can travel expenses be deducted from taxes

How to Deduct Travel Expenses (with Examples)

Reviewed by

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 .

Join over 140,000 fellow entrepreneurs who receive expert advice for their small business finances

Get a regular dose of educational guides and resources curated from the experts at Bench to help you confidently make the right decisions to grow your business. No spam. Unsubscribe at any time.

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%.

{upsell_block}

🌐 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.

{write_off_block}

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

{email_capture}

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

Over 1M freelancers trust Keeper with their taxes

Keeper is the top-rated all-in-one business expense tracker, tax filing service, and personal accountant.

Everything You Need to Know About the Business Travel Tax Deduction

Get the tax info they should have taught us in school

Expense tracking has never been easier

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.

Voted best tax app for freelancers

What Are Travel Expenses?

Understanding travel expenses, the bottom line.

Deductions & Credits
Tax Deductions

Travel Expenses Definition and Tax Deductible Categories

Michelle P. Scott is a New York attorney with extensive experience in tax, corporate, financial, and nonprofit law, and public policy. As General Counsel, private practitioner, and Congressional counsel, she has advised financial institutions, businesses, charities, individuals, and public officials, and written and lectured extensively.

For tax purposes, travel expenses are costs associated with traveling to conduct business-related activities. Reasonable travel expenses can generally be deducted from taxable income by a company when its employees incur costs while traveling away from home specifically for business. That business can include conferences or meetings.

Key Takeaways

Travel expenses are tax-deductible only if they were incurred to conduct business-related activities.
Only ordinary and necessary travel expenses are deductible; expenses that are deemed unreasonable, lavish, or extravagant are not deductible.
The IRS considers employees to be traveling if their business obligations require them to be away from their "tax home” substantially longer than an ordinary day's work.
Examples of deductible travel expenses include airfare, lodging, transportation services, meals and tips, and the use of communications devices.

Travel expenses incurred while on an indefinite work assignment that lasts more than one year are not deductible for tax purposes.

The Internal Revenue Service (IRS) considers employees to be traveling if their business obligations require them to be away from their "tax home" (the area where their main place of business is located) for substantially longer than an ordinary workday, and they need to get sleep or rest to meet the demands of their work while away.

Well-organized records—such as receipts, canceled checks, and other documents that support a deduction—can help you get reimbursed by your employer and can help your employer prepare tax returns. Examples of travel expenses can include:

Airfare and lodging for the express purpose of conducting business away from home
Transportation services such as taxis, buses, or trains to the airport or to and around the travel destination
The cost of meals and tips, dry cleaning service for clothes, and the cost of business calls during business travel
The cost of computer rental and other communications devices while on the business trip

Travel expenses do not include regular commuting costs.

Individual wage earners can no longer deduct unreimbursed business expenses. That deduction was one of many eliminated by the Tax Cuts and Jobs Act of 2017.

While many travel expenses can be deducted by businesses, those that are deemed unreasonable, lavish, or extravagant, or expenditures for personal purposes, may be excluded.

Types of Travel Expenses

Types of travel expenses can include:

Personal vehicle expenses
Taxi or rideshare expenses
Airfare, train fare, or ferry fees
Laundry and dry cleaning
Business meals
Business calls
Shipment costs for work-related materials
Some equipment rentals, such as computers or trailers

The use of a personal vehicle in conjunction with a business trip, including actual mileage, tolls, and parking fees, can be included as a travel expense. The cost of using rental vehicles can also be counted as a travel expense, though only for the business-use portion of the trip. For instance, if in the course of a business trip, you visited a family member or acquaintance, the cost of driving from the hotel to visit them would not qualify for travel expense deductions .

The IRS allows other types of ordinary and necessary expenses to be treated as related to business travel for deduction purposes. Such expenses can include transport to and from a business meal, the hiring of a public stenographer, payment for computer rental fees related to the trip, and the shipment of luggage and display materials used for business presentations.

Travel expenses can also include operating and maintaining a house trailer as part of the business trip.

Can I Deduct My Business Travel Expenses?

Business travel expenses can no longer be deducted by individuals.

If you are self-employed or operate your own business, you can deduct those "ordinary and necessary" business expenses from your return.

If you work for a company and are reimbursed for the costs of your business travel , your employer will deduct those costs at tax time.

Do I Need Receipts for Travel Expenses?

Yes. Whether you're an employee claiming reimbursement from an employer or a business owner claiming a tax deduction, you need to prepare to prove your expenditures. Keep a running log of your expenses and file away the receipts as backup.

What Are Reasonable Travel Expenses?

Reasonable travel expenses, from the viewpoint of an employer or the IRS, would include transportation to and from the business destination, accommodation costs, and meal costs. Certainly, business supplies and equipment necessary to do the job away from home are reasonable. Taxis or Ubers taken during the business trip are reasonable.

Unreasonable is a judgment call. The boss or the IRS might well frown upon a bill for a hotel suite instead of a room, or a sports car rental instead of a sedan.

Individual taxpayers need no longer fret over recordkeeping for unreimbursed travel expenses. They're no longer tax deductible by individuals, at least until 2025 when the provisions in the latest tax reform package are due to expire or be extended.

If you are self-employed or own your own business, you should keep records of your business travel expenses so that you can deduct them properly.

Internal Revenue Service. " Topic No. 511, Business Travel Expenses ."

Internal Revenue Service. " Publication 463, Travel, Gift, and Car Expenses ," Page 13.

Internal Revenue Service. " Publication 5307, Tax Reform Basics for Individuals and Families ," Page 7.

Internal Revenue Service. " Publication 463, Travel, Gift, and Car Expenses ," Pages 6-7, 13-14.

Internal Revenue Service. " Publication 463, Travel, Gift, and Car Expenses ," Page 4.

Internal Revenue Service. " Publication 5307, Tax Reform Basics for Individuals and Families ," Pages 5, 7.

Terms of Service
Editorial Policy
Privacy Policy
Your Privacy Choices

Search Search Please fill out this field.
Building Your Business
Business Taxes

7 Rules You Should Know About Deducting Business Travel Expenses

What Is Your "Tax Home"?

Charges on Your Hotel Bill

The 50% rule for meals, the cost of bringing a spouse, friend or employee.

Using Per Diems To Calculate Employee Travel Costs

Combined Business/Personal Trips

International business travel.

The Cost of a Cruise (Within Limits)

Frequently Asked Questions (FAQs)

Helde Benser / Getty Images

The IRS has a specific definition for business travel when it comes to determining whether these expenses are tax deductible. The agency says business travel is travel that takes you away from your tax home and is "substantially longer than an ordinary day's work." It requires that you sleep or rest while you're away from home, and that you do so. The travel must be "temporary." This means it can't last a year or more.

Key Takeaways

You can deduct expenses that take you away from your tax home for a period of time that would require you to spend the night.
Your tax home is the city or area where your regular place of business is located.
You’re limited to 50% of the cost of your meals.
Your trip must be entirely business-related for costs to be deductible, but special rules apply if you travel outside the U.S.

What Is Your "Tax Home"?

Your tax home is a concept set by the IRS to help determine whether a trip is tax deductible. It's defined by the IRS as the entire city or general area where your regular place of business is located. It's not necessarily the area where you live.

Your tax home can be used to determine whether your business travel expenses are deductible after you've determined where it's located. You can probably count your expenses during travel as business deductions if you have to leave your tax home overnight or if you otherwise need time to rest and sleep while you're away.

Check with a tax professional to make sure you're accurately identifying the location of your tax home.

Charges for your room and associated tax are deductible, as are laundry expenses and charges for phone calls or for use of a fax machine. Tips are deductible as well. But additional personal charges, such as gym fees or fees for movies or games aren't deductible.

You can deduct the cost of meals while you're traveling, but entertainment expenses are no longer deductible and you can't deduct "lavish or extravagant" meals.

Meal costs are deductible at 50%. The 50% limit also applies to taxes and tips. You can use either your actual costs or a standard meal allowance to take a meal cost deduction, as long as it doesn't exceed the 50% limit.

The cost of bringing a spouse, child, or anyone else along on a business trip is considered a personal expense and isn't deductible. But you may be able to deduct travel expenses for the individual if:

The person is an employee
They have a bona fide business purpose for traveling with you
They would otherwise be allowed to deduct travel expenses

You may be able to deduct the cost of a companion's travel if you can prove that the other person is employed by the business and is performing substantial business-related tasks while on the trip. This may include taking minutes at meetings or meeting with business clients.

Using Per Diems To Calculate Employee Travel Costs

The term "per diem" means "per day." Per diems are amounts that are considered reasonable for daily meals and miscellaneous expenses while traveling.

Per diem rates are set for U.S. and overseas travel, and the rates differ depending on the area. They're higher in larger U.S. cities than for sections of the country outside larger metropolitan areas. Companies can set their own per diem rates, but most businesses use the rates set by the U.S. government.

Per diem reimbursements aren't taxable unless they're greater than the maximum rate set by the General Service Administration. The excess is taxable to the employee.

If you don't spend all your time on business activities during an international trip, you can only deduct the business portion of getting to and from the destination. You must allocate costs between business and personal activities.

Your trip must be entirely business-related for you to take deductions for travel costs if you remain in the U.S., but some "incidental" personal time is okay. It would be incidental to the main purpose of your trip if you travel to Dallas for business and you spend an evening with family in the area while you're there.

But attempting to turn a personal trip into a business trip won't work unless the trip is substantially for business purposes. The IRS indicates that “the scheduling of incidental business activities during a trip, such as viewing videotapes or attending lectures dealing with general subjects, will not change what is really a vacation into a business trip."

The rules are different if part or all of your trip takes you outside the U.S. Your international travel may be considered business-related if you were outside the U.S. for more than a week and less than 25% of the time was spent on personal activities.

You can deduct the costs of your entire trip if it takes you outside the U.S. and you spend the entire time on business activities, but you must have "substantial control" over the itinerary. An employee traveling with you wouldn't have control over the trip, but you would as the business owner would.

The trip may be considered entirely for business if you spend less than 25% of the time on personal activities if your trip takes you outside the U.S. for more than a week.

You can only deduct the business portion of getting to and from the destination if you don't spend all your time on business activities during an international trip. You must allocate costs between your business and personal activities.

The Cost of a Cruise (Within Limits)

The cost of a cruise may be deductible up to the specified limit determined by the IRS, which is $2,000 per year as of 2022. You must be able to show that the cruise was directly related to a business event, such as a business meeting or board of directors meeting.

The IRS imposes specific additional strict requirements for deducting cruise travel as a business expense.

How do you write off business travel expenses?

Business travel expenses are entered on Schedule C if you're self-employed . The schedule is filed along with your Form 1040 tax return. It lists all your business income, then you can subtract the cost of your business travel and other business deductions you qualify for to arrive at your taxable income.

What are standard business travel expenses?

Standard business travel expenses include lodging, food, transportation costs , shipping of baggage and/or work items, laundry and dry cleaning, communication costs, and tips. But numerous rules apply so check with a tax professional before you claim them.

The Bottom Line

These tax deduction regulations are complicated, and there are many qualifications and exceptions. Consult with your tax and legal professionals before taking actions that could affect your business.

IRS. " Topic No. 511: Business Travel Expenses ."

IRS. " Publication 463 (2021), Travel, Gift, and Car Expenses ."

IRS. " Here’s What Taxpayers Need To Know About Business-Related Travel Deductions ."

Small Business Trends

10 tax deductions for travel expenses (2023 tax year).

Tax season can be stressful, especially if you’re unaware of the tax deductions available to you. If you’ve traveled for work throughout the year, there are a number of deductions for travel expenses that can help reduce your taxable income in 2024 and save you money.

Read on for 10 tax deductions for travel expenses in the 2023 tax year.

Are business travel expenses tax deductible?

Business travel expenses incurred while away from your home and principal place of business are tax deductible. These expenses may include transportation costs, baggage fees, car rentals, taxis, shuttles, lodging, tips, and fees.

It is important to keep receipts and records of the actual expenses for tax purposes and deduct the actual cost.

What kinds of travel expenses are tax deductible?

To deduct business travel expenses, they must meet certain criteria set by the IRS.

The following are the primary requirements that a travel expense must meet in order to be eligible for a tax deduction:

Ordinary and necessary expenses: The expense must be common and accepted in the trade or business and be helpful and appropriate for the business.
Directly related to trade or business: The expense must be directly related to the trade or business and not of a personal nature.
Away from home overnight: The expense must have been incurred while away from both the taxpayer’s home and the location of their main place of business (tax home) overnight.
Proper documentation: The taxpayer must keep proper documentation, such as receipts and records, of the expenses incurred.

Eligible Business Travel Tax Deductions

Business travel expenses can quickly add up. Fortunately, many of these expenses are tax deductible for businesses and business owners.

Here is an overview of the types of business travel expenses that are eligible for tax deductions in the United States:

Accommodation Expenses

Accommodation expenses can be claimed as tax deductions on business trips. This includes lodging at hotels, rental costs of vacation homes, and other lodgings while traveling.

Meal Expenses

Food and beverage expenses incurred on a business trip may be deducted from taxes. This includes meals while traveling and meals during meetings with clients or contractors.

Transportation Expenses

Deducting business travel expenses incurred while on a business trip may also be claimed.

This includes flights, train tickets, car rentals, gas for personal vehicles used for the business trip, toll fees, parking fees, taxi rides to and from the airport or train station, and more.

Expenses of operating and maintaining a car

Expenses of operating and maintaining a car used for business travel may also be claimed as tax deductions.

This includes fuel, insurance, registration costs, actual costs of repairs, and maintenance fees. Fees paid to hire a chauffeur or driver may also be deducted.

Operating and maintaining house-trailers

Operating and maintaining house trailers for business travel may be eligible for tax deductions, provided that the use of such trailers is considered “ordinary” and “necessary” for your business.

This includes any costs associated with renting or owning a trailer, such as fuel costs, repair and maintenance fees, insurance, and registration charges.

