Is Business Travel Tax Deductible? What to Know

Be prepared for your next business trip by knowing what is tax deductible.

Traveling for work can be costly. Regardless of how frequently you travel, understanding how to claim travel expense tax write-offs may seem daunting. Thankfully, the Internal Revenue Service (IRS) has provided guidelines to help business travelers claim these deductions correctly. Here are some important considerations to keep in mind.

Qualifying for Business Travel:

1. Cannot be located in the city you work in

   For your trip to qualify as business travel, it must take you away from your “tax home” or place of work. Usually, your tax home is your regular place of business. This includes the entire city or general area where your business or work is located. Additionally, the trip must require you to sleep somewhere that isn’t your home.

2. Normal Work Hours

   You should be working your regular work hours during the business trip. It is acceptable to take personal time in the evening or take weekends off.

3. Ordinary and Necessary Expense

   To qualify for tax deductions, your travel expenses must be ordinary and necessary. They should not be lavish, extravagant, or for personal purposes.

Deductible Travel Expenses:

1. Lodging

   Lodging expenses, such as hotels, motels, Airbnb stays, or even crashing on a friend's couch, are tax deductible.

2. Meals

   The cost of business-related food and beverages purchased from a restaurant can be deducted, including morning coffee or a quick lunch at the airport.

3. Transportation

   All costs related to transportation are tax deductible. This includes traveling by airplane, train, bus, or car between your home and your business destination. Even fares for taxis, Uber rides, or other types of transportation to and from your destination can be deducted. Additionally, you may be able to deduct mileage using the IRS-prescribed standard mileage rate if you drive your personal vehicle for business travel.

4. Baggage

   Baggage fees can be expensive and are often overlooked. The good news is that they are also tax deductible, so you don't have to worry about fitting everything in your carry-on bag. You can also deduct shipping costs for work materials or clothes.

5. Wi-Fi and Communications

   Wi-Fi expenses, including those incurred on a plane or at your hotel, and other communication expenses like hotspots and international calls, are tax deductible.

6. Dry Cleaning and Laundry

   Expenses for dry cleaning and laundry are tax deductible, so you can always look your best during your business trip.

7. Shipping

   If you need to bring work materials to a trade show or other event, you can claim a tax deduction for the cost of shipping those items to your destination. You can also deduct the cost of shipping your baggage or work clothes if you prefer not to carry them with you.

Where to claim travel expenses:

Self-employed business owners and farmers can deduct travel expenses against their business or farm income. Unfortunately, most employees can no longer deduct unreimbursed business-related expenses on their personal tax returns as the Miscellaneous Itemized Deduction category (where those expenses would be claimed) was eliminated under the Tax Cuts & Jobs Act in 2018.

To claim your travel expenses, visit the IRS website for specific deductions and consult with a tax advisor for your individual situation. Keeping track of your expenses during your business trip can make it easier to prepare a tax return, and using Jefferson Bank’s eStatements and eDocuments can help keep your documents organized and easily accessible!