Tax Deductions for Small Business: Handling Travel Expenses

There are many travel tax deductions for small businesses available. The tricky part of making these tax deductions though is determining which ones follow the actual guidelines put in place by the IRS. To determine which travel expenses you can write off for your small business and to maximize your tax deduction, follow the guidelines below.

Mileage and Gas and Fees

When it comes to driving for business trips, you will need to log every mile driven. You can deduct the cost for gas, tolls and parking as long as they pertain to business only. Keeping all receipts as well as detailing the event attended, will help to keep all documentation in order.

Car Rentals and Transportation

When renting a car, booking a flight or purchasing a train ticket, it is important to find the best deal available. Keep receipts for all purchases and to be thorough, also document other prices for the same trip to prove that you chose the best option.

Meals

Meals can be written off on business trips for up to 50% of the total cost. This includes tip and taxes tacked on. It is important as well to document any discussion when taking clients out to dinner as well as keeping receipts. The exception to this rule when traveling is day trips. If you are not required to spend the night for the business trip, the meals are not deductible.

Hotels

If your business trip requires you to spend a night, you may deduct 50% of the costs of the hotel. Be sure to keep the hotel bill as well as keeping a record of the event or meeting that you attended. It is helpful to list the times of flights or other transportation. This can help to prove that it was necessary for you to spend the night in a hotel.

Other Travel Expenses Allowed

Besides the typical expenses listed above, there are a few others that are allowed when traveling for business. Calls made either from your cell phone or the hotel may be deducted with the proper proof. Any shipping charges you had to pay to transport work related materials for the trip including baggage fees. Dry cleaning and laundry is also deductable when it is necessary for you to spend the night.

Deductions Not Permitted

Personal vacations and travel expenses are not allowed when it comes to travel cost deductions. This is true for any full length vacations you take for fun as well as any business trips that are extended for personal reasons. While the business aspect of a trip is deductible, you cannot include extra days you choose to stay. The same is true when you bring family or friends along on a business trip. While your expenses are covered, you cannot deduct any expenses for non business related individuals. Another deduction that is not allowed is lavish dining expenses. While it is not necessary to find the cheapest meal possible, you cannot deduct meals that are extremely expensive when you have a number of other options.

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