What Business Travel Expenses Can You Deduct on Your Taxes?

Local and Long Distance Travel

Picture of Business Travel Expenses on Taxes
Deducting Business Travel Expenses. PhotoAlto/Ale Ventura/Getty Images

When you own your own business, it is common to have to do some business related travel. This can include local travel, such as driving to and from rental properties, or long distance travel, such as attending a property investing seminar or checking out potential rental properties in other parts of the country. When you file your taxes, the Internal Revenue Service allows you to deduct certain expenses related to this travel.

Learn what can be deducted.

Requirements to Deduct Business Travel Expenses

Solely Business:

You can deduct these travel expenses if the purpose of the travel was solely for business. The expenses you can deduct must also be considered “ordinary and necessary” in your course of business. For example, driving to the supermarket would most likely not be a necessary expense for a landlord, however it could be necessary for a baker who needs to buy flour.

Mix of Business and Pleasure:

You may also deduct certain expenses if the travel was a mix of business and pleasure. In this case, you must separate the trip into expenses incurred for business and expenses incurred for pleasure. You must only deduct the expenses for business on your taxes. 

Keep Records:

It is very important to keep adequate logs and documentation of all travel for business purposes. You should log the purpose of the trip, miles driven (if you drove) and any expenses (gas, lodging, meals, etc.) incurred in case they come into question.

You need to keep any receipts for this business travel. If you are ever audited, the I.R.S. will want you to provide proof of all of your income and expenses.

Local Travel Expenses

If you own an automobile that you use for business, you are able to deduct the cost of business related travel. This will include things such as traveling to a hardware store to pick up supplies for your property or traveling to a meeting with potential investors.

There are two different options for taking the automobile deduction. You may use either the standard mileage rate or the actual expenses incurred. The standard mileage rate involves deducting miles driven for business use, while actual expenses involves deducting the business portion of expenses such as gasoline and repairs.

See Also: Standard Mileage Rate vs. Actual Expenses

Long Distance or Overnight Travel Expenses

If you have to make long distance travel for business, you can deduct certain expenses. Be more careful when deducting these expenses, because the I.R.S looks more closely at deductions taken for long distance or overnight travel.

You must meet two conditions to be able to take the overnight travel expense:

  1. Your business must require you to be away from home for longer than a day’s work.
  2. Sleep is necessary for you to properly perform your work.

If you meet these conditions, you can deduct expenses including:

  • Transportation Costs- This includes things such as airfare, train fare, bus fare, cost of a rental car and expenses related to using your own car.

 

  • Hotel Expenses- This is the lodging that would allow you to sleep.

 

  • Meals- However, you can only deduct 50% of the cost of your meals.

     

    • Entertainment- You can only deduct entertainment that is directly related to business. For example, hosting clients at the theater or a social or athletic club. Taking your family to see Cirque de Soleil would not be a business related travel expense.

     

    • Dry Cleaning.

     

    • Phone Calls or Faxes.

    *You should always consult the IRS or a certified accountant to decide what deductions are applicable to your specific situation.