a picture of the original receipt and if requested by the warranty location outside of the US, then you can use the photo and duplicate the receipt.
Buy maximum at One Brand Store: Make sure you pick a few brands and do shopping in those brands’ outlets so that you meet the minimum requirement of a Tax refund. If not, you will not be eligible for a tax refund, as you will miss out on the minimum. I did not get anything as I bought in multiple brands and they were less than $150 purchase per store, so I was not meeting the minimum amount of tax refund in Texas.
Register for Warranty: If you are buying an electronic item and if there is an option to register online, register for warranty, when you have the original receipt.

Common FAQs

We have addressed some of the commonly asked questions below.

The sales tax refunds are paid by the respective State Govt. or local Govt. where you made the purchases. It is a state sales tax refund and not a Federal govt refund. IRS does not give any sales tax refunds.

Yes, your visa status does not matter for tax refunds. All visa types are eligible, including H1B, L1, F1, etc. Anyone traveling outside of the US is eligible for a tax refund. All the tax refund conditions described in the above article apply to everyone.

Yes, US Citizens are also eligible for a tax refund, provided they travel outside the US within 30 days after the purchase of the goods. You can only claim it at airports on the day of your departure. All the conditions and requirements are described in the above article

When you shop in America, you are not subject to Value Added Tax (VAT) or Goods and Services Tax (GST). The concept of VAT and GST exist in many countries, but in the US it is different, and you are only subject to Sales Tax when you do shopping.

This depends on the state and if they offer the tax refund. In certain states, if they charge sales tax and have a policy in place to refund sales tax, then you would likely get the tax refund. It is best to check with the online vendor and then the state policy for the same.

What are your experiences with tax refunds as tourists? Did you get any tax refund as a Resident? Share your thoughts in the comments.

How You Can Get Your Money Back When a Vacation Abroad Goes Awry

There are five steps to take if something goes awry on your trip.

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A trip abroad is a dream for most people, but sometimes things go awry. Flights get canceled, trains get delayed, hotels have bugs, tours don’t live up to their promises — unfortunately, a lot of unexpected issues can pop up when traveling.

These problems become more complicated when you’re out of the country, though. It’s not as simple to call and demand a refund when you can’t speak the language or it costs money to make that call in the first place. Plus, there may be different consumer laws and regulations in other countries, too.

But there are things you can do to get your money back when you experience a travel roadblock. Follow this step-by-step guide to ensure a refund from anywhere in the world.

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1. Have travel insurance before you go

Travel insurance is a smart way to protect yourself when you go on any trip. While most travel insurance options won’t offer complete reimbursements, they will get you sizable refunds for common trip headaches, like stolen luggage, canceled transportation and shoddy accommodations.

“Before you book your trip, check if the credit card you plan to use offers any travel insurance or assistance that might be useful to you. Otherwise, it might be a good idea to begin shopping for travel coverage through a carrier that offers comprehensive travel coverage,” advised Mark Friedlander, the director of corporate communications for the Insurance Information Institute .

If anything comes up, you can then contact your travel insurance to try to get a refund. Jenna Hummer, the director of publicity for Squaremouth , a travel insurance company, said your steps should “then be to:

Have all receipts from your trip ready ahead of time
Obtain documentation from your travel supplier proving you canceled your trip
Provide as much detail as possible in your claim form and interview
Be prepared to send in additional information or documentation to support your claim"

Of course, not everyone needs to invest in travel insurance, Hummer added.

“Travelers with existing protection through their travel credit cards, airline, or through others means, travelers that don’t have any prepaid, non-refundable trip expenses, travelers with few trip expenses, or taking relatively inexpensive trips, travelers with existing medical coverage that covers them for their trips” likely won’t want to buy travel insurance, she said.

2. Check the policies

Let’s say you’re one of those people who didn’t choose to get travel insurance. You may still be protected in another way. Look at what your credit card offers, for example, as there are credit cards with travel insurance .

You can also check out the policies on the offending company’s site: The airline, hotel, or vendor may already have a structure in place for people experiencing problems.

3. Contact the company directly

If you don’t have travel insurance or the company doesn’t offer an automatic resolution, you’ll want to reach out directly. The fastest way is probably via phone, so try to make these calls while you’re already abroad. If you’re already back in the United States, you can use calling apps like WhatsApp, Facebook Messenger or FaceTime to help make a free or low-cost international call.

