Business Travel Expenses
Travel expenses are the ordinary and necessary expenses incurred
while traveling away from your home for your business, profession,
or job. You are traveling away from your home if duty requires you
to be away from the general area of your tax home for a period
longer than one day's work, and you need to get sleep or rest while
you are away.
Tax Home
In general your tax home is the entire city or general area
where your main place of business is located. Your tax home is
based on your business, not where you maintain your family
home.
When determining your tax home, take into account all of the
following:
- Length of time you spend at each location
- Degree of business activity at each location
- Significance of financial return in each location
The most important factor in determining your tax home is the
length of time spent at each location.
Qualifying Expenses
Travel expenses paid or incurred for an indefinite work
assignment are not deductible.
A work assignment is determined indefinite when the work
assignment is in excess of one year, or if it is realistic to
expect the assignment will be in excess of one year. If you expect
the assignment to be longer than one year, travel expenses are not
deductible even if the time period ends up being less.
If you can reasonably expect the assignment to last less than
one year, and that expectation changes to a period of time longer
than one year, travel expenses become nondeductible when the
determination is made.
Travel expenses paid or incurred while looking for work in your
present trade or business are deductible. However, you cannot
deduct travel expenses while looking for work in a new trade or
business, or if you are looking for work for the first time. If you
are unemployed and there is a substantial break between the time
since you were last employed, you cannot deduct your travel
expenses, even if the work is in the same trade or business as your
previous work.
Deductible Expenses
Deductible expenses include, but are not necessarily restricted
to:
- Travel by plane, train, bus, or car from your home to the
business location
- Using your car while at the business location
- Meals
- The deduction for business meals and entertainment is limited
to 50% of the cost.
- In lieu of keeping records of meal expenses and deducting the
actual cost, you can deduct a standard allowance based on the
location where you travel.
- Lodging
- Transportation fares for taxis, etc.
- Between the airport or bus/train station and your hotel
- Between the hotel and your work location
- From one customer to another
- From one place of business to another
- Tips paid for services related to any of these expenses
For more information see IRS
Publication 463.