Internet and phone expenses

Internet and phone expenses associated with business travel can also be claimed as tax deductions. This includes the cost of any internet service, such as Wi-Fi or data plans, and phone services, such as roaming charges or international calls.

Any communication devices purchased for business use, such as smartphones and laptops, may also be eligible for tax deductions.

Computer rental fees

Rental fees for computers and other computing devices used during business travel may also be deducted from taxes. This includes any applicable charges for purchasing, leasing, or renting a computer, as well as the related costs of connecting to the Internet and other digital services.

All such expenses must be necessary for the success of the business trip in order to qualify for a tax deduction.

Travel supplies

Travel supplies, such as suitcases and other bags, are also eligible for tax deductions when used for business travel. Any costs associated with keeping the items protected, such as locks and tracking devices, can also be claimed as tax deductions.

Other necessary supplies, such as office equipment or reference materials, may also be eligible for deductions.

Conference fees and events

Conference fees and events related to business travel may also be eligible for tax deductions. This includes fees associated with attending a conference, such as registration, accommodation, and meals.

Any costs related to the organization of business events, such as venue hire and catering, may also be claimed as tax deductions.

Cleaning and laundry expenses

Business travel expenses associated with cleaning and laundry may also be claimed as tax deductions. This includes a portion of the cost of hotel and motel services, such as cleaning fees charged for laundering clothing, as well as any other reasonable expenses related to keeping clean clothes while traveling away from home.

Ineligible Travel Expenses Deductions

When it comes to business expenses and taxes, not all travel expenses are created equal. Some expenses are considered “Ineligible Travel Expenses Deductions” and cannot be claimed as deductions on your income taxes.

Here is a list of common travel expenses that cannot be deducted, with a brief explanation of each:

Personal Vacations: Expenses incurred during a personal vacation are not deductible, even if you conduct some business while on the trip. In addition, expenses related to personal pleasure or recreation activities are also not eligible for deductions.
Gifts: Gifts purchased for business reasons during travel are not deductible, even if the gifts are intended to benefit the business in some way.
Commuting: The cost of commuting between your home and regular place of business is not considered a deductible expense.
Meals: Meals consumed while traveling on business can only be partially deducted, with certain limits on the amount.
Lodging: The cost of lodging is a deductible expense, but only if it is deemed reasonable and necessary for the business trip.
Entertainment: Entertainment expenses, such as tickets to a show or sporting event, are not deductible, even if they are associated with a business trip.

How to Deduct Travel Expenses

To deduct travel expenses from income taxes, the expenses must be considered ordinary and necessary for the operation of the business. This means the expenses must be common and accepted business activities in your industry, and they must be helpful, appropriate, and for business purposes.

In order to claim travel expenses as a deduction, they must be itemized on Form 2106 for employees or Schedule C for self-employed individuals.

How much can you deduct for travel expenses?

While on a business trip, the full cost of transportation to your destination, whether it’s by plane, train, or bus, is eligible for deduction.

Similarly, if you rent a car for transportation to and around your destination, the cost of the rental is also deductible. For food expenses incurred during a business trip, only 50% of the cost is eligible for a write-off.

How do you prove your tax deductions for travel expenses?

To prove your tax deductions for travel expenses, you should maintain accurate records such as receipts, invoices, and any other supporting documentation that shows the amount and purpose of the expenses.

Some of the documentation you may need to provide include receipts for transportation, lodging, and meals, a detailed itinerary or schedule of the trip, an explanation of the bona fide business purpose of the trip, or proof of payment for all expenses.

What are the penalties for deducting a disallowed business expense?

Deducting a disallowed business expense can result in accuracy-related penalties of 20% of the underpayment, interest charges, re-assessment of the tax return, and in severe cases, fines and imprisonment for tax fraud. To avoid these penalties, it’s important to understand expense deduction rules and keep accurate records.

Can you deduct travel expenses when you bring family or friends on a business trip?

It is not usually possible to deduct the expenses of taking family or friends on a business trip. However, if these individuals provided value to the company, it may be possible. It’s advisable to speak with an accountant or financial expert before claiming any deductions related to bringing family and friends on a business trip.

Can you deduct business-related expenses incurred while on vacation?

Expenses incurred while on a personal vacation are not deductible, even if some business is conducted during the trip. To be eligible for a deduction, the primary purpose of the trip must be for business and the expenses must be directly related to conducting that business.

Can you claim a travel expenses tax deduction for employees?

Employers can deduct employee travel expenses if they are ordinary, necessary, and adequately documented. The expenses must also be reported as taxable income on the employee’s W-2.

What are the limits on deducting the cost of meals during business travel?

The IRS permits a 50% deduction of meal and hotel expenses for business travelers that are reasonable and not lavish. If no meal expenses are incurred, $5.00 daily can be deducted for incidental expenses. The federal meals and incidental expense per diem rate is what determines the standard meal allowance.

Deductions For Business Travel Expenses

If you travel away from home overnight on business, you can deduct these travel expenses:

Airline, train, or bus fares — This includes first-class.
Actual expenses or standard mileage rate
Business-related tolls and parking

You might rent a car while you’re away from home on business. If you do, you can deduct only the business-use portion of the expenses. To learn more, see the Car and Truck Expenses tax tip.

To and from the airport or station
From one customer to another
From one place of business to another
Transportation from your temporary lodging to your temporary work assignment
Baggage charges and transportation costs for sample and display materials
Your own meal
Another person’s meal

To learn more, see the Meals and Entertainment tax tip.

Dry cleaning and laundry expenses
Phone, fax, and Internet expenses
Tips relating to deductible travel expenses
Other expenses, like public stenographer’s fees or computer rental fees

You can’t deduct expenses if they’re lavish or extravagant.

If your trip is mainly for business but includes some personal activities, you can deduct these expenses:

Travel expenses to and from the business destination
Food and lodging during the business portion of the stay

However, if the trip is mainly for personal reasons, you can’t deduct those expenses. This is true even if you conduct some business at the destination. You can deduct business expenses you incur at the destination, regardless of the purpose of the trip.

If you attend a convention that benefits or advances your business, you can also deduct appropriate expenses. These include:

Round-trip travel
Meals and lodging
Display costs

Travel outside the United States

You can deduct the cost of travel outside the United States if your entire trip is devoted to business activities. You could take a trip mainly for business, but engage in some personal activities there. If so, you have to prorate travel costs between your business and personal activities. Prorated costs include meals and lodging en route.

You can’t deduct expenses for travel as a form of education. Ex: If you’re a professor of Asian history, you can’t deduct the cost of a tour of Japan, even though the trip will enhance your lectures.

Special rules apply for conventions held outside the North American area and on cruise ships.

To learn more, see Publication 463: Travel, Entertainment, Gift, and Car Expenses at www.irs.gov.

Was this topic helpful?

Yes, loved it

Could be better

No one offers more ways to get tax help than H&R Block.

How to find deductions for travel expenses

With more consultants and business travelers hitting the road for business travel, it's time for a brush-up on what expenses are eligible for tax deduction while they're away. If you're unsure about what qualifies, read on.

Find out more about Business Taxes

by Grace L. Williams

Grace L. Williams is a journalist. Her areas of expertise include small business, career, personal finance, and inve...

Key takeaways

What is business travel or a business trip, what is a business-related travel expense, what business travel expenses are tax deductible, are there other tax deductions for travel expenses, tracking expenses on your business trip, importance of documentation, combining business and personal travel, special considerations for self-employed individuals, getting help with tax deductions for travel expenses, frequently asked questions.

Business travel is back after the pandemic, and with that increase comes the age-old question every business traveler must ask at least once: "What can I deduct as a business expense while I'm on the road?"

You've likely heard the term "write-off" somewhere and may have used it somewhere within your business circles. But what exactly is it? You might wonder if you can book first-class travel or five-star lodging and eat in fancy dining establishments and then submit them as business write-offs. The short, overarching rule for those specifics is no, you probably cannot, but there is more to eligible business travel expenses than that.

A man looks at his cell phone while boarding a flight for business travel. Business travel deductions fall into three categories: costs related to how you will get to your destination (travel), where you will stay (lodging), and what you will eat and drink when you are there and in transit..

So before you book travel arrangements on your credit card (hopefully a designated business credit card), read on for more information about making expensing your business travel less stressful.

Understand IRS guidelines for deductible travel expenses to maximize tax savings.
Proper documentation is essential for claiming deductions, including meals and entertainment, with a clear business justification.
Utilize tax professionals and leverage technology to ensure accurate deductions, compliance with laws, and maximum savings on travel expense deductions.

A woman in a window seat on an airplane checks her phone during a business trip. business travel or a business trip is defined as any travel conducted that is business-related.

Simply put, business travel or a business trip is defined as any travel conducted that is business-related. To be considered eligible as a business trip, the travel itself must meet the following criteria:

The trip must be conducted for legitimate business purposes, not as leisure time, vacation, or personal purposes.
The trip must occur outside the bounds of a regular commute to and from work (or the main place of business) and home.

If the trip meets these criteria, it falls under the category of a business trip. It also means that you can deduct travel expenses whether you are a business owner sending an employee on your behalf or a self-employed individual.

To better understand business-related travel expenses, it's a good idea to look at overall business expenses. A business expense is incurred as part of the regular day-to-day operations of your employer (or for you if you are a self-employed individual) to conduct the business. Under current Internal Revenue Service (IRS) laws, special rules allow portions of business expenses to be deducted from the overall business income. These expenses are considered tax deductible, which means they are applied before any taxes are. The umbrella term "write-off" comes from this business tax deduction category.

In business, eligible tax deductions can have a significant impact. Being able to deduct expenses can often reduce the total overall taxable income . Cumulatively, tax-deductible expenses will likely reduce the total bill when it is time to file your tax return.

A deductible business travel expense is one that you or an employee incur during travel directly related to conducting business. In both instances (a business expense or a business travel expense), it is essential to ensure the expense falls under the category of being for bona fide business purposes. This means that deducting the travel expenses must be something genuinely related to conducting or doing a bona fide business purpose. If it is, its cost can be written off as part of business or business travel-related expenses. It applies to self-employed individuals or employees traveling for an employer or business owner.

So what exactly can you expense?

A man works on his laptop in an airport while waiting for his flight to board. In order to legally deduct business travel, specific criteria must be met.

First and foremost, consider the basics, or the "Big 3" in business travel. Essentials here include these three actual expenses: costs related to how you will get to your destination (travel), where you will stay (lodging), and what you will eat and drink when you are there and in transit. Each category within the Big Three can be an eligible travel expense and, therefore, a tax write-off, but they come with some criteria worth exploring.

Transportation expenses: If you plan to travel by car, and you will either use a vehicle you lease long-term or your car, there are two choices related to how this mode of transportation might be expensed. One choice is known as the “ standard mileage rate ." Under current IRS allowances, the standard mileage rate deduction for self-employed individuals and employees is 65.5 cents per mile for business-related travel. The rate per mile would apply to any driving conducted to or from the business destination. It would also apply to any driving conducted while you are at the destination if it is business-related. For instance, once at the destination, if driving must be done to run errands, those miles can be added to the total mileage count.

The other vehicle expense option for a business trip is to itemize the individual expenses. Eligible business costs, in this instance, include the lease, insurance, fuel, costs related to the upkeep and maintenance of the vehicle, such as oil changes or tune-ups, and any major repairs on the vehicle, such as fixing a flat tire.

If you are renting a car as part of your transportation expenses and it falls under the ordinary and necessary business travel expense category, the cost to rent a car would qualify as an eligible business expense. Other vehicle-related expenses that qualify for travel deductions include tolls and parking fees.

Actual expenses method

The actual expenses method involves calculating the total cost of vehicle use and multiplying it by the percentage used for business purposes. This includes:

Depreciation
Garage rent
Vehicle registration fees
Lease payments

To calculate the percentage of business use, divide the total business miles driven by the total miles driven in the year. While this method can lead to larger deductions, it requires detailed record-keeping and more complex calculations than the standard mileage method.

Standard mileage rate

The standard mileage rate allows you to claim a fixed rate per mile driven for business purposes, plus parking fees and tolls. The standard mileage rate for business in the United States is 65.5 cents per mile. The IRS determines This rate annually based on a study of the fixed and variable costs of operating a vehicle for business reasons, such as gas, maintenance, and depreciation.

This method can be used for self-employment, business-related travel, or when using a vehicle for work as an independent contractor. However, personal use of the vehicle is not eligible for this deduction.

Ticketed travel: For ticketed travel, like flights or trips by train, the cost of your ticket can be expensed as a travel deduction if your class fare qualifies as an eligible and reasonable expense. This means that while you likely won't be able to deduct first-class fare, you can deduct what is known as the ordinary and necessary expense related to the fare, which covers classes such as economy. You can also expense costs incurred while en route, such as baggage fees. And, if you are waiting at an airport or train station, any meal costs, snacks, or drinks would also qualify as business-related expenses.

Meal expenses and entertainment: Business meals cut eligible business expenses but with some stipulations, including the standard meal allowance. While current IRS laws permit for up to 50% of a business meal to be deducted, like ticketed travel, rental cars, and other business-travel-related costs, the meal must fall under an ordinary and necessary expense to be eligible as a tax-deductible business expense. If you are tempted to go all out and splurge on your dining, you might find that it is not an eligible business travel expense.

But changes have been made to the entertainment category. While entertainment used to be an allowed business expense, it is sometimes no longer eligible to claim tax deductions. This means that if you expect to take clients out as part of client meetings or conduct business, be sure to read the fine print since you might discover you cannot claim entertainment as a legitimate business expense.

Lodging expenses: Business travelers must consider where they will sleep while away. To be considered eligible as a business expense, the location of your stay must be outside of the main place of business and require overnight accommodation. Notably, in this expense category, IRS rules stipulate that for it to be an eligible business expense, the lodging cannot fall into the extravagant or considered recreational category.

Remember: With each of the "Big 3" and all other related business expenses to be deducted, the expenses must be ordinary and fall under the category of reasonable business expenses. If you opt for pricey vehicles, tickets, meals, and rooms instead of the available moderately-priced alternatives, you risk losing eligibility as legitimate business expenses.