Of course, you may run into an issue if you don’t speak the language. In that case, you can always try to contact the company via email or social media, where you can use a translation app to help get your message across, Friedlander suggested.

4. Get a local to intervene on your behalf

Wat Arun and cruise ship in twilight time, Bangkok, Thailand.

If your emails are going unanswered or you just can’t communicate with the vendor, consider turning to a local for help, Friedlander said. They can mediate for you and help you advocate for what you need.

Don’t know anyone directly on the ground in this country? “Asking a bilingual employee at the hotel where you are staying may be another option,” he explained.

5. Dispute the credit card charge

Unfortunately, sometimes the vendor just won’t be responsive, regardless of how you communicate. That’s when it’s time to talk with your credit card company.

Contact them to explain the situation and dispute the credit card charge. Just make sure you have the proper documentation to back up your claims. Typically, chargebacks are simple to do and are often approved.

Claim Travel Expenses on Your Tax Return

Travel expenses for professional-related commutes can be claimed as income-related expenses (Werbungskosten) on your tax return and help increase your chances of a tax refund. These expenses can include business trips, trips home in the case of double household management, or simply your daily commute to work – To learn more about deducting these on your tax return, keep reading this article!

Which travel expenses can be claimed?

Travel expenses incurred for professional reasons can be claimed on your tax return by entering the appropriate lump sums or flat rate and in some cases, these costs are fully deductible. These can be divided into 3 categories:

Expenses for the commute from your residence to your primary workplace
Travel costs from your secondary to primary residence in the case of double household management
Travel costs for external activities & business trips

Traditional employees can deduct all of these costs as income-related expenses while freelancers/self-employed persons can claim their travel expenses as business expenses (Betriebsausgaben).

1. Your work commute

Primary profession: commuter allowance.

You can claim a commuter allowance (Entfernungs-/Pendlerpauschale) for the commutes between your residence and your primary profession . Primary profession refers to your main and permanent job. Freelancers can claim the commuter allowance for commutes to their first business location while students/trainees can claim it for commutes to their place of education.

The commuter allowance amounts to 30 cents per kilometer for the first 20 kilometers of one-way travel to or from your workplace, regardless of means of transportation or actual incurred expenses. That means this can be claimed whether you walk, ride a bike, drive a car, ride passenger, or take public transportation – just keep in mind that you can only claim one-way per working day. The tax office will only accept deductions for the shortest possible route (regardless of means of transport) and long detours would have to be justified, for example, if it’s more convenient and is a faster route (due to the shorter route having heavy traffic etc.).

Note: As of January 2021, the commuter allowance was increased to 35 cents from the 21st kilometer of one-way travel for long-distance commuters and from 2022 to 2026 it is increased again to 38 cents from the 21st kilometer of one-way travel.

Commuter allowance: Maximum limit

Generally, the tax office accepts a flat rate of 230 trips per year for a 5-day work week, and 280 trips for a 6-day work week. Commuter expenses can not be deducted for days spent home sick, on vacation, or working from home – days spent working from home can instead be claimed using the home office lump sum . A maximum of 4,500 euros per year can be deducted, unless you meet one of the following two exceptions :

If you commute to work in your own personal or business vehicle and exceed 4,500 euros per year with the commuter allowance, the excess amount may be deducted.
If you commute to work with public transportation and the costs exceed 4,500 euros per year, you can enter and claim the actual expenses on your tax return (not as a part of the commuter allowance).

If you meet either of these exceptions, hang on to your receipts as proof must be submitted upon the tax office’s request.

Commuter costs for multiple workplaces or professions

There can only be one primary workplace per profession, if you work at several locations they are considered external activity (Auswärtstätigkeit). Expenses for commuting to external activities can be reimbursed if you travel by public transport and the kilometer allowance (Kilometerpauschale) can be used if you travel by car. This applies to both the outward and return journey and amounts to 30 cents per kilometer.

If you have several professions , the commuter allowance can only be used for your primary profession if you travel between there and home on the same day. If you travel from workplace to workplace, the distances can be added, but then the commuter allowance can only be used for half of the total distance .

