Tax Breaks for Business Travel Expenses

tax breaks | January 19, 2017 | By Susannah McQuitty

Five 1040.com employees hold up their passports on a trip to Guatemala.

Do a lot of hotel hopping in 2016? (We got to do some country hopping! Guatemala was amazing, and you can read more about our outreach!) If your travel had to do with work, you might be in luck: If you’re an employee of a company that didn’t reimburse your out-of-pocket business travel expenses, you might qualify for some sweet deductions.

Deductible travel expenses

You can get deductions for qualifying business trip expenses, including:

  • Travel by airplane, train, bus, or car between your home and your business destination. (If you’re provided a ticket or ride free as a result of a frequent traveler or similar program, your cost is zero.)
  • Fares for taxis or other types of transportation between the airport or train station and your hotel, the hotel and the work location, and from one customer location or place of business to another
  • Shipping luggage, product samples, or display materials between your regular and temporary work locations
  • Using your car while at your business destination. You can deduct actual expenses or the standard mileage rate, as well as business-related tolls and parking fees. If you rent a car, you can deduct only the business-use portion for the expenses.

Two 1040.com employees laughing with Guatemalan children at an overlook.

  • Meals and lodging
  • Dry cleaning and laundry
  • Business calls while on your business trip, including business communications by fax machine or other communication devices
  • Tips you pay for services related to any of these expenses
  • Other similar ordinary and necessary expenses related to your business travel. (These expenses might include transportation to and from a business meal, public stenographer’s fees, computer rental fees, and operating and maintaining a house trailer.)

Also, here’s a tax hack: Instead of keeping records of your meal expenses and deducting the actual cost, you can generally use a standard meal allowance, which varies depending on where you travel. The deduction for business meals is generally limited to 50% of the unreimbursed cost.

A 1040.com employee talks with a Healing Waters International field worker in Guatemala.

How do you know if your expenses qualify?

“Business travel” only counts if the trip is not a regular arrangement – so if your travel is consistent and indefinite, it won’t earn you this deduction.

You’re traveling away from home if you meet both of these conditions:

  • Your duties require you to be away from the general area of your tax home (the entire city or general area where your main place of business or work is located, regardless of where you maintain your family home) for a period substantially longer than an ordinary day’s work,
  • You need to get sleep or rest overnight to meet the demands of your work while away.

A 1040.com employee plays ball with Guatemalan children.

An important note

Unreimbursed employee expenses are one of the miscellaneous deductions that are limited to the amount that’s more than 2% of your adjusted gross income. Others in this category include job search expenses and tax preparation fees. For example, if your AGI is $45,000, you won’t get a deduction until you spend more than $900 on these kinds of expenses.

Also, these expenses are categorized as an “Itemized Deduction” and are reported on Schedule A with other itemized deductions such as mortgage interest, charitable donations, property taxes, and state and local income tax. If your total itemized deductions aren’t greater than your standard deduction, it won’t benefit you to itemize. Don’t worry, we determine the best option for you during the filing process.

There are many more deductible business expenses, such as certain work uniforms and equipment. For more business deductions, check out our Tax Guide!

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