There are some other expenses anyone traveling for business should consider submitting as tax-deductible expenses.

Event fees: These could come into play if you travel to an event such as a conference, convention, or trade show. In addition to the Big 3, certain expenses related to attending these events would qualify as eligible business travel expenses. The expenses are deductible if the event has an entry or booth fee. While you are there, if you attend workshops, lectures, or courses that require materials such as a workbook or registration, these would also be eligible as tax-deductible travel expenses. And, if you are running a booth or table at an event and need materials or supplies, the cost to purchase them would also qualify as legitimate business expenses.

Incidental expenses: Any reasonable additional expenses you incur while traveling for a business activity can be considered incidental expenses. For instance, if you incur expenses on ground transportation, a rideshare fee, taxi fare, or a subway ticket qualify as business expenses. Laundry and dry cleaning services are also eligible business activities. In addition, indirect expenses like office supplies can be eligible business expenses.

Organization before, during, and after the business trip will help you avoid potential pitfalls or headaches when filing expenses or taxes. From the outset, one great way to separate your business trips and expenses from personal expenses is to have a single credit or debit card that you designate for business use only. This de facto "corporate" card will come in handy and be a best friend on the road since it automatically creates a tally of itemized expenses courtesy of the real-time accounting and monthly statements that come with it.

Beyond the lone card designated for business expenses, your meticulous record-keeping will greatly help you when it's time to account for everything. If you don't want to use a third-party software program or expense-tracking app to track your expenses, a simple solution is to use a basic spreadsheet that tracks the date, the reason for the expense, and the cost. To set this up, once you have incurred an expense, note it down using the aforementioned basic information.

While on the trip, another simple organizational tool is keeping all receipts and other applicable hard-copy records and materials in one designated place. A pouch or envelope will work fine as the place to keep these items. Make sure you read the receipt or record, and if it does not have information such as the name and address of the business, write it on the back before you stash it away. Finally, if a receipt is for something like a business lunch, ensure the date and information about the place of business are on the receipt. Then, write the name of the person you shared your time with and the reason for meeting up somewhere on the receipt.

Claiming travel expense deductions requires proper documentation. This includes retaining receipts and records for all expenses incurred during your business trip. For meals and entertainment expenses, you'll need to note the nature of the meeting, including who you met with, when, and the topics discussed.

It's worth noting that lodging expenses on non-business days may still be eligible for deductions if specific strategies are employed, such as incorporating “vacation days" between workdays. In such cases, the total cost of lodging for the trip can still be tax deductible even when no work is taking place on the weekend. However, meals and entertainment expenses without a clear business justification won't be deductible and must be paid personally.

A man and woman enjoy fall foliage after a business trip to the Northeast U.S. The non-business portion of business travel expenses may be viewed as taxable income if paid by the individual or company.

Allocating expenses between business and personal activities is essential to ensure accurate deduction claims. Expenses must be allocated based on actual usage, so the non-business portion of the expenses may be viewed as taxable income if paid by the individual or company.

To accurately allocate expenses between business and personal activities for tax deductions, follow these steps:

Track usage for a period of time.
Determine the allocation by proportionally dividing the expenses based on the amount of business and personal use.
Maintain proper records to support the allocation.

When combining business and personal travel, careful allocation of expenses and adherence to specific rules is important. Expenses related to the personal nature of the trip cannot be deducted; only those incurred for business purposes can be.

If traveling abroad, you must spend a minimum of 25% of your time conducting business to qualify as a business trip and claim travel expense deductions. If you conduct business for less than 25% of the time while on a trip, you can still deduct travel costs. This deduction must be proportional to the amount of time spent on business.

Rules for international travel

International travel has additional rules to consider when claiming travel expense deductions. As mentioned, you must spend at least 25% of your time abroad conducting business to claim travel-expense deductions.

If you use 25% or less of your trip for business purposes, you can deduct related travel costs in proportion to the time spent on work. This can help to make international business trips more affordable. For example, if 40% of your time is spent on business activities, you can claim the entire cost of airfare as a business expense.

Self-employed individuals should be aware of special considerations when deducting travel expenses, such as home office deductions and computer rental fees. Understanding these unique aspects can help self-employed individuals maximize their tax savings and ensure compliance with tax laws, especially regarding their tax home.

Home office considerations

Home office deductions can be claimed if the office is the primary place of business and is regularly used for business purposes. The IRS has specific guidelines for the regular use of a home office for business purposes, such as the office being used exclusively and regularly for business purposes.

To claim a home office deduction, you can use the simplified method the IRS provides. Here's how it works:

Multiply the allowable square footage of your home office by the prescribed rate of $5 per square foot.
The maximum allowable square footage is 300 square feet, so the maximum deduction you can claim using this method is $1,500 annually.
The simplified option allows for a standard deduction without the need for detailed record-keeping.

Deducting computer rental fees

Computer rental fees can be deducted if the equipment is used for business during the trip. The full cost of the computer rental may be deducted as a business expense.

To claim a deduction for computer rental fees from business travel expenses, you must provide relevant documentation demonstrating the rental fees paid, such as receipts or invoices. Proper record-keeping is essential to support your deduction and ensure compliance with IRS regulations.

Leveraging technology

Technology, such as expense tracking apps and online bookkeeping services, can simplify record-keeping and documentation for travel expense deductions. These tools can help you track and categorize expenses, making it easier to identify and compute deductible expenses for tax purposes.

Expense tracking applications can:

Generate reports and summaries of travel expenses
Be beneficial for tax filing and auditing purposes
Save time and effort in tracking and documenting your travel expenses
Ensure accurate deductions and compliance with tax laws

Leveraging technology in expense tracking can be a valuable tool for managing your finances.

Sometimes, you might need more help. This guide provides basic questions about business travel deductions and expenses. Still, you are not alone if you have other questions about what might qualify as a tax-deductible business expense. There are experts at LegalZoom who can answer specific questions and better advise you about both business expenses and business travel-related expenses.

You might have questions about whether specific costs related to your business qualify as ordinary and necessary expenses or wonder if percentages of a certain expense or the entire cost can be completely deductible. Additionally, professionals in the know about things like a specific tax home can help you sort out concerns related to your business so that you can always claim the proper travel expenses. For any consultant looking to get back into the swing of travel, help and practical tips are just a click away.

Understanding and maximizing travel expense deductions can save you significant money on your tax return. By familiarizing yourself with the requirements, maintaining proper documentation, and leveraging the expertise of tax professionals and technology, you can ensure accurate deductions, compliance with tax laws, and, ultimately, keep more money in your pocket.

What kind of travel expenses are tax deductible?

Tax deductible travel expenses include airfare, train/bus fares, taxi rides between an airport or station and a hotel, or from the hotel to a work location.

What are the three requirements for a traveling expense deduction?

To qualify for a traveling expense deduction, you must have a “business trip," leave your tax home, have most of the trip business-related, and plan the trip in advance.

How do I prove travel expenses for taxes?

To prove business travel expenses for taxes, use credit card slips with notes on the business purpose made at the time of incurring the expense.

Are daily travel expenses tax deductible?

Daily travel expenses from your home to a regular place of business are not tax deductible. However, you can deduct transport expenses when traveling between your home and a temporary work location outside the metropolitan area where you live and normally work. Additionally, ordinary and necessary travel expenses incurred while away from your home and your main place of business can be deducted.

How do I allocate expenses between business and personal activities during a combined trip?

Allocate expenses proportionally based on the amount of business and personal use for a period of time, and maintain proper records to support deductions.

Determining Tax Deductions for Travel Expenses + List of Deductions

Published August 15, 2023

Published Aug 15, 2023

WRITTEN BY: Tim Yoder, Ph.D., CPA

This article is part of a larger series on Accounting Software .

1. Determine Your Trip Meets the Requirements of a Business Trip
2. Check the List of Business Expenses That Qualify for Deductions
3. (For Those Mixing Business & Personal Travel): Allocate Expenses

Bottom Line

The IRS considers deductible travel expenses to be any ordinary and necessary expenses you incur while traveling away from home on business. To get tax deductions for travel expenses, the trip must have a business purpose and be temporary (less than one year) and you must be away from your tax home for a length of time that exceeds your usual work day or be away overnight to get sleep to fulfill the demands of your job while away.

Key Takeaways

A qualifying business trip must take you away from home overnight long enough to require rest.
Most expenses incurred during a qualifying business trip are deductible, including meals on days off.
Partnerships, limited liability companies (LLCs), and corporations can directly pay or reimburse employees for business travel expenses and deduct them from their business returns.
Self-employed business owners will deduct their travel expenses on Schedule C, while farmers will use Schedule F.
Purely personal expenses on business trips, such as sightseeing, are nondeductible.

Step 1: Determine Your Trip Meets the Requirements of a Business Trip

A business trip for tax purposes is one that meets the following criteria:

There must be a business purposes for the travel
You are required to be away from your tax home
The trip lasts overnight or a period long enough to require rest
The trip is temporary

Business Purpose

Your trip must be an ordinary and necessary part of conducting your business for your expenses to be deductible. Below are some reasons you may decide to travel for business:

Meeting with clients or customers: If you travel overnight to meet with clients or customers for business purposes, such as negotiating contracts, discussing projects, or providing consultations.
Attending business conferences or seminars: If you travel to attend conferences, seminars, or trade shows that are relevant to your business activities, including acquiring new industry knowledge or networking with other professionals.
Training or professional developmen t : If you travel to attend training programs, workshops, or courses directly related to your business or profession.
Conducting in-person meetings or negotiations: If you need to travel to have face-to-face meetings or negotiations with business partners, suppliers, or other stakeholders.

Your tax home is not your residence but rather your principal place of business activity including the entire city or general location of your business. So, your business trip cannot be in the general vicinity of your principal place of business for you to be away from home.

Amount of time you spend at each location
Degree of business activity in each area
Relative significance of the financial return from each area
No regular place of business: If, by the nature of the work, there is no regular or principal place of business, then your tax home will be the place where you regularly live and where you travel to different job sites to perform your service.

For example, a self-employed repair person may not have a regular place of business because they spend each workday at a different customer’s location.

Overnight Stay

Overnight stays for travel purposes do not specifically mean staying from evening to the next morning. Instead, overnight means that the trip is longer than a typical day’s work and long enough for you to require rest. Resting in your car is generally not enough, but if you have to get a hotel room, then the trip will qualify as overnight regardless of when you sleep.

Transportation vs travel expenses: Local transportation at your tax home can be deductible without an overnight stay—if there is a business reason for the transportation, such as driving from your office to visit a client. On a tangent, when you travel overnight, your transportation is deductible, and so are things like lodging, meals, and incidental expenses.

Temporary Travel

For purposes of business travel, a temporary stay is one that is expected to last for less than one year. Open-ended trips are not temporary.

However, say you initially anticipate that your trip will last less than one year, but it later becomes apparent that it will last more than one year. The trip is a deductible business trip up until the point in time it becomes apparent it will last more than one year.

The IRS will also consider a series of assignments to the same location, all for short periods, that together cover a long period to be an indefinite assignment. Any expenses you incur from this type of trip will not be deductible.

Step 2: Check the List of Business Expenses That Qualify for Deductions

Your travel expenses must be business-related—unless an exception applies—to qualify for a deduction. However, if you incur expenses that are purely for personal pleasure, they are nondeductible.

Here is a list of business travel expenses that can be deducted.

Round-trip Transportation To-and-From the Destination

Transportation for a round trip to and from your temporary work location is deductible—and it could be anything that gets you to the location, including via your personal car. If you use your personal car, your costs are calculated using either the actual expenses or the standard mileage rate .

In addition, you can deduct additional round trips to return to home when you are not working.

However, the deduction for the additional round trips is limited to the cost you would have incurred if you stayed at the temporary location. Those costs could include meals and lodging.

The business purpose of the meals is your business trip and are thus deductible—even if you eat alone.
Meals on days off qualify.
Travel to and from meals is deductible—even on your days off.
The meals do not have to have a specific business purpose, such as meeting with a client.
For longer trips, lodging can include monthly rentals.
If you return home on your days off but keep the lodging at your travel location, then the lodging is still deductible if it is ordinary and necessary. For instance, the monthly rent of an apartment at your travel location would be deductible even if you return home on the weekends.

Transportation at the Destination

Once you arrive at your destination, you may need additional transportation to get around town—and these costs are deductible. The only exception would be if you travel to the destination for a purely personal reason like sightseeing on your day off.

Incidentals

Incidental expenses are minor expenditures associated with business travel. You can deduct the actual cost of any one of the following expenses:

Shipping of baggage and sample or display material between your regular and temporary work locations
Business seminar and registration fees
Dry cleaning and laundry
Business calls include business communications by fax machine and other communication devices
Tips you pay for services related to any of these expenses
Parking, tolls, and fees
Any other similar ordinary and necessary expenses related to your business travel

Step 3 (For Those Mixing Business & Personal Travel): Allocate Expenses

When trips are both business and personal, the allocation of expenses varies based on the primary purpose of the trip. Determining the primary purpose of your journey requires you to evaluate the time spent on business vs personal activities.

Primarily Business Domestic Trips

If your trip is primarily for business purposes, then the round-trip transportation is 100% deductible and does not need to be allocated to the personal portion of your trip. However, all other expenses, like lodging and meals, must be allocated to personal expenses for days where there was no business reason for staying.

For example, if your seminar ends on Friday and you stay until Sunday, then the lodging and meals for Saturday and Sunday are nondeductible.

Primarily Personal Domestic Trips

If the primary purpose of your trip is personal, then none of the round-trip expenses are deductible. However, you can deduct the business portion of meals, lodging, and local transportation that was incurred for a business purpose.

Let’s say you stay a couple of days after your family vacation to meet with a client. The lodging and meals for those extra days are deductible.