Mobility premium for long-distance commuters

As of 2021, long-distance commuters with a daily commute of 21 kilometers or more can apply for the new mobility premium (Mobilitätsprämie). In order to apply, your taxable income must not exceed the basic tax-free allowance (Grundfreibetrag) of 9,744 euros (as of 2021). The bonus is based on the 2021 commuter allowance increase and will remain valid until 2026. If eligible, you can apply for this premium directly on your tax return and receive it directly to your bank account. The premium grants a bonus of 14% to the already increased commuter allowance from the 21st kilometer of one-way travel to work and the assessment basis for the premium varies upon the difference between your annual taxable income and the basic tax-free allowance.

2. Commutes to your main residence with two households

Many employees manage two households for professional purposes and shorter commutes to the office, leading to common trips between their primary and secondary residences. One trip per week (or a total of 46 per calendar year) back to your primary residence can be deducted using the commuter allowance regardless of means of transportation. The same rules apply: either the outward or return journey can be deducted. The allowance can be deducted even if no costs were incurred from the trip, such as if you were given a ride.

In order to be eligible to deduct costs for double household management , your “life core” must take place at your primary residence, where you regularly stay and contribute at least 10% of the costs. It is not a prerequisite to have a spouse, partner, or child(ren) living at your primary residence.

The commuter allowance increase to 35 cents (2021) / 38 cents (2022) from the 21st kilometer also applies to trips home to your primary residence to see your family. Note: The maximum of 4,500 euros per year doesn’t apply to family trips home.

If you travel with public transportation and the costs exceed the benefits from the commuter allowance, you can instead deduct those costs individually on your tax return. If you fly home, you can only claim the price of the plane ticket.

Note: Weekly trips to your primary residence cannot be deducted if made with a company car. No tax must be paid on the first trip home with a company car as a non-cash benefit (geldwerter Vorteil), but it must be taxed from the second trip onwards.

3. Costs for business trips

Employers often pay for business trip expenses out of their own pocket – whether it be field service, further education, or visits to a trade fair. If the costs aren’t covered by your employer, it’s definitely worthwhile to claim them on your tax return. Means of transport are irrelevant unless you’ve traveled in a company car , which is not tax-deductible.

Expenses for travel by public transport, ship, or airplane are all reimbursed based on the lowest class available. Train journeys exceeding two hours in the next higher class can be reimbursed.

If you traveled by car, you can either determine the actual incurred costs and claim them or use the kilometer allowance (Kilometerpauschale). Unlike the commuter allowance, the kilometer allowance can be applied to both the outward and return journey .

Per kilometer traveled, the kilometer allowance amounts to:

30 cents for trips by car
20 cents for trips by motorcycle, scooter, moped, or e-bike

Tip: If your business trip away from home and your workplace exceeds 8 hours, you can claim a flat rate of 14 euros for room and board as well as meals (Verpflegungsmehraufwand). If the trip exceeds 24 hours, you can claim a flat rate of 28 euros.

Please note: The portion of travel expenses covered by your employer can no longer be included in your tax return. You can alternatively declare the costs in full if you also claim the employer subsidies for your travel costs.

Is it worth it for you to file a tax return?

More From Forbes

Is travel insurance refundable here’s everything you need to know.

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Sometimes, travel insurance is refundable. Here's when you can get your money back.

Peter Hoagland always checks to see if his travel insurance is refundable. That's because anything can happen between the time you book your vacation and when you leave — and because travel insurance isn't always refundable.

During the pandemic, he discovered that the hard way. He had to cancel a trip and asked for his money back from the insurance company. It refused.

"Since then, I always read the fine print on the policy," he says.

The refundability of travel insurance has always been an open question. Some countries and U.S. states regulate refundability. Travel insurance companies put refundability details in the fine print of the policy. And, as Hoagland found out, there are always exceptions.

Like the pandemic, when refund policies were all over the map. Some insurance companies adhered to their published policies. Others offered a credit that could be reused within a year, which was minimally useful because the pandemic was still happening a year later. Others quietly gave their customers a refund.

Hoagland says he fought for his money. Eventually, he contacted a manager at his travel insurance company.

"That produced a quick result," he says. "I got my money back."

