While much of business has been halted over the last two years, some companies still require a lot of travel. If you’ve been traveling because of your business, you can deduct some of those expenses from your taxes.
This simple guide will inform you about what kind of expenses qualify for a deduction, how to document your business travel, and which tax forms you would include this information on.
What Can Be Deducted?
There are several categories of travel expenses that can be included in your deductions. These categories include:
- Transportation: These costs include any traveling you needed to do to get to the place of business that is outside of your local area. The cost of a plane, train, or bus ticket can be deducted. This also includes the cost of gas or any car-related driving expenses.
However, it should be noted that you cannot deduct the cost of a ticket if you received it for free. For example, if you flew by plane but used frequent flier miles to pay for the ticket in full, you cannot deduct the ticket cost from your taxes.
- Hired Cars: If you hire a taxi, commuter bus, limousine, or other vehicles to get you from the airport, train, or bus terminal to your hotel, this cost can also be deducted.
- Baggage and Shipping Expenses: Your work may require you to travel with or ship expensive computers or bulky equipment. Any extra costs you incur by shipping or traveling with excess baggage can also be deducted.
- Meals and Lodging: As long as your trip is short-term (less than a year) you can deduct the cost of living while you’re traveling for businesses. You may also be able to deduct the cost of your food as well, but in most cases, business meals will only be deducted by 50% instead of the entire cost.
- Miscellaneous Travel Expenses: This includes things like dry cleaning and laundry.
How Do You Document Business Travel?
The best way to document your travel expenses is by keeping all your receipts. They should include the date, expense details, amount spent, and share how the purchase was business-related.
Where Are These Expenses Notated?
This depends on the kind of business you work for or own.
Sole proprietors or single-member LLCs should find the “Expenses” section on the Schedule C forms.
Partnerships or multiple-member LLCs should list these deductions on the “Deductions” portion of a 1065 form.
Corporations should list these deductions under the “Deduction” portions of an 1120 form.
Yes, You Can Deduct Your Travel Expenses!
Now that you know what business travel expenses you can deduct from your taxes, you can start saving more money, which you can invest back in your business or career!
Important Note. Always remember to consult with a tax advisor or your Denver accountant if you’re concerned about how to specifically deduct your business travel expenses. Tax regulations change frequently and vary state by state. The best way to ensure that your business travel deduction remains within the standards of your state is by getting in contact with a local professional.