Business Foreign Trips

The allocation of travel expenses on foreign trips is slightly different from the rules above. Round-trip transportation for foreign trips must be allocated to business and personal based on the number of business vs personal days on the trip. This is different from the “all or nothing” rule for the cost of domestic round-trip travel.

If your spouse joins you on a business trip, you usually cannot deduct any of their expenses. However, if your spouse’s trip satisfies a business purpose, then expenses must be otherwise deductible by the spouse.

Generally, for the travel costs of a spouse, dependent, or any other person to be tax-deductible, they must work for the business or be a co-owner.

Frequently Asked Questions (FAQs)

Are travel expenses tax deductible for business.

Yes, roundtrip travel is 100% tax deductible as long as the primary purpose of the trip is business. Once at your destination, expenses must be allocated between business and personal. However, all meals are deductible as long as the reason for your continued stay is business.

Can I deduct travel expenses for my employees?

Yes, you can generally deduct travel expenses for your employees as long as the expenses are ordinary and necessary, directly related to your business, and properly substantiated.

Is there a limit to the amount of travel expenses I can deduct?

Yes, there are some such as business travel on a cruise ship, where the expense is limited to $2,000 per year. Also, your expenses are limited to the non-lavish or extravagant cost of the trip, so you may want to be careful before booking a 5-star hotel.

Travel expenses are ordinary and necessary expenses you incur while you are temporarily away from home, so these expenses cannot be lavish in nature. To determine if a travel expense is deductible, it must be directly related to your trade or business.

When it comes to travel expenses, having well-organized records makes it much simpler to complete your tax return. Keep track of any records that may be used to substantiate a deduction, such as receipts, canceled checks, and other documentation.

About the Author

Find Timothy On LinkedIn

Tim Yoder, Ph.D., CPA

Tim worked as a tax professional for BKD, LLP before returning to school and receiving his Ph.D. from Penn State. He then taught tax and accounting to undergraduate and graduate students as an assistant professor at both the University of Nebraska-Omaha and Mississippi State University. Tim is a Certified QuickBooks ProAdvisor as well as a CPA with 28 years of experience. He spent two years as the accountant at a commercial roofing company utilizing QuickBooks Desktop to compile financials, job cost, and run payroll. Tim has spent the past 4 years writing and reviewing content for Fit Small Business on accounting software, taxation, and bookkeeping.

Join Fit Small Business

Sign up to receive more well-researched small business articles and topics in your inbox, personalized for you. Select the newsletters you’re interested in below.

Host Agencies
Accelerator Course
Travel Jobs
Travel Agent Chatter
Etiquette & Rules
Privacy Policy

A List of Business Travel Expenses You Can Write Off In 2023 [+Travel Expense Calculator & Tax Organizer]

Figuring out which business travel expenses you can write off probably registers on the fun-o-meter at the same level as root canals or bathing feral cats.

Travel agents are plagued with tricky questions when it comes to travel expense write-offs. If you have a few business meetings during a family vacation, how much of the trip can be a travel expense write-off? If you specialize in Europe does that mean any and all trips to Europe are tax write-offs?

Don’t worry. Stick with us and we’ll clear up what you can and can’t write off as a travel expense. I learned a thing or two when I chatted with Jay Elstad, a CPA (Certified Public Accountant) with Riley Martin Ltd , and Stephanie Cannon, a former accountant turned Founder of SC Travel Design . Our Friday 15 Episode with Stephanie Cannon in late 2022 is pretty much a movie trailer for this article!

It turns out that figuring out travel expenses is a lot less intimidating when you talk to professionals. So I’m here to share their wisdom with you. Starting with HAR's beauteous tax organizer! Download it now and keep it handy while you go through the article!

Here's how HAR's Tax Organizer looks in action:

To make it your very own, just click on the upper right-hand arrow on the document to download it for yourself! (If you have any issues or you don't have a Gmail account, we won't leave you out! Just drop us a line at [email protected] and we'll send it via email).

This article and the HAR tax organizer will ensure you’re tracking and logging expenses thoroughly and efficiently. Will it make tracking travel expenses fun? Um, no. Sorry. I’m not that good. But I will give you the tools to help you feel more confident when it comes to travel expenses.

⭐️ HAR ARTICLE HIGHLIGHTS: ⭐️

PDF: A list of travel expenses you can (and can't) write off
Business Travel Expenses You Can Write Off
Business Travel Expenses You Can't Write Off
Hobbyists (or Travel Dabblers)
Cruises & Travel Expenses
The Elephant in the Room: Is a Vacation a Travel Expense?
Travel Expense Scenarios for Travel Professionals
Tips on Tracking & Documenting Your Business Travel Expenses
Travel Expense Tracking Tools

A PDF Summary of Business Travel Expenses You Can (and Can't) Write Off

Our infographic details which business travel expenses you can (and can't) write off at a glance. If you're looking for crib notes, this PDF is it. But I highly recommend reading the rest of the article because business travel expense write-offs are all about nuance and the nitty-gritty.

A List Travel Expenses You Can Write Off

You can write off any travel expenses that are necessary, reasonable, and ordinary to your business operations. Below are examples of travel expenses you can (and cannot write off). Let's start with which write-offs are a green light.

1: Transportation

By airplane, train, bus, or car between your home and your business destination.
Fares for taxis or other types of transportation between the airport or train station and your hotel, or the hotel and the work location of your customers or clients, your business meeting place, or your temporary work location.
Personal car usage or car rental: You can deduct actual expenses or the standard mileage rate (¢65.5 for 2023 travel), as well as business-related tolls and parking fees. If you rent a car, you can deduct only the business-use portion for the expenses.

2. Baggage or Shipping

Checking in your luggage? You can deduct that. Shipping display materials for the trade show? Go ahead and write that off too (so long as it’s between your regular and temporary work location).

You can deduct any of your business-related lodgings as an expense so long as it’s reasonable and necessary to your business (e.g. hotel/resort stay during a travel conference).

If you bring your sweetie/friend/kid you can only deduct lodging expenses that are reasonable for one person, for the nights/days that you worked.

4. Dry cleaning and laundry

If you have laundry or dry cleaning bills during your business travel, keep those receipts for your travel expenses. (I'm told that traveling to your basement to do laundry does not fall under this category.)

5. Communication Expenses (Beyond your work cell phone)

(beyond your cell phone): Your cell phone will already be deducted in a different category. But if you have any peripheral communications like leasing a satellite phone in Antarctica (sweet!) for emergency business calls, you can deduct that.

Tips include any gratuity to pay for the services noted on this list (porter fees, room service/cleaning, cab rides, etc.).

Note on cash: If you take out cash for tips (or other incidentals) from an ATM, the ATM receipt is not enough documentation. You should write down on your ATM receipt the date, location/service, and amount, for which you tipped if you want to take it as a deduction.

This one is super vague, but here it is in IRS speak, "Other similar ordinary and necessary expenses related to your business travel." (e.g. use of a hotel business center, hiring an interpreter, transportation to and from hotel to business event, etc.)

I saved meals for last because it's a little complicated. But here's what you need to know about meals. The IRS recommends using a standard meal allowance rather than engaging in the administrative gymnastic of saving every receipt form every meal. Here's the lowdown.

You can (generally) deduct 50% of the unreimbursed meal cost. (Meals in 2022 can be deducted at 100% due to IRS' temporary rule, Notice 21-25 )
Meals must be non-entertainment-related. In 2018, the tax law changed, rendering entertainment expenses 100% nondeductible . So if you go to a dinner theater show with a client and the meal portion is not itemized on your theater ticket, you cannot deduct it.
There are two ways you can track/deduct meal expenses. You can either use a per diem or track your actual expenses. We’ll explore this soon , so stay tuned

A List of Travel Expenses You Can't Write Off

Now for the less fun part: Here are examples of travel expenses you CAN NOT deduct.

1. Entertainment

Entertainment is not an allowable expense. Going golfing at the resort with a potential client or a BDM (business development manager) while you’re at a business conference? Too bad . . . you’re going to have to do it on your own dime.

2. Family/friends/dependents traveling with you

If you’re traveling with a friend, family member, and/or dependent you cannot deduct any of their travel expenses.

If you feel like you fall under an exception to this rule—e.g. you compensate your family member/friend/dependent to fulfill necessary business activities during the trip and have the 1099 or W-2 to prove they work for you—talk to your CPA.

3. Lavish and extravagant

Lavish and extravagant expenses are not allowed by the IRS. However, they’re a little foggy on what defines lavish or extravagant saying only, “an expense isn’t considered lavish or extravagant if it’s reasonable based on facts or circumstances.”

If you think this may be a concern for you, talk to your CPA.

4. Travel that is compensated

This may seem obvious, but if your travel is comped, you cannot deduct it as an expense. For example, if you’re presenting at a conference and the event planner comps your entire hotel stay, you cannot deduct lodging.

The same also goes for using points on loyalty programs toward flight/lodging etc.

5. Personal vacations

You cannot deduct personal travel. When it comes to mixing business with leisure (I mean, do travel agents ever really stop working?), we get into a serious gray area. It’s such a doozie that it gets its own section. So read on.

Travel Expenses for Travel Advisor Hobbyists (or Travel Dabblers)

I’m not going to spend too much time talking about hobbyists. Just know that if you sell travel as a hobby, then none of your travel expenses are allowable in the eyes of the IRS.

How do you know if you’re a hobbyist? The IRS has a long list , including items like whether or not “you depend on the income for your livelihood” and other fun determining factors.

The IRS understands it can take a while to become profitable. Typically, you’re approaching hobbyist territory in the eyes of the IRS if you report a loss of three out of five years of business operations. (A loss means you’re claiming business expenses beyond your income.)

As with all things tax-related, there are exceptions as to what expenses are considered a loss, but that's above my pay grade. You’re a psychic now so you know what I’m about to say . . . talk to your accountant or CPA.

Cruises & Business Travel Expenses

You can only deduct up to $2,000 per year of expenses for things held on cruise ships

Cruises are special snowflakes and are subject to their own rules when it comes to travel expenses. According to the IRS , “You can deduct up to $2,000 per year of your expenses of attending conventions, seminars, or similar meetings held on cruise ships. All ships that sail are considered cruise ships.”

This may not be the happiest news to cruise buffs who spend thousands per year on Seminars at Seas. But remember, I’m just the messenger (not the IRS).

If you want to write off your 2k in cruises, there are all sorts of stringent requirements you need to meet. Below, I am copying and pasting what the IRS has to say on the matter, verbatim (why reinvent the wheel):

You can deduct these [cruise] expenses only if all of the following requirements are met.

The convention, seminar, or meeting is directly related to the active conduct of your trade or business.
The cruise ship is a vessel registered in the United States.
All of the cruise ship's ports of call are in the United States or in possession of the United States.
You attach to your return a written statement signed by you that includes information about:
The total days of the trip (not including the days of transportation to and from the cruise ship port),
The number of hours each day that you devoted to scheduled business activities, and
A program of the scheduled business activities of the meeting.
You attach to your return a written statement signed by an officer of the organization or group sponsoring the meeting that includes:
A schedule of the business activities of each day of the meeting, and
The number of hours you attended the scheduled business activities.

Again, if you think your cruise trip/business model is an exception, or you have a bone to pick with these rules, don’t call me. [Enter refrain] Talk to your CPA.

The Elephant in the Room: Is Your Vacation a Travel Expense?

I know that CPAs and accountants everywhere are probably going to duck and cover at the merest whisper of deducting trips that have even a whiff of personal travel.

But as a travel agent, it’s confusing since you need to travel to run a successful and profitable business.

Sure, it’s easy enough to justify travel expenses for a conference or an escorted FAM (familiarization trip). But when it comes to deducting travel expenses for any trip that’s in any way attached to personal travel, you’re entering some serious gray area (I like to call this Grayland).

The IRS isn’t super helpful when it comes to navigating Grayland. Their verdict is this, “If your trip was conducted primarily for personal reasons, such as a vacation, the entire cost of the trip is a nondeductible personal expense. However, you can deduct any expenses you have while at your destination that are directly related to your business.”

Not exactly cut and dry. Sigh.

I can’t advise you on your taxes (trust me, everyone loses in this scenario). But here are a few guiding questions that help you determine if your trip is justifiable as a travel expense (and to what extent).

1. What is the primary purpose of your trip? You know in your heart of hearts whether your primary purpose is business or personal. If your primary purpose is to go to Mexico with your family, it’s going to be a tough sell to deduct your travel expenses. (Even if you do sell the resort or region you’re staying at.)

If the primary purpose of your trip is an Oaxaca FAM that’s sponsored by the Mexico tourism board, then that’s a different story. We’ll talk more about mixing business with pleasure later. But here’s the major takeaway: You can deduct only the expenses of your trip that are directly related to business. (Remember: reasonable, ordinary, necessary).

2. How much of your trip is spent on activities directly related to business activities? You can only write off the travel expenses directly related to business activity. So if you spend 10 days in Mexico with your family, but you spend 3 days ditching your family to go on-site inspections you scheduled weeks ago, you can reasonably write off a portion of your trip as a business expense.

Conversely, if you go on your family vacation and decide to pop into the nearest Sandals at the last minute for a self-administered “tour” in the name of business activity, that is a serious foul in the eyes of the IRS. (We’ll get into scenarios later).

3. Will your business derive income from the trip? You can have the most un-fun, jam-packed business trip in the world. But if you don’t make a good-faith effort to do any follow-up (ahem, earn moolah) with all your great meetings and research, then this could raise a red flag to the IRS.

4. Is the business activity necessary to your business/niche? If your niche is Italy, it’s going to be tough to write off a trip to Hawaii if you’ve never booked that destination (and don’t plan on doing it any time soon).

5. Is the trip necessary to the business operations you’re conducting? Working away from your tax home doesn’t automatically qualify as a travel expense. To deduct travel expenses, the business activity must necessitate the trip.

For example, if I go visit a friend in Paris and spend three full days working on this blog post about travel expenses, I may not deduct my trip as a business expense because I could easily conduct these business operations from home. Major bummer (because who isn't inspired to write about travel expenses when they see the Arc de Triomphe?)