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But let's face it: Getting a refund for travel insurance can be difficult. There are times when insurance is always refundable because it's required by law. There are times when it's sometimes refundable. And there are times when it's almost never refundable. But even then, there may be a way to recover some — or all — of the value of your policy.

Getting a refund for travel insurance can be a challenge

If you have a travel insurance policy and would like to get a refund, it might be easier said than done, say experts.

"While travel insurance is regulated like auto and home insurance, it’s often less standardized," says Stuart Winchester, CEO of Marble, a digital wallet for your insurance. "So first off, it’s important to check the fine print of your specific policy. Don’t assume it’s like the last one you got."

Even when you have something in writing, a refund can require some serious negotiating skills.

"Getting a refund for travel insurance can be complicated and frustrating," says Peter Hamdy, the managing director of a tour operator in Auckland, New Zealand. He's asked for a refund on policies numerous times and says that despite what travel insurance companies may tell you, there are no hard-and-fast rules when it comes to getting a refund on your policy.

"Some situations can warrant a refund," he says. "It depends on your policy."

What does a typical refundability clause look like? For example, the World Explorer Guardian from Insured Nomads notes that it's refundable only during the 10-day review period from the date of delivery or 15 days from the date of delivery if mailed, provided you have not already departed on your trip and you have not incurred any claimable losses during that time. If you depart on your trip before the expiration of the review period, the review period ends and the policy can't be refunded.

"We go a bit further with our World Explorer Travel Medical plans," notes Andrew Jernigan, CEO of Insured Nomads. "If no claims have been filed then we can refund the unused portion of the policy if you cut your trip short.”

When can you get a refund for travel insurance?

Here are the most common cases where travel insurance can be refunded:

If you cancel during the "free look" period required by the government. Most states require what's called a "free look" period of anywhere from 10 to 14 days. "During this period, travelers can review the purchase and make sure it fits their needs," explains James Nuttall, general manager of Insubuy . "If it does not, they can cancel it for any reason and get a full refund, no questions asked, so long as you haven’t departed yet.
If you cancel during the travel insurance company grace period. Many insurance companies also have a grace period for refunds (usually, they are the same as the "free look" although some grace periods can be longer). "If you’re outside your grace period, which typically lasts one to two weeks after signing, you’re contractually obliged to pay your premiums," says David Ciccarelli, CEO of the vacation rental site Lake . "Still, it doesn’t hurt to ask your company for a refund or alternative options if you’re outside your grace window. You might not get a yes, but it could lead to some cost savings or better solutions."
When someone else cancels your trip. "For instance, if your cruise is canceled due to low river tide, you are not at fault and would typically receive a full refund or credit for a future sailing, thus eliminating the need for the travel insurance policy," explains Rhonda Abedsalam vice president of travel insurance for AXA Assistance US.
If you die. Typically, the policy would be refunded to your next of kin. Generally, you can also ask for a refund if your travel companion dies before your trip.

Remember, it depends on where you buy your insurance

The refundability of your insurance can depend on where you purchased it. Commercial policies bought from a cruise or tour company are generally canceled and refunded if you cancel the trip far enough in advance of your departure date.

"The travel insurance cancellation provisions are generally tied to the cancellation provisions for the cruise or tour," explains Dan Skilken, president of TripInsurance.com . "After you have paid the last deposits on the cruise and are close enough to departure that they will not provide a refund on the cruise, they generally will also not provide a refund on the travel insurance. But if you cancel early enough to get all or most of your deposit back, you will also get your travel insurance premium refunded."

If you’ve purchased retail travel insurance from a third-party provider or comparison website, you can often get a refund if you can show receipts proving that you received a full refund of all trip deposits and have not had any cancellation penalties or taken any travel credits when you canceled your trip.

That's because retail travel insurance is sold for a specific traveler and for a specific trip. If you have proof of a complete refund and have not received travel credits, then you no longer have what's called an "insurable interest" in the trip. The insurance company must cancel and refund your premium in full, says Skilken.

Insider tip: If the insurance company refuses, just tell them you have proof that you no longer have an insurable interest in the trip. You have to have an insurable interest in a trip to own a travel insurance policy.

Your agent may be able to help you get a refund

You may also be able to lean on the agent who sold you the policy. For example, all policies on Squaremouth come with a money-back guarantee.

