Your guide to tax deductions for business travel
Know where you can saveThe first key to getting the most out of your travel budget is knowing what constitutes an official business trip and the items and services that the IRS considers tax-deductible in the context of business travel. According to BizFilings there are a few tips you can follow to ensure you are staying within the limitations of the law. Remember, these are not boundaries you ever want to push!
- Business travel must occur outside your tax home. That's right, a 20 minute car ride to the next town does not mean you can save on a swanky spa treatment afterward. BizFilings explained that you must be well out of the vicinity of your area code in order to count your trip under the 'business travel' umbrella. A good rule of thumb is to ask whether you can complete the entire trip without requiring sleep or rest - a nap in a hotel after a 10 hour conference is totally reasonable. The source pointed out that there are special circumstances that may arise, such as if you have several business locations and consistently travel among these them. In this case, determine where most of your income is accumulated and deem that area your principal place of business. However, you are considered an itinerant if you have no official headquarters and therefore may not be eligible for any tax breaks. On a temporary assignment in another location for a year or less? Your tax home doesn't change and you can enjoy plenty of deductions.
- Mixing business with pleasure - what's reasonable? BizFilings noted that the IRS won't deny travel expenses for lavish accommodations such as a fine dining experience or first-class flight, but you'll have to draw the line between business and pleasure somewhere reasonable to avoid drawing too much attention to your tax sheet. You'll only be eligible for breaks when the expenses in question are intended directly for the continuation or acquisition of new business, so make sure those fancy dinners and rounds of golf will be more about strategy than leisure. Are you planning on taking a day or two to yourself on a trip that is primarily for work? You're still good to go for tax breaks, but only if that distinction is made very clear in your records. Be careful to keep your books straight and you won't run into a problem.