The same goes for travel agents. If you’re on a family vacation but you’re still booking trips and supporting your clients from afar, your travel expenses are not deductible as travel expenses 1 because the trip wasn’t required for that particular business activity.

At the end of the day, you need to rely on your common sense (or, better yet, the common sense of your CPA or accountant). Remember the golden rule: travel expenses must be reasonable and necessary to your business.

How do you decide what’s reasonable? The following scenarios will help provide a little perspective.

Business Travel Expense Scenarios for Travel Agents

When it comes to deducting any business travel expenses that are (in any way) attached to personal travel, the CPA/accountants I chatted with agreed to proceed with caution.

If you’re mixing personal and business travel, be clear about what days you spend working and document your meetings and business activity during those days.

As an example, here are a few scenarios by way of example. Please remember that these scenarios are just crib notes. They’re intended to help give you a lay of the land, not to advise you in any way shape, or form:

Scenario 1 (The Conference)

You fly to the annual ASTA conference on Tues. and stay through Fri. The entire time is scheduled with conference activities except for breakfasts, which you purchase every morning at the resort cafe and charge to your room. On Thurs. night after the conference is over, you take an Uber to meet your long-distance college friend for dinner and drinks. You fly out early Friday morning.

Travel expenses are entirely deductible except for the Uber rides (to and from) and dinner and drinks with your friend.

Scenario 2 (The FAM)

You’re invited to an escorted FAM in Hawaii. The FAM is 3 days, but you decide to take your family with you and extend your trip, tacking on a 7-day family vacation after your FAM. You stay at the same resort with your family as you did during the FAM.

Since your business operations necessitated the trip to Hawaii, you can write off 100% of your flight and transportation to and from the airport (so long as it’s reasonable). Why? Because you’d have to fly to and from Hawaii and transfer to and from the airport to conduct your business anyway.

Additionally, you can also deduct other travel expenses incurred while you were working (such as meals and incidentals). If you rented a car, you can prorate your rental fees according to what percentage of the time you used it for work (e.g. 30% for 3 of ten days of total cost may be deductible).

Scenario 3 (working on vacation part I)

You’re on a family vacation to Disney World for 5 days. You take a last-minute lunch meeting to meet a new property manager at a resort you often book. The rest of the time, you enjoy with your family, posting about your time together on your travel agency's social media.

None of this trip is deductible except for your meal with the property manager. Sad face.

Scenario 4 (working on vacation part II)

A baseball fanatic, you decide to go to Japan for the Japan Series. While you’re there, you bring work with you and spend three hours per day booking trips and supporting your traveling clients. The rest of the time, you watch baseball and explore Japan.

None of your travel expenses are deductible because your trip to Japan wasn’t necessary for the business operations you were conducting while there.

These scenarios are merely examples. I know that real-life scenarios are much more complicated. If you’re mixing personal and business travel, be clear about what days you spend working and document your meetings and business activity during those days.

At the end of the day, it’s easiest to document your business activity and track expenses if you keep your personal and business travel separate. And let’s be honest, it’s best for your work-life balance too! Ultimately, you need to ensure you’re doing your due diligence to record and document your trips. Guess what?! We have a few tools to help you do just that.

Pro Tips on Tracking & Documenting Your Business Travel Expenses

Entering your expenses on beautiful sheets is just part of the administrative fun of tracking travel expenses.

Beyond that cursory bookkeeping, you need to have receipts, journals, and other documentation to back up your travel expenses. Why?

If the IRS comes calling with an audit letter, you may need to provide your documentation to prove that your travel expenses were (wait for it) reasonable and necessary. To make things more exciting, the IRS can hit you up for explanations about travel you took years ago.

Get all the info you need: When it comes to big-picture travel expenses, make sure that the receipts have all the details necessary to satisfy the IRS.

Here’s what the IRS considers enough detail:

Destination Area of Travel
Date(s) You left for and returned from your trip
Number of days spent on business
Amount of expense(s)

Here are a few tips to make this process as painless as possible:

1. Track Your Cash for incidentals: This tip is from Jay: If you take out cash for tips (or other incidentals) from an ATM, the ATM receipt is not enough documentation. You should write down on your ATM receipt the date, location/service, and amount, for which you tipped if you want to take it as a deduction.

2. On meal receipts, write down who attended and what business you discussed: This will help you jog your memory if you ever need to provide further documentation for your expense.

3. For transportation expenses beyond going between the airport and hotel, write down where you’re going: When you’re taking the rideshare to the ASTA gala, write down the destination/event on your receipt.

4. Keep detailed journals/documentation of business you conduct during travel: This is especially important for “Grayland” travel. It’s a benefit for yourself as much as it is for the IRS. But after your trip, write down your actionable items that relate to how you will derive income from your trip.

Are you going to create a new marketing initiative based on the site you toured? Great. Are you going to follow up with future potential clients? Fabulous. Are you growing your list of supplier contacts to expand your book of business? Write down how you plan to follow up on your trip to grow your business.

Tips for Documenting Your Travel Expenses

The truth is that as a good business person, you'll have all this information at your fingertips. Really, it’s just a matter of corralling all that info into one place.

Pro Tips on Developing a Documentation System for your Travel expenses

Stephanie Cannon weighed in on the importance of developing a system to document your expenses. See her tip below:

It's not only crucial to track the various trip expenses but to also develop a documentation system. In this digital age, I use folders on my computer, 1 for the year, and multiple for each trip during that year. Inside each trip folder, I include a summary sheet (Excel) that lists out all of the transaction details for each expense with a note of what it was for. I then upload all of the appropriate receipts for safekeeping (and store any paper copies in a large envelope).

~ Stephanie Cannon (2022)

Want to see this in action? Join Stephanie for her (free) "Travel Advisor's Know Your Numbers Challenge." Her challenge is the runway into a more in-depth Bookkeeping Bootcamp for travel advisors, covering how to set up and complete their bookkeeping process on a routine basis, no matter what “tool” you decide to use.

How Long Do I Keep all this Fun Documentation?

The IRS is allowed to dredge up the past. So you want to hang on to all your tax documents. If you’ve been in the biz for a while, you probably have enough receipts to wallpaper your entire house.

So when exactly can you throw all the stuff away? The rule of thumb is to keep documentation for:

3 years from the date you filed your return or
7 years if you claim a loss

If alarm bells went off when you read “rule of thumb” in regard to taxes, then you’re really getting the spirit of this article! Don’t take it from me. Read the lengthier recommendation on the IRS site or [enter refrain] talk to your CPA.

Travel Expense Calculator & Tracker

We whipped up a few goodies to help you along your voyage of figuring out your travel expenses. Now that you know which of your travel expenses you can deduct, we have a nifty resource you can use to approximate how much of your trip you can write off. It's also a resource to help you document the purpose of your trips as well (in case you need to refresh your memory).

How does it work?

Enter your total deductible expenses
Document the purpose of your business travel
upload receipts

This means that all your travel documentation will be at your fingertips for bookkeeping purposes so if the IRS calls you and asks the purpose of that travel conference and FAM at an all-inclusive in Puerto Vallarta, then you have everything you need at your fingertips.

Here's a quick look at how the travel expense calculator works:

You give the travel expense calculator a gander. But know that, if you decide you want to copy and download the template for yourself or your business, you'll need to create a free Airtable account (essentially it's a spreadsheet on steroids). This tool will help calculate and track your travel expenses and provide the kind of documentation the IRS (or your bookkeeper) wants to see!

HAR's Tax Organizer

2. har tax organizer.

We're so excited about HAR's tax organizer that we're going to put the download in our article a second time! (In case we didn't have you convinced at the beginning of the article.

Now you know your actual travel expenses, and you can enter your tally! Hurray! But where do you put all this delectable information? That’s right, in your HAR Tax Organizer !

Now, if I may say so myself, HAR’s tax organizer is a thing of beauty. It’s a form where you calculate all your business expenses. That’s right, we’re talking waaaay beyond travel expenses here!

So download your form and give it a test run by entering your travel expenses.

Other Travel Expense Tools!

1. tracking apps (har uses expensify ).

The more you travel, the more impossible it will be to remember the Wheres? Whys? and What Fors? of your travel expenses. If you are overwhelmed at the thought of tracking all your expenses, stop everything and download an expense-tracking app.

I’m sure there are a ton of expense apps out there, and we’re not going to dig into different options here. HAR uses Expensify. It’s user-friendly and helps create reports very quickly.

What do you use? Tell us in the comments!

2. Per Diem Rate Calculator:

Per diem rates vary depending on where you're going (and what year it is). This is a nifty way of determining legitimate, standard per diem rates according to your destination. Remember, if you’re self-employed, you can only use the meal and incidental expenses (M&IE) per diem and you must still document all the expenses.

3. Accounting/ Bookkeeping Software

Below is a list of accounting software.

Quickbooks , Freshbooks , and Xero are great for smaller agencies or if you’re starting out. If you want a free option, you can use a Google Spreadsheet or Excel document. (HAR uses Quickbooks.)
TRAMS and Globalware are for large travel agencies and are travel-specific (unlike the above programs). For the average agency, these programs are not cost-effective.

If you're a die-hard DIY-er You can also use free resources such as Google spreadsheets or Excel sheets.

Thank Yous!

I can’t emphasize enough how little I knew about taxes before chatting with these amazing people: Stephanie Cannon, thank you for sharing your very rare travel-accounting hybrid knowledge with me, and for reviewing this article to help insure it provides the latest juicy gossip on tax regulations!

Jay Elstad has a ton of experience working with travel professionals. I called Jay during his BUSIEST season (mea culpa)! And you know what, he didn’t even get mad at me. In fact, he really went the extra mile to answer my questions and review this article.

Editor's Note: This article was first published on March 2nd, 2020. We update and republish it annually to include the latest information on travel expense deductions. The most current publish date is listed at the top of the article.

It’s important to note we’re talking about travel expenses only. You can still write off necessary office expenses you need to conduct business, such as phone calls, wifi, a portion of lodging used for your office, etc. ↩

About the Author

Mary Stein has been working as a writer and editor for Host Agency Reviews since 2016. She loves supporting travel advisors on their entrepreneurial journey and is inspired by their passion, tenacity, and creativity. Mary is also a mom, dog lover, fiction writer, hiker, and a Great British Bake Off superfan.

Agent Tools
Business Tips
Experienced Agents
Legal & Regulatory
Travel Agent Basics

Tax Deductions for Travel Expenses

Have questions on formation, banking and taxes?

Schedule a FREE consultation with a formation and compliance expert today 📞

The ability to deduct travel expenses from tax is often an overlooked perk that can significantly reduce your taxable income and turn costly trips into smart financial maneuvers. However, navigating the maze of tax rules surrounding these deductions can be difficult to understand.

In this article, we’ll delve into the intricacies of what qualifies as travel expenses and unravel how you can turn your business ventures into valuable tax-saving opportunities.

What Are Travel Expenses in Taxation?

In business taxation, travel expenses refer to costs you incur when traveling away from your primary work location for business reasons. This includes expenses like airfare, mileage for using your personal vehicle, hotel stays, and meals.

These are the costs you have to pay during business trips that last longer than a regular workday. It’s worth noting that these expenses must be both common in your industry and important for your business activities to be considered valid for tax purposes.

Can You Deduct Your Travel Expenses?

In short, yes, you can deduct your travel expenses. These deductions apply when the expenses are both “ordinary” and “necessary” for your business. This includes costs like airfare, lodging, and meals during business trips. However, it’s crucial to understand the specific criteria these expenses must meet to qualify for deductions.

Allowable Tax Deductions for Travel Expenses

Having established that you can deduct travel expenses, it’s important to look at what exactly you can deduct from your taxes. In the next section, we’ll break down the types of travel expenses that the IRS considers deductible.

Airfare is a deductible expense when traveling for business purposes. This includes flights to and from your business destination. It’s important to note that if you extend your trip for personal reasons, only the portion of airfare directly related to business activities is deductible.

2. Vehicle Expenses

When using your personal vehicle for business travel, you can deduct expenses using either the standard mileage rate or actual expenses like gas, oil changes, and maintenance. The standard mileage rate is simpler, but actual expenses might yield a higher deduction if you have significant costs.

Hotel or motel costs incurred while on business travel are deductible. This only covers the nights necessary for the business aspect of your trip. Any additional nights for personal enjoyment are not deductible.

Meal expenses during business travel are partially deductible — typically, you can deduct 50% of the cost. This includes meals alone or with business associates, as long as the meal has a clear business purpose.

5. Baggage and Shipping

Costs for baggage and shipping related to business travel, like transporting display materials to a conference, are deductible. This also includes fees for checking bags on a flight.

6. Dry Cleaning and Laundry

If your business trip lasts longer than one day, you can deduct expenses for dry cleaning and laundry. These costs are often overlooked but are legitimate deductions as they are necessary for maintaining a professional appearance during business engagements.

7. Tips and Gratuity

Tips you pay for services related to any of the above expenses, like tipping a hotel bellhop or a taxi driver, are also deductible. These small expenses can add up, so it’s important to keep track of them during your travels.

For more ideas on tax write-offs, check out our blog on 30 creative tax deductions you should know .

Travel Expenses that You Cannot Claim as Tax Deductions

While there are numerous travel expenses that qualify for tax deductions, it’s equally important to recognize those that do not. In the following section, we’ll outline specific travel expenses that are not eligible for deduction under IRS rules.

1. Personal Vacation Expenses

Expenses incurred during personal vacation time, even if it’s part of a trip that includes business activities, are not deductible. For example, if you extend a business trip for personal leisure, additional lodging and meal costs related to the vacation portion cannot be claimed.

2. Commuting Costs

Costs related to commuting between your home and your regular place of work are not deductible as travel expenses. This includes daily transportation costs, regardless of whether you are using public transport or a personal vehicle. These expenses are considered personal commuting costs and are not eligible for tax deduction.

3. Family or Companion Travel Costs

If you bring family members or companions on a business trip, their travel costs are not deductible, unless they are employees and the travel is for a bona fide business purpose.

