Small Business Tax Deduction Tips on Travel Expenses

You can claim a small business tax deduction for expenses related to business travel. It can save your business significant money at tax time. However, it is important to know what qualifies as business travel, which expenses can be a small business tax deduction and what percent you can deduct.

Business Travel Defined

It’s important to know how the Internal Revenue views business travel. You might otherwise try to deduct expenses that will raise red flag at the IRS. Few small business tax deductions are worth the cost in time, money and worry of an IRS audit.

The IRS considers you to be on business travel if the normal demands of your business take you away from your tax home for longer than one day’s work. And to do that work requires that you get rest or sleep away from home.

Transportation Deductions

Almost any kind of transportation that you pay for while on business travel is a small business tax deduction. That covers air or ground transportation from your tax home to your business travel destination. That means commercial airfare, trains, buses, rent cars or your own car. But the key word is “you” pay for it. That means if you use frequent flyer miles or points from some other reward program to cover the cost of airfare, you cannot deduct the airfare from taxes as well.

And it includes transportation while you are at your business travel destination. So you get a small business travel tax deduction for taxis; subways or buses; or rental cars. And again, your own car mileage would be covered as well.

Expenses While Away

You receive a small business tax deduction for all meals while on business travel, and that would include the tips and taxes on meals. However, you can only deduct 50 percent of the meal expense, whether you are eating alone or taking clients out for business entertainment.

Other expenses, including travel, can be deducted at 100 percent. For example, your laundry and dry cleaning are a small business tax deduction while on business travel. The cost of your lodgings can be deducted as well. This does not only mean a hotel. If you rent a room in a home or rent a trailer for an extended stay, these costs can be deducted.

Business Expenses

It’s routine to need to send a fax, print a report, prepare sales materials or send a package while on business travel. If you are doing these from a hotel, it can be very expensive. Such small business tax deductions can add up, and all such business expenses can be deducted. The use of professional services - such as a typing service, copying or translation services - can be deducted as well.

Avoid Lavish Expenses

You cannot claim a full tax deduction for so-called “lavish” expenses. The IRS does not define lavish by a specific dollar amount. Rather the cost of the business entertainment must be “reasonable for the facts and circumstance.”