"The purpose of this benefit is to give travelers extra time to review their policy documentation to be sure it’s the best policy for their coverage needs," says spokeswoman Jenna Hummer. At Squaremouth, the money-back period typically lasts between 10 and 14 days, which is in line with the mandated "free look" period.

However, I have also seen agents negotiate with travel insurance companies for a more generous refund period in case of extenuating circumstances. There's no guarantee that you'll get it, but it's worth asking — and one reason to work with a third party.

Agents can also help you avoid this problem. Susan Sherren, who runs Couture Trips , a travel agency, notes that American Airlines Vacation Packages offers a predeparture protection insurance plan, which allows cancellation for any reason before the outbound departing flight time. Other restrictions apply, she adds.

"More flexibility will often cost you more," she says. "But having the flexibility is a great way to sleep well at night."

Can't get a refund? Look for other kinds of flexibility from your travel insurance company

Even if your travel insurance company says no to a refund, it doesn't necessarily mean you've lost the value of your policy.

"If a travel supplier changes or cancels your trip, you should be able to change your travel insurance policy to match the new dates of your trip or even cover a new trip, sometimes up to two years into the future," says Daniel Durazo, director of external communications at Allianz Partners USA .

Pro tip: Be sure to change the dates of your travel insurance policy before the departure date of your current itinerary. You can do that online or by calling your agent. Once the policy's effective date has passed, making any changes or initiating a refund or credit becomes much more difficult.

Don't forget to do your due diligence

Bottom line: Travel insurance is refundable under certain circumstances. But knowing when can require research.

"It's important for consumers to carefully read their policy upon receipt to understand the specific terms offered by their insurance provider," says Robert Gallagher, president of the US Travel Insurance Association.

The more you know, the likelier you are to get the refund you want when your plans change.

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US lawmakers revise bill to ensure quick airline refunds