4. Luxury or Excessive Expenses

Extravagant or lavish expenses that are not necessary for conducting business are not deductible. This includes luxury accommodations or first-class air travel that goes beyond what is reasonable and necessary for business purposes.

5. Non-Business Activities or Entertainment

Expenses for non-business activities or entertainment during a business trip are not deductible. This includes sightseeing tours, golf outings, or other leisure activities that do not have a clear business purpose.

6. Fines and Penalties

Any fines or penalties incurred while on a business trip, such as traffic tickets or parking fines, are not deductible. The IRS does not allow deductions for expenses that arise from illegal activities or breaches of law, including minor infractions like speeding tickets.

Understanding the Importance of Recordkeeping

Transitioning from what you can and cannot deduct, it is important to emphasize the importance of careful record keeping. Proper documentation of travel expenses is not only a good business practice, but also a necessity for tax purposes. The IRS requires detailed records to substantiate all deductions claimed.

This means you must keep receipts, logs of business activities, dates, locations, and the purpose of each expense. Accurate records not only confirm your deductions in the event of a tax audit but also help you monitor your business expenses and budget more effectively.

Essentially, accurate record-keeping is the backbone of expense reporting. It ensures compliance with tax laws and can protect you from potential disputes or penalties from the IRS, ensuring the financial integrity of your business.

How to Claim Write-Offs for Travel Expenses on Your Tax Return?

The next step is to learn how to claim these travel expenses as write-offs on your tax return. This procedure ensures that you receive the rightful deductions and thus contributes to a more accurate and favorable tax result . Here’s a step-by-step guide:

Determine Eligibility

First, confirm that your travel expenses are indeed business-related and meet the criteria of being ordinary and necessary. Ensure you’re not including any non-deductible expenses like personal activities or luxury expenditures.

Gather Documentation

Collect all relevant receipts, logs, and records related to your travel expenses. This includes airfare, accommodation, meals, and other allowable expenses. The more organized and detailed your records, the easier the claiming process.

Fill Out the Appropriate Tax Forms

For self-employed individuals, these expenses are typically reported on Schedule C of the IRS Form 1040 . If you’re an employee, consult current tax laws, as recent changes may affect how you claim these deductions.

Calculate Deductions

Calculate the total amount of your travel expenses based on your records. Remember to apply the 50% limit for meal expenses and choose between the standard mileage rate or actual car expenses if you use your personal vehicle.

Report on Tax Return

Enter the total amount of your deductible travel expenses in the appropriate section of your tax form. Make sure the information is accurate, as discrepancies can lead to audits or penalties.

Keep Records Post-Filing

Do not throw away your documents after submitting your tax return. The tax office can review previous tax returns, usually up to three years after they were submitted.

Consider Professional Advice

If you are unsure about accounting for travel expenses, a tax advisor can provide you with clarity and certainty. They can also help you maximize your deductions while ensuring compliance with tax laws.

Entrepreneur’s Guide to Travel Expenses and Tax Deductions

Traveling for your business ventures is a clear sign that you are advancing in your career. But it’s not always easy to keep track, or fully understand the complicated tax jargon to get the most out of your tax return.

At doola, we understand the complexity of managing business finances. Our expert bookkeeping services streamline your financial records, ensuring accuracy and compliance. Let us handle the nuances of tax deductions so you can focus on growing your business.

Are business insurance premiums tax deductible?

Yes, business insurance premiums are tax-deductible. This includes insurance for general liability, property, and professional liability, as these are considered necessary and ordinary business expenses.

Can I deduct the cost of hiring employees for my startup?

Absolutely! Costs associated with hiring employees, including wages, benefits, and recruitment expenses, are tax-deductible as they are essential operational expenses for your startup.

Are expenses for inventory and raw materials tax deductible for a startup?

Yes, expenses for inventory and raw materials are deductible for a startup. These costs are part of the cost of goods sold and are essential for providing the products or services your business offers.

Can I deduct the cost of business meals and entertainment?

You can deduct 50% of qualifying business meal expenses, provided they are not lavish or extravagant and have a business purpose. However, entertainment expenses are generally not deductible under current tax law.

Are expenses for business-related subscriptions and memberships tax deductible?

Yes, expenses for business-related subscriptions and memberships, like trade journals or professional organizations, are tax-deductible as long as they are relevant to your business and can be considered ordinary and necessary expenses.

Free e-book

How to form a US LLC in 5 minutes

A beginner-friendly guide on the basics of LLCs. Learn about formation, banking, and taxes.

Schedule a FREE consultation with a US CPA today 📞

LLC vs. C Corporation: The Ultimate Guide for Your Business
Best State to Form My LLC In
Wyoming vs. Delaware LLC
LLC Fees by State

Keep reading

Start your dream business and keep it 100% compliant

Turn your dream idea into your dream business.

A beginner-friendly guide on the basics of LLCs. Learn about formation, banking, and taxes. Get ready to turn your dream idea into your dream US business.

Cookie consent

By continuing to browse this website, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. Learn more.

Can You Deduct Your Vacation From Your Taxes? Experts Weigh In

Know what’s deductible and what’s not when it comes to submitting travel expenses on your taxes..

Copy Link copied

Man on wood patio with laptop computer, on green hill overlooking sea

If there’s a certain amount of work involved, you may be able to claim travel costs on your taxes.

Photo by GaudiLab/Shutterstock

People are traveling like crazy these days. The Sunday after Thanksgiving 2023 was the biggest single travel day in U.S. aviation history, with TSA screening more than 2.9 million passengers on November 26.

If you’re one of those travelers racking up frequent flier miles as quickly as you can fasten your seat belt, you may be looking for ways to recoup some of the cost. Can you legally write off your trip? If you’re self-employed (for example, if you’re an entrepreneur, freelancer, or consultant, or have an online business) and you did some work while on the road, there’s a good chance you can.

Here’s what it takes to get two thumbs up from the IRS.

Pass these four tests

For starters, your trip must have a business purpose, meaning it must include activities such as client meetings, attending a conference, being a guest speaker at a conference, doing research and development for the business, or holding a board meeting or annual shareholders’ meeting. The activity should have the potential to generate revenue.

“Don’t think you can take a personal trip, talk business for an hour and then try and deduct the whole amount of your trip. The intent of the trip needs to be business,” says Caitlynn Eldridge, founder and CEO of Eldridge CPA .

The second and third requirements deem that the trip must be both “ordinary and necessary,” according to IRS guidelines on business travel expenses . “An ordinary expense means it’s typical in your business, both [in terms of] amount [as well as in] frequency and purpose. Necessary means it actually helps you increase your profits or expand your business,” explains Tom Wheelwright, a certified public accountant and author of the book Tax-Free Wealth (BZK Press, 2018).

Lastly, every expense must be properly documented. To get a deduction for travel, Wheelwright said that you must spend more than half your time during the business day doing business and have everything documented. “So, if you spend four and a half hours a day doing business, it becomes deductible. You also must have documentation, which includes receipts, of what you did, and a log of your expenses,” says Wheelwright.

On receipts, write the name of the client who you had the meal with for further proof. “Save the emailed confirmation and receipt from the hotel reservation or conference ticket payment that show the dates, times, and name of the events as well as the receipts from the travel it took to get there and back [such as for gas or flights],” says Ben Watson, founder of Fiscal Fluency , a personal finance and business coaching company.

Note that for 2024, the IRS mileage reimbursement rate is 67 cents for employees or a self-employed individual traveling for work, up from 65.5 cents in 2023.

Know, too, that you must be away from home overnight—the IRS requires an overnight stay for the trip to qualify as business travel, Wheelwright says.

Domestic travel versus travel abroad

There’s a big difference between how you calculate deductions if the work trip was taken in the United States versus abroad. According to Wheelwright, “It’s an all-or-nothing test in the U.S., so either you spent more than 50 percent of your time on business, and it’s all deductible, or you spent 50 percent or less and none of it’s deductible.”

For international business travel, the deductions work differently. He explained that when you travel to another country, the deduction is proportionate. “For example, if you spent 40 percent of your time doing business in Italy, then 40 percent is deductible,” says Wheelwright.

Stick to the rules

Square outdoor infinity pool with palm trees in background and facing sea at dusk

If you normally stay in more modest hotels, trying to deduct a luxe property stay could raise red flags.

Photo by Yokwar/Shutterstock

It has to be a legitimate business trip. “You can’t simply do some work while on the beach and call it a business trip,” says Watson. But if you make it a “bleisure trip” by adding a couple days at the beach onto your preplanned business trip to the coast, you could still write off at least some of your lodging fees, he explained. If you do extend your trip for vacation, you can only deduct the expenses that were directly related to work and took place on the days that you conducted business. If you are traveling to multiple cities, keep in mind that each must have a business purpose.

You do have to work. If you are at a conference, make sure you fully participate, which means not just attending one or two sessions. If you only attend a small number of the business-related events, the entire purpose of the trip would be considered a personal trip with “incidental” business activities, Watson points out. Remember you need a log of what you did, and if it’s thin on details, it could prove problematic. “You don’t want to lose the ability to deduct transportation, lodging, meals, and other expenses,” says Watson.

If it’s a business trip of your own making, be sure it includes meetings with clients or participating in some work-related activity. “To demonstrate evidence of these events, it’s wise to put calendar appointments down in your phone in advance and hold onto receipts when the time comes to file your tax return and claim your deductions. Remember, the primary purpose of this trip is [supposed to be] for work,” says Riley Adams, a CPA and CEO and founder of WealthUp , a financial literacy website.

Don’t try to bend what “ordinary and necessary” means. “If you have the ability to accomplish the same business tasks while staying at a modest hotel as you would at the Four Seasons, you’ll have a hard time justifying the extra cost if you’re ever audited,” Watson cautions.

Stay at a place that is similar to places you normally stay on a business trip, so your expenses are considered “ordinary.” Wheelwright explains that if you usually stay at five-star hotels for your business trips, then the Four Seasons would fall into the same category. However, if you usually stay at hotels like the Comfort Inn, and suddenly switch to a luxury hotel, the high-end venue could raise red flags with the IRS. He says that it doesn’t matter whether you stay at a hotel or a vacation rental, the quality level and price tag should be similar to what is typical for your business trips.

When traveling with non–business companions, such as a spouse or family members, you may only deduct the cost of the lodging you would have paid if you were traveling alone—for example, if a single room costs $150 per night, and you paid $200 for a double room, you could only deduct at the $150 rate.

What can you deduct?

One woman in dress and two men in suits at dining table with salads, bread, and wine

You can deduct 50 percent of the cost of business meals.

Photo by Rawpixel.com/Shutterstock

Personal meals are not deductible, but half the cost of food expenses related to business can be deducted. Expenses for your family’s meals and entertainment cannot be deducted unless they are actively engaged in the business and you can show that their expense is both ordinary and necessary.

Travel expenses are only deductible on the days in which the work-related event occurs. “For example, a taxi ride to the meeting, train to a conference, or plane ride to the event [are deductible],” says Adams. “Lodging, much like travel expenses, is deductible on the days in which business is set to occur.”

Understand too, that if you’re provided with a plane ticket paid for by your company, or you’re riding free because you’re redeeming frequent flier miles, your cost is zero, so you can’t deduct it.

But there are a couple of things you may not be aware of. For example, if you have to ship your baggage, you can deduct that cost; you also can deduct for tips for services, such as a tip to the waiter during a meal with a client.

Be strategic

It’s best to put your “vacation” days in the middle of the business days, advises CPA Greg O’Brien. “For example, if [a] business owner took a seven-day trip to Florida and spent five days meeting with clients or prospects and two days relaxing on the beach, this would still qualify as a deductible business trip. The trick is to stick the ‘vacation’ days in the middle of the business days,” he says.

By placing the vacation days in the middle, the travel days to and from are still considered business related, rather than personal.

Watson offers another tip: “Laundry, dry-cleaning and shoe-shine expenses are perfectly acceptable expenses if incurred shortly after returning home.”

Sign in to Community
Discuss your taxes
News & Announcements
Help Videos
Event Calendar
Life Event Hubs
Champions Program
Community Basics

Find answers to your questions

Work on your taxes

Community home
Discussions
Deductions & credits

Can any of my travel expenses be deducted if I work while on vacation?

Do you have a turbotax online account.

We'll help you get started or pick up where you left off.

Mark as New
Subscribe to RSS Feed
Report Inappropriate Content
TurboTax Self Employed Online

Do you have an Intuit account?

You'll need to sign in or create an account to connect with an expert.

Still have questions?

Get more help

Ask questions and learn more about your taxes and finances.

Thank you for helping us improve the TurboTax Community!

and start working on your taxes

File your taxes, your way

Get expert help or do it yourself.

Access additional help, including our tax experts

Post your question.

to receive guidance from our tax experts and community.

Connect with an expert

Real experts - to help or even do your taxes for you.

You are leaving TurboTax.

You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.

Still need to file? An expert can help or do taxes for you with 100% accuracy. Get started

Self-Employed
Tax Write-Offs & Deductions Explained

What is a Tax Write-Off? (Tax Deductions Explained)

How does a tax write-off work?

While people often think of business expenses when thinking about tax write-offs, they can also be tax deductions or expenses that you are eligible to claim on your individual taxes. These items result in a reduction in your personal taxable income. When you are self-employed and have your own business, a tax write-off related to your business is an expense directly related to conducting your business.

The Internal Revenue Service (IRS) is responsible for administering and collecting taxes. When you file your tax return, the IRS uses your reported income minus your tax deductions (or tax-write offs) to determine what tax bracket you are in and the tax rate your taxable income will be taxed. A tax bracket is applied to an income range.

For example, let’s say when you file your taxes, your reported income is $50,000. With the standard deduction ($14,600 single for 2024, $13,850 single for 2023), your adjusted gross income would be $35,400 for 2024, or $36,150 for 2023. The standard deduction will lower your reported income and in turn, lower your taxable income and your tax rate.

