11 Tax-Deductible Expenses During Business Trips
October 17, 2013
One of the great things about traveling for business is that what you spend, in many cases, is tax deductible. As I write this, I’m on my way to the Financial Blogger Conference (also called FinCon), where I will learn some new things, make a few business deals, and have a great time connecting with people I consider my friends.
It’s a great experience, in a city I’ve never been to, and some of the costs are offset by the fact that they are tax deductible.
What Business Travel Costs Can You Deduct?
Whether you are traveling for a conference, or traveling for some other reason, your business expenses are tax deductible. This means that you can reduce your income by the amount that you spend on your business trip. Here are some deductible expenses while you’re on a business trip:
- Rental car
- Ground transportation
- Dry cleaning
- Conference registration
- Mileage if you drive your own car
- A portion of your meals
- What you pay to entertain business associates or clients (double check though, since not everything is tax deductible)
- Internet access and other business services at your hotel or the conference center
You can ask a knowledgeable tax professional about what else might be tax deductible for your trip.
Getting the Most Out of a Business Travel Tax Deduction
You want to make sure that you are getting the most out of your ability to use business expense deductions, so it makes sense to keep good records. The IRS will want to see the records anyway. Keep all of your receipts. You can use an application like Shoeboxed to help you sort them. I just keep them in a folder at home, after entering them into my desktop personal finance software. I am able to mark business expenses, so during tax time I just get a report and use my receipts as backup.
You should keep other records as well. If you have a business lunch, and you want to deduct a portion of the meal’s cost, it can be a good idea to jot down notes about who you met with, and what you talked about. If you are driving your car, you want to properly record your mileage. Use odometer readings to help you.
Remember that a tax deduction is not a dollar-for-dollar reduction in the amount of your tax liability. Indeed, while you can offset some of the cost of your business trip, you are not traveling for free. Keep this in mind. Don’t go on a trip that you pay for unless you had planned on it, or unless you can see benefit in it. Your business trip should be something that you have planned on, and would take anyway.
Be aware that if you are on a business trip that your company reimburses you for, you can’t take the tax deduction. You can only deduct business travel expenses that you were not compensated for. I recently went to Houston as part of a book project I’m working on. Since the client paid all the costs, I can’t deduct the cost of the trip on my taxes (but he can).
As long as you are careful about your travel, and you are engaged in activities for your business, you can enjoy yourself and reap a tax benefit.
What are some other business tax deductions you can take? Leave a comment!
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