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COMMENTS

Understanding business travel deductions
Tax Tip 2023-15, February 7, 2023 — Whether someone travels for work once a year or once a month, figuring out travel expense tax write-offs might seem confusing. The IRS has information to help all business travelers properly claim these valuable deductions.
How to Deduct Business Travel Expenses: Do's, Don'ts, Examples
If you are traveling abroad for business purposes, you trip counts as "entirely for business" as long as you spend less than 25% of your time on personal activities (like vacationing). Your travel days count as work days. So say you you head off to Zurich for nine days.
Here's how to claim work expenses when filing your taxes
To find the percentage, compare the size of space you use for business to that of your entire home, and then apply the percentage to the specific expenses. For instance, if your home is 1,800 ...
Is Your Working Vacation Tax Deductible?
On the days where you conduct business, you are able to deduct 50% of your business-related food and entertainment costs and fully deduct other ordinary and reasonable expense incurred to do your business — i.e., lodging, taxis, rental cars, etc. Planning Your Work Trip Is Key
Tax Deductions for Business Travelers
You can deduct business travel expenses when you are away from both your home and the location of your main place of business (tax home). Deductible expenses include transportation, baggage fees, car rentals, taxis and shuttles, lodging, tips, and fees. You can also deduct 50% of either the actual cost of meals or the standard meal allowance ...
How to Deduct Travel Expenses (with Examples)
Here's how to make sure your travel qualifies as a business trip. 1. You need to leave your tax home. Your tax home is the locale where your business is based. Traveling for work isn't technically a "business trip" until you leave your tax home for longer than a normal work day, with the intention of doing business in another location. 2.
Can I deduct travel expenses?
If you're self-employed or own a business, you can deduct work-related travel expenses, including vehicles, airfare, lodging, and meals. The expenses must be ordinary and necessary. For vehicle expenses, you can choose between the standard mileage rate or the actual cost method where you track what you paid for gas and maintenance.
How to use your tax refund for travel
As the data shows, the average refund as of late February is $3,213 — up 4.3% from last year. Some states also typically have higher averages than other. With data put together from LendingTree for the tax year 2021, residents of Wyoming, Massachusetts, Florida and Washington, D.C., received the largest average refund, at over $5,000.
What are State Tax Implications for Traveling Employees?
The rules vary for withholding income tax on employees who temporarily travel outside of their resident state for work. This requires payroll managers to navigate different filing rules for all states, territories, and hundreds of municipalities.
How to Put Your Tax Refund to Work for You
If you're eagerly anticipating a tax refund in the coming weeks, you have good reason to be optimistic: The IRS reports that about 77% of tax returns filed last year generated a refund, and the...
How to get your maximum VAT refund when traveling abroad
The EU's minimum standard VAT rate is 15% — far more than the combined state and local sales tax rates you'll find anywhere in the U.S. However, the average standard VAT rate in the EU currently sits around 21%. All EU countries have standard VAT rates above the 15% threshold; Luxembourg has the lowest rate at 16%, and Hungary has the highest at 27%.
Work & Travel USA Participant Resources
Resources Need more information about joining the InterExchange Work & Travel USA program? You've come to the right place to learn about what it takes to participate in the program, and there's plenty of supporting information here for current participants, too. Quick Links Housing Insurance Social Security SEVIS Tax Information Important Documents
Going Home
Bring your papers (passport, J-1 visa, and DS-2019) for identification. Make sure all fees are paid and that you withdraw all funds from the account. Ask if the bank needs your home country address. If You Keep Your Account Open
Claim tax relief for your job expenses: Travel and overnight expenses
You cannot claim for travelling to and from work, unless you're travelling to a temporary place of work. You can claim tax relief for money you've spent on things like: public transport costs hotel...
USA Work And Travel Tax Refund
1. Standard deduction The standard deduction is $12,550 for the 2022 tax year. This deduction is available to all taxpayers, regardless of their resident status. In addition, you may claim a deduction for any expenses associated with your work in the United States, such as travel expenses or work-related equipment. 2. Foreign tax credit
Solved: About work and travel tax refund.
About work and travel tax refund. Hi I was a J1 student last year. Last summer I went to Montana to work and travel. Now I'm doing my tax refund and I heard from my friend about you two days ago. But I already sent my 1040RN-EZ three days ago. So I want to know is it work that I fill my tax with TurboTax? TurboTax Self Employed iOS posted
Trips you can and can't claim
You can claim a tax deduction for the cost of transport on trips to: perform your work duties - for example, if you travel from your regular place of work to meet with a client attend work-related conferences or meetings away from your regular place of work deliver items or collect supplies
How to Use Work Clothes as a Tax Deduction
Step 2: Document your employer's policies. Step 3: Save your receipts. Click to expand. Beginning in 2018, unreimbursed employee expenses are no longer eligible for a tax deduction on your federal tax return however, some states such as California continue to provide a deduction on your state tax return if you qualify.
Tourist Refund Scheme (TRS)
You can Before you buy International travellers (including Australians) might be able to claim a GST (Goods and Services Tax) and WET (Wine Equalisation Tax) refund for some goods bought in Australia that you then take out of the country with you on a plane or ship. You must
How to get Tax Refund in USA as Tourist for Shopping? [2023]
In Texas, you need to have a minimum of $12 tax per receipt or combined receipts from the same brand stores. Technically, in Texas with an 8.25% sales tax, you need to purchase for at least $150 USD in a single store or brand outlet to be eligible for the refund.
How You Can Get Your Money Back When a Vacation Abroad Goes Awry
"Travelers with existing protection through their travel credit cards, airline, or through others means, travelers that don't have any prepaid, non-refundable trip expenses, travelers with few ...
Claim Travel Expenses on Your Tax Return
Generally, the tax office accepts a flat rate of 230 trips per year for a 5-day work week, and 280 trips for a 6-day work week. Commuter expenses can not be deducted for days spent home sick, on vacation, or working from home - days spent working from home can instead be claimed using the home office lump sum.
Welcome Back, Road Warriors: Business Travel Returns
Think again. Videoconferencing hasn't made in-person meetings obsolete. Scattered workforces have in some cases resulted in more trips, not fewer. Companies are sending employees back on the ...
Is Travel Insurance Refundable? Here's Everything You Need ...
That's because retail travel insurance is sold for a specific traveler and for a specific trip. If you have proof of a complete refund and have not received travel credits, then you no longer have ...
US lawmakers revise bill to ensure quick airline refunds
U.S. House and Senate negotiators agreed late Tuesday to revise language in an aviation reform bill to ensure quick refunds for airline passengers whose flights are canceled and who are not ...