What is the benefit of a tax-write off?

The best benefit from a tax-write off is the reduction of your taxable income, which in turn lowers the taxes you have to pay.

Who can write-off expenses on their income taxes?

Individuals, self-employed, small businesses, and cCorporations can write-off expenses on their taxes.

Individuals

A tax deduction is a result of a tax-deductible expense or exemption which reduces your taxable income. A common deduction on your federal income tax return is the standard deduction ($14,600 single, $29,200 married filing jointly for 2024 and $13,850single, $27,700 married filing jointly for 2023), which the IRS allows taxpayers based on income and filing status.

Unlike tax deductions, tax credits are subtracted from and are a dollar-for-dollar reduction of the taxes you owe. For example, a $100 credit reduces your tax dollar-for-dollar ($100). On the other hand, a deduction reduces your taxable income by $100. The resulting amount of tax you save depends on your tax bracket . If you were in the 24% tax bracket, a $100 deduction reduces your taxes by $24. On the other hand, a $100 credit would reduce your taxes by $100. Common credits include the Child Tax Credit , the Earned Income Tax Credit , and the Child and Dependent Care Credit .

For some individuals, deductions and credits that can be claimed do phase out at higher incomes. The IRS determines what expenses can be considered legitimate write-offs. Don’t worry about knowing which tax deductions and credits are deductible. TurboTax will ask you simple questions about you and give you the tax deductions and credits you’re eligible for based on your answers.

Many self-employed taxpayers think if they set their business up as a corporation or another type of business structure, they may get more tax write offs (tax deductions) than if they are set up as a sole proprietor; but this is a myth. If you are self-employed, you can take many of the same business tax deductions as corporations, which lowers your taxable self-employment income.

As a sole proprietor, you may also be eligible for the 20% Qualified Business Income Deduction, which will be coupled with lower personal tax rates under tax reform. You can also deduct the full expense of business equipment up to $1,220,000 for 2024 in the first year you put the equipment in service., Iin some cases, certain SUV heavy vehicles used for your business also qualify. For 2024, if you placed a qualified sports utility vehicle in service, you may be able to deduct up to $30,500.

Image of a young business woman standing with the door of an SUV open and talking on the phone.

If you are self-employed you may not know all of the different business deductions you are eligible for, but TurboTax Premium will search tax deductions specific to your industry.

You can also easily track your business income, expenses, and mileage year-round with QuickBooks Self-Employed and easily import the information directly to your TurboTax tax return at tax-time.

Small Businesses

Businesses can be classified as small businesses based on revenue, sales, assets, annual gross profits, net profits, or the number of employees the business employs. If you are considered a small business with employees, you will be able to deduct business expenses related to your employees like payroll expenses and other expenses directly related to running your business.

A simple way to reduce your possible income tax bill is to make sure you are claiming all the tax deductions available for your small business. As a small business owner, it will be essential to keep good books and records of your business income and expenses. Doing so will ensure you do not miss out on any tax-write offs, which will end up costing you more money.

Quickbooks can help you manage your business finances in one place to make sure you are prepared come tax time. Some common tax write-offs for small businesses include rent expenses, telephone and internet expenses, bank fees, and contract labor to name a few. Each business will have some expenses that are specific to their business or industry that can possibly be a tax write-off.

Corporations

Corporations are allowed to deduct business expenses that the IRS defines as “ordinary and necessary” business expenses. There are two types of business expenses: current expenses and capital expenses. Current expenses are expenses needed to keep the corporation running and are fully tax deductible. Capital expenses are items such as investments or real estate that also qualify for deductions if purchased to generate income from the business. Ultimately the IRS tax code determines what a business qualifies to deduct.

A normal business deduction for all businesses are operating expenses that the business relies on to operate on a day-to-day basis such as rent, office supplies, and payroll expenses. Another customary business deduction for a corporation are employee expenses such as employer-sponsored health benefits, tuition reimbursement, bonuses, awards, sick leave, and employee salaries.

Middle-aged business man handing someone a paycheck.

How much are tax write-offs worth?

The amount that a tax write-off is worth depends on several factors surrounding the deduction or credit. Many tax deductions and credits have limits which are prescribed by the tax provisions. These limits can depend on several factors, such as filing status, income, and dependents.

In some situations, the amount you can write-off may be limited based on your adjusted gross income. An example of this is the student loan deduction , which begins to phase out when income exceeds $80,000 as a single person or $165,000 for married filing joint couples for 2024.

In some cases, it’s possible that taking the tax write-off would not be to your benefit. For example, ifyour total itemized deductions are less than the standard deduction amount for your filing status, it would be in your best interest to choose the standard deduction. Fortunately, when you file with TurboTax, the guessing game is eliminated, and the option benefiting you the most ( standard deductions versus itemized ) will be chosen based on your entries.

What are some common tax write-offs?

While everyone will not qualify for every tax write-off, here is a list of some common tax write-offs:

Standard deduction: A standard deduction is a deduction that is a specific dollar amount that reduces your taxable income. For tax year 2024, the standard deduction is $14,600 single and $29,200 married filing jointly (2023 the standard deduction is $13,850 single and $27,700 married filing jointly).
Mortgage interest : You can write-off the interest you pay on the first $750,000 of home loans on homes purchased after December 15, 2017. For mortgages that existed as of December 14, 2017 the maximum mortgage interest deduction allowed is based on a loan amount of up to $1 million.
Student loan interest : If you made payments on a qualified student loan in 2024 and have a modified adjusted gross income (MAGI) under $80,000 as a single or head of household filer or $165,000 as married filing jointly you can write off up to $2,500 of interest paid on the student loans .
Donations to charities: If you made contributions to qualified 501(c)3 organizations, you may qualify for a write off if you itemize your deductions.
Medical and dental expenses: If you can itemize your deductions and your unreimbursed medical and dental expenses exceed 7.5% of your adjusted gross income, you may qualify to deduct those costs as medical expenses.
Traditional IRA contributions: If you made contributions to your traditional IRA and have a MAGI under a certain limit, you may qualify to write off contributions up to $7,000 if you’re under age 50 (or $ 8,000 if you’re age 50 or older). You are able to make a contribution up until the tax deadline and reduce your taxable income for the tax year.
Health savings account (HSA) contributions: If you qualify to contribute to an HSA you can write off contributions that you made to the account. For tax year 2024 you can contribute up to $4,150 for an individual or up to $8,300 for a family.
Self-Employed Business expenses: If you own and operate a self-employed business, you’re allowed to write off certain expenses that are ordinary and necessary expenses related to running your business. The most common examples include the home office deduction, business use of your car, supplies, and start-up costs.

What are some expenses that are non-deductible?

It is normal to have yearly expenses that don’t qualify as a tax write-off and are non-deductible. Also, it’s possible that an expense can be legitimate, but not deductible on your taxes.

Here are some common expenses that you can’t deduct:

Child support
Alimony paid on divorce agreements entered into after Dec. 31, 2018
Political contributions
529 contributions (no federal deduction, but it may be deductible on a state tax return)
Roth IRA contributions

What are some tricky tax deductions?

Knowing when an expense qualifies as tax write off (or tax deduction) can be trickier than it seems. Below are some expenses that can be deductible, but they come with specific conditions:

Home Office

The home office deduction used to be an expense that self-employed business owners were hesitant to take, but if you have a dedicated space in your home where you conduct business, you should not hesitate to claim the home office deduction which is a portion of your home expenses like rent or mortgage interest, property taxes, and utilities based on the square footage of space in your home you use for your home office. The IRS also allows you to use the simplified home office deduction, which is up to $1,500 (up to 300 square feet at $5 per square foot) depending on how much space you use in your home.

Home Office Computer

If this is the only computer in your household, you will need to calculate the percentage of time that you use the computer solely for business purposes.

Uniforms or Costume

If your costume or uniform is something you could wear outside your job, you shouldn’t write it off. If, however, it’s obvious you can only wear it for the duties of your specific job, then it qualifies as a write-off if you are self-employed.

What are tax write-offs in a nutshell?

In a nutshell, a tax-write off is a legitimate expense that lowers your taxable income on your tax return. A tax write-off is commonly referred to as a tax deduction. Ultimately, the IRS determines what expenses can be considered a legitimate write-off.

No matter what moves you made last year, TurboTax will make them count on your taxes. Whether you want to do your taxes yourself or have a TurboTax expert file for you, we’ll make sure you get every dollar you deserve and your biggest possible refund – guaranteed.

Business Networking Tax Deductions

Real Estate Employment Taxes Explained

Written by Adam Middleton

4 responses to “Tax Write-Offs & Deductions Explained”

I was driving a semi truck over the road I thought that according to DOT laws that we were allowed a $46 or $42 tax write off every day that we slept in our truck.

So what if youre a home owner ? What deductibles or write offs do you have ?

I live in Washington state, and paid $760 in union dues last year. Does anyone know if this is deductible? Thanks!

I am a hairstylist, I have my nails done for a more professional look at work. Is it possible to write the cost off on my taxes? Hope this isn’t a crazy question.

Browse Related Articles

Tax Deductions and Credits

The Difference Between a Tax Credit and a Tax Deduction

Deductions and Credits

What Are Tax Deductions? A 101 Guide

What Medical Expenses are Tax Deductible?

Residential Clean Energy Credit 101: A Comprehensive Gu…

Self-Employed Tax Deductions Calculator 2023-2024

Love and Marriage Some Tax Benefits of Marriage (411 × 600 px)

Love and Taxes: Tax Benefits of Marriage

Apples and oranges standard deductions vs. itemized d….

Happy Veterans’ Day: Tax Breaks for Our Military

Real Talk Series: Do My Cancer Treatments Affect My Tax…

Tax Guide for the Self-Employed Everything You Need to Know

Self-Employment Taxes: An Intro Guide to Get You Starte…

Money Talks News

12 Expenses You May Be Tempted to Claim As Tax Deductions — but Shouldn’t

Posted: June 18, 2024 | Last updated: June 18, 2024

Thinking of trying to deduct a few of these things on your federal tax return? That could be a costly mistake.

More for You

White House press secretary Karine Jean-Pierre leaves the podium after a medical emergency is reported in the room.

White House press briefing interrupted by medical emergency

Hit Crime Drama to Finally Start Streaming 25 Years After Series Ended

Joe Biden Puts Samuel Alito in a Jam

Andrew McCarthy on why two Breakfast Club stars are absent from Brat Pack documentary

16 signs your body is telling you something is wrong

Minimizing your air conditioning and heater usage is a massive win for your wallet and the environment.

Appliance repairman demonstrates simple step to cool any room in minutes: 'Allowing you to ease off the AC'

15 Highest Paying Jobs That Nobody Wants

Kevin O'Leary says you can live off $500K this way

Kevin O'Leary explained how you can live off $500K and ‘do nothing else to make money' — but is it realistic for your retirement?

Jason Kelce, left, and Travis Kelce, right, famously faced off against each other in the 2023 Super Bowl.

Travis Kelce’s Homes: Inside His and Brother Jason Kelce’s Real Estate Portfolios

This U.S. State Is One of the Best Places to Retire for Low Crime, Taxes, and an Affordable Cost of Living

Flight attendant explains why you should always throw a bottle of water under hotel beds

I quit sugar for 6 months and this is what it did to my face and body

‘Old People Smell’ Is Real, Here’s What Causes It and How To Avoid It

There are major changes coming for your washers and dryers

There are major changes coming for your washing machines and dryers

What It's Like To Live In A Pallet Home

Is the Sunshine State losing its luster?

Man who ditched California due to the ‘cost of living, politics, traffic and crime’ says he’s ‘much happier’ in Florida — but is the Sunshine State now losing its luster?

Ian Dupre of Embrun, Ontario holds up his winning prize after buying a $100 scratch-off ticket the same day his second child was born. Dupre went on to win $1 million Canadian dollars.

Do we really need $1M in retirement savings? Not even close, one top economist says

Archaeologists make spectacular discovery in George Washington’s Mount Vernon home

These Are The 7 Things Stroke Doctors Say You Should Never, Ever Do

I toured Kykuit, a 40-room mansion in New York that once belonged to the richest man in the world. Take a look inside.

See inside Kykuit, a 40-room mansion in New York that once belonged to the richest man in the world

Credits & Deductions
Income & Investments
CRA Tax Updates
Getting Organized
Family & Children
Homes & Rental Properties
Medical & Disability
Expats & Non-Residents
Employment & Employees
Foreign Income & Property
Self-Employed & Freelance
Small Business
Unemployment
After you File

The Landlord’s Toolbox: A Guide to Claiming Expenses on Rental Properties

Maybe you own a rental property as an investment, or you rent out your basement suite to help with the mortgage. Either way, you want your rental property to be as profitable as possible, right? One mistake many landlords make is not including rental property tax deductions they’re eligible for when filing their taxes. But that’s leaving money on the table.

To unlock the hidden potential of your rental property, you need to understand how rental property expenses work in Canada and how to claim them on your tax return. Our guide lays out the basics and some common deductions.

When you own a rental property, the rent you collect is taxable income.
You can claim eligible expenses to lower how much tax you have to pay on that income.
Eligible expenses include mortgage interest, property tax, utilities bills, and home insurance.

File your taxes with confidence

Get your maximum refund, guaranteed*.

How do rental property tax deductions work in Canada?

In Canada, the rent you collect from tenants is considered income and must be reported on your tax return. That means you pay tax on it. But the good news is, you can deduct eligible expenses first. How does that work? Essentially, you take your rental income and subtract expenses. You calculate tax payable on what’s left.

The difference between current and capital expenses

There are two kinds of expenses: current and capital . Here’s what they’re about:

Current expenses. Expenses to maintain the rental property—for example, repairs—are called current expenses and can be deducted in full in the relevant tax year. These kinds of costs tend to recur regularly.
Capital expenses. Expenses that enhance the value of the property and have a long-lasting life—for example, upgrading flooring—are called capital expenses. New assets you purchase, such as appliances, are another type of capital expense. These expenses have to be added to the value of the property and depreciated over time—they aren’t counted as rental expenses, per se.

