Often, business owners wonder what they may or may not deduct. Often, business owners and those incurring deductible travel expenses for their employer, conservatively deduct expenses, opting to leave money on the table in order to avoid unwanted IRS attention. So, let’s set the record straight, and make certain that in these tight times, no money is left on the table.
As a business-owner, you may deduct costs for travelling away from home on business. However the IRS adage - that the expenses must be “ordinary and necessary expenses” for travelling away from home for your business do apply. For example, if you are traveling away from home (your ‘tax home’) for business purposes and you stay for a period substantially longer than an ordinary day's work, then you will naturally have expenses to get sleep or rest to meet the demands of your work while away. This type of expense is then “ordinary and necessary”. In addition, the travel must also be temporary in nature, in that it lasts for less than a year.
Likewise, you may deduct your transportation costs (such as the cost of airline tickets, car rental, standard mileage allowance and/or actual transportation costs if you are driving your own car, etc) and other expenses such as food, lodging and incidentals. However you cannot deduct expenses that are lavish or are for personal purposes. Similarly, travel expenses for conventions are deductible if you can show that your attendance benefits your trade or business. Special rules apply to conventions held outside of North America, in foreign travel in general and on cruises.
For more information and resources on Business Travel, please see Publication 463, Travel, Entertainment, Gift, and Car Expenses or contact your local income tax preparation office for assistance.
Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.