Which rental expenses are tax deductible in Canada?

Here are some common rental property write-offs you should know about if you’re a landlord.

Advertising

Claim a tax deduction for fees paid toward advertising your rental property, such as in newspapers and trade publications or on websites.

Home insurance

Deduct property insurance premiums paid toward coverage on your rental property. Include only the relevant tax year’s coverage, even if your premiums provide coverage for more than a year.

Interest and bank charges

Good news: you can claim mortgage interest or interest on money you borrowed to finance the purchase of your rental property or to improve it. Unfortunately, you can’t claim a tax deduction for your mortgage principal. As for loan interest, deduct only the money you borrowed to cover soft costs. The Canada Revenue Agency (CRA) defines soft costs as funds you borrow for construction, renovations, and upgrades to your rental property.

Also, you might be able to deduct expenses related to obtaining your mortgage, such as the cost of the mortgage application and appraisal, as well as legal fees paid to your real estate lawyer. The CRA explains the rules around this.

Office expenses

Do you buy pens, pencils, paper clips, stationery, or other small items to use for your rental property business? These can be claimed as office expenses. Larger items, such as computers, printers, chairs, and desks, should be claimed as capital expenses.

Professional fees

If you hire an accountant or other tax expert to help you prepare your return, the fees you pay are a deductible expense. This includes the TurboTax Live service, which offers packages with support from experts on rental property taxes.

Property taxes

Deduct property taxes paid to your municipality in the current year. Claim only the portion that relates to your rental property. For example, if you paid $3,000 in property taxes on your principal residence and you rent out your basement apartment (which is 40% of the square footage of your home), claim $1,200 on your tax return:

$3,000 x 40% = $1,200

Repairs and maintenance

You can deduct the cost of repairs on your rental property, including the labour. The expenses have to be current expenses, such as those related to restoring the property to its original condition, not to improving the value of the property. And, sorry, you can’t deduct a value for your own labour (though we’re sure you’re worth it).

Salaries and management fees

Amounts paid to your employees can be deducted—but alas, you can’t deduct your own salary (that is, if you pay yourself one). If you are an employer, you should deduct your contributions to the Canada Pension Plan (CPP) and Employment Insurance (EI) plans. You can also deduct amounts paid to a third party to manage your property. Also, realtor fees related to the sale of a rental property can be claimed to reduce capital gains. Read a little more here on how this works.

If your rental property is in another municipality, you can deduct travel expenses incurred when going to collect the rent or maintain the property—but only those expenses related to actually managing the property (for example, you can’t deduct boarding or lodging).

You can claim a tax deduction for the portion of utilities related to your rental property or suite. The following utilities related to your property can be deducted (if you pay for them): heat, electricity, water, and cable.

One important point to keep in mind: If you’re renting part of your primary residence, claim only the portion of expenses that pertain specifically to the rental unit. For example, if you rent out your basement and pay the water bill for the entire home, you can’t claim the total amount of that bill on your taxes—just the portion that applies to the basement.

How do you claim rent expenses on your taxes?

While the CRA accepts other types of financial statements for claiming rental income and expenses, they encourage landlords to use form T776 . Fill it out on your own when it’s time to file your taxes , or you can make it easier by using TurboTax, which helps you complete the form along with your entire income tax return.

Minimize your rental income; maximize your profits

By tracking and claiming all eligible expenses, you’ll be getting the most value out of your rental property or unit. Isn’t that why you have it in the first place? Save receipts, log what you spend, and make sure you have it all on hand at tax-filing time.

Get every dollar you deserve

Designed for all levels of investing, TurboTax covers nearly every investment tax situation, including stocks, bonds, ESPPs, crypto, rental properties, and more.

How capital gains tax affects your property and investments—and can it be avoided, capital gains on primary residence & principal residence exemption, how does the tax-free savings account (tfsa) work.

ATO Community
Legal Database
What's New

Log in to ATO online services

Access secure services, view your details and lodge online.

Deductions for home-based business expenses

How to claim tax deductions for home-based business expenses if you operate some or all of your business from home.

Last updated 1 August 2023

For a summary of this content in poster format, see Home-based business expenses (PDF, 277KB) This link will download a file

Media: Claiming deductions home-based business expenses https://tv.ato.gov.au/ato-tv/media?v=bi9or7od7bgywi External Link ( Duration: 01:09)

What is a home-based business?

A home-based business is one where an area of your home is set aside and used exclusively as a place of business.

The types of expenses you can claim depend on how you operate your business out of your home and the business structure. You can only claim deductions for the business portion of your expenses.

If you do not have an area set aside and used exclusively as a place of business but you do some work from home, you may still be able to claim a deduction for some of your expenses relating to the area you use.

Be aware that you may have to pay capital gains tax (CGT) when you sell your home if you used part of your home for business purposes – remember to keep the right records to work out your deductions or CGT. If you are eligible, you may be able to reduce your CGT by applying the small business CGT concessions.

Home-based business expenses

If you operate some or all of your business from home, you may be able to claim tax deductions for the business portion of expenses.

These may include:

occupancy expenses (such as mortgage interest or rent, council rates, land taxes, house insurance premiums)
running expenses (such as electricity, phone, decline in value of plant and equipment, furniture and furnishing repairs, cleaning)
the cost of motor vehicle trips between your home and other locations, if the travel is for business purposes.

You may not be able to claim occupancy expenses if personal services income rules (PSI) apply to your business.

You can claim both occupancy expenses and running expenses if you have an area of your home set aside as a ‘place of business’.

Remember, if your business is entitled to goods and services tax (GST) input tax credits, you must claim the deduction in your income tax return at the GST exclusive amount.

You may be eligible for an immediate deduction or an accelerated rate of decline in value for depreciating assets under one of the tax depreciation incentives, such as temporary full expensing.

There are recent changes in the methods to calculate running expenses.

The temporary shortcut method ended on 30 June 2022.

For the 2022–23 income year, you may be able to use the revised fixed rate method to calculate your running expenses – which is a fixed rate of 67 cents per work hour and incorporates the following usage expenses:

electricity
computer consumables, such as printer ink

You can't claim an additional separate deduction for the expenses covered by the rate per work hour.

You can separately claim a deduction for the decline in value of depreciating assets, such as laptops, mobile phones and office furniture. You can also claim a deduction for any other running expenses not covered by the rate, for example, cleaning your home office.

If you don't use the revised fixed rate method, you can claim the actual expenses you incurred while working from home.

Regardless of what method you choose to use to calculate your home-based business expenses, you should keep complete and accurate records for at least 5 years to substantiate your claims.

Type of business structure

Your business structure can affect the method you can use and the expenses you can claim, especially if your business is a company or trust.

For more information, see:

Home-based business expenses – sole trader or partnership
Home-based business expenses – company or trust

Sole trader or partnership home-based business

How to claim occupancy and running expenses for the business use area of your home as a sole trader or partnership.

Company or trust home-based business

Home-based businesses run as a company or trust need a genuine, market-rate rental contact with the property owner.

Home-based business and CGT implications

If you used any part of your home for business purposes, you may have to pay CGT when you sell it.

COMMENTS

Understanding business travel deductions
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.
Publication 463 (2023), Travel, Gift, and Car Expenses
You can deduct 11 / 18 of the round-trip plane fare and other travel expenses from New York to Paris, plus your non-entertainment-related meals (subject to the 50% Limit), lodging, and any other business expenses you had in Paris. (Assume these expenses total $4,939.)
Topic no. 511, Business travel expenses
Topic no. 511, Business travel expenses. Travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job. You can't deduct expenses that are lavish or extravagant, or that are for personal purposes. You're traveling away from home if your duties require you to be away from the general ...
How to Deduct Travel Expenses (with Examples)
Travel. 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. Lodging. The cost of your lodging is tax deductible.
How to Deduct Business Travel Expenses: Do's, Don'ts, Examples
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.
Can I deduct travel expenses?
SOLVED • by TurboTax • 5278 • Updated November 30, 2023. 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 ...
Travel Expenses Definition and Tax Deductible Categories
Travel expenses are costs associated with traveling for the purpose of conducting business-related activities. Travel expenses can generally be deducted by employees as non-reimbursed travel ...
How to write off travel expenses
For self-employed travel expenses, you will list travel write-offs on Schedule C Form 1040. Businesses must claim travel expenses on Form 2106 and report them on Form 1040 or Form 1040-SR as an adjustment to their total income. While there's no annual travel deduction limit, the IRS scrutinizes higher write-offs.
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 ...
PDF THE COMPLETE GUIDE TO DEDUCTING BUSINESS TRAVEL EXPENSES
Only deduct expenses that occur away from the tax home 2. Only deduct expenses that are ordinary and necessary 3. Keep all receipts 4. Create and store a record of all expenses ... If the taxpayer travels outside the United States, expenses for travel can be deducted if the trip is entirely for business purposes. Not only that, but all travel ...
7 Rules You Should Know About Deducting Business Travel Expenses
You can deduct the cost of meals while you're traveling, but entertainment expenses are no longer deductible and you can't deduct "lavish or extravagant" meals. Meal costs are deductible at 50%. The 50% limit also applies to taxes and tips.
10 Tax Deductions for Travel Expenses (2023 Tax Year)
The IRS permits a 50% deduction of meal and hotel expenses for business travelers that are reasonable and not lavish. If no meal expenses are incurred, $5.00 daily can be deducted for incidental expenses. The federal meals and incidental expense per diem rate is what determines the standard meal allowance.
Deductions For Business Travel Expenses
If you travel away from home overnight on business, you can deduct these travel expenses: Airline, train, or bus fares — This includes first-class. You might rent a car while you're away from home on business. If you do, you can deduct only the business-use portion of the expenses. To learn more, see the Car and Truck Expenses tax tip.
How to find deductions for travel expenses
If traveling abroad, you must spend a minimum of 25% of your time conducting business to qualify as a business trip and claim travel expense deductions. If you conduct business for less than 25% of the time while on a trip, you can still deduct travel costs. This deduction must be proportional to the amount of time spent on business.
Determining Tax Deductions for Travel Expenses + List of Deductions
Step 2: Check the List of Business Expenses That Qualify for Deductions. Your travel expenses must be business-related—unless an exception applies—to qualify for a deduction. However, if you incur expenses that are purely for personal pleasure, they are nondeductible. Here is a list of business travel expenses that can be deducted.
What Travel Expenses You Can (and Can't) Write Off
Cruises are special snowflakes and are subject to their own rules when it comes to travel expenses. According to the IRS, "You can deduct up to $2,000 per year of your expenses of attending conventions, seminars, or similar meetings held on cruise ships. All ships that sail are considered cruise ships.".
7 Allowed Tax Deductions for Travel Expenses
2. Vehicle Expenses. When using your personal vehicle for business travel, you can deduct expenses using either the standard mileage rate or actual expenses like gas, oil changes, and maintenance. The standard mileage rate is simpler, but actual expenses might yield a higher deduction if you have significant costs. 3.
Can You Deduct Your Vacation From Your Taxes? Experts Weigh In
Note that for 2024, the IRS mileage reimbursement rate is 67 cents for employees or a self-employed individual traveling for work, up from 65.5 cents in 2023. Know, too, that you must be away from home overnight—the IRS requires an overnight stay for the trip to qualify as business travel, Wheelwright says.
When can I deduct travel expenses on my federal tax return?
A fee-basis state or local government official may deduct some unreimbursed work-related expenses, including travel expenses. A qualifying performing artist may also deduct work-related expenses, including travel. A qualifying performing artist has an Adjusted Gross Income (AGI) of less than $16,000 before deducting expenses and has to have ...
Can Travel Expenses Be Deducted From Your Taxes? Our Expert Weighs In
More for You. As tax season approaches, you might wonder if your travels can be deducted from your expenses. Our accountant gives us the details in an exclusive interview.
Here's what taxpayers need to know about business related travel deductions
Tax Tip 2022-104, July 11, 2022 — Business travel can be costly. Hotel bills, airfare or train tickets, cab fare, public transportation - it can all add up fast. The good news is business travelers may be able off-set some of those cost by claiming business travel deductions when they file their taxes.
Can any of my travel expenses be deducted if I work while on vacation?
Level 8. Generally, you would take a percentage of the expenses as a business expense. You would say I worked 50% of the time so I'll take 50% of the hotel. That is only if you had to go there for work and decided to turn it into a vacation. This does not sound like the case. If you went on a family vacation and brought your laptop and did work ...
PDF Travel & Entertainment Expenses
You can only deduct your travel expenses for the first 8 months. You cannot deduct any travel expenses you paid or incurred after that time. Example 1 (continued): While in Portland, you lived in a trailer you own. You returned to Seattle most weekends and maintained contact ... tax home is in Seattle for travel expense purposes.
Tax Write Offs & Deductions Explained
As a sole proprietor, you may also be eligible for the 20% Qualified Business Income Deduction, which will be coupled with lower personal tax rates under tax reform. You can also deduct the full expense of business equipment up to $1,220,000 for 2024 in the first year you put the equipment in service., Iin some cases, certain SUV heavy vehicles ...
12 Expenses You May Be Tempted to Claim As Tax Deductions
Thinking of trying to deduct a few of these things on your federal tax return? That could be a costly mistake. 8 foods you should never eat at a hotel breakfast The 50 best conservative places to ...
The Landlord's Toolbox: A Guide to Claiming Expenses on Rental
Amounts paid to your employees can be deducted—but alas, you can't deduct your own salary (that is, if you pay yourself one). If you are an employer, you should deduct your contributions to the Canada Pension Plan (CPP) and Employment Insurance (EI) plans. You can also deduct amounts paid to a third party to manage your property.
Deductions for home-based business expenses
Remember, if your business is entitled to goods and services tax (GST) input tax credits, you must claim the deduction in your income tax return at the GST exclusive amount. You may be eligible for an immediate deduction or an accelerated rate of decline in value for depreciating assets under one of the tax depreciation incentives, such as ...