Americans make more than 400 million business trips per year. Whether it’s meeting new clients, networking at major conventions, or performing product demonstrations, there’s a lot of business that can only be done in person.
The cost of all that travel adds up fast, though. Even those who squeeze every penny still need to spend hundreds of dollars filling their gas tanks or getting on planes.
Wouldn’t it be nice if that business travel cash could go just a little further, though? With all that travel, you might be wondering: is business travel tax deductible?
Corporate travel gets complicated fast. We’ll outline the ways business travel tax deductions work and the circumstances in which you can take them.
Is Business Travel Tax Deductible?
If you document the reasonable expenses you have for business travel, you can deduct them from your income on your taxes. The rules work somewhat differently for employees as opposed to those who own their own businesses, but the short answer lands at yes.
The rules also differ for domestic and international travel. That’s why Corporate Travel Management software provides tools for tracking you and your employees during travel. You need to know how long trips last and what expenses get racked up.
What Can I Deduct?
Business tax deductions for travel include more than just getting from point A to point B. You can write off half of the cost of business meals, half of the cost of meals eaten during travel, laundry or dry cleaning costs, and baggage fees.
You can also write off the cost of lodging. This can include Airbnb lodgings as well as hotels, so long as you document the expenses.
The act of traveling, whether by land or by air, also qualifies. Planes, trains, and cars all count as long as they get you to your destination. You can also squeeze rental cars into your annual business travel tax deductions.
You can only write off costs incurred during the business portion of your trip. If you want to sneak in some sightseeing, you can, but you have to put it in the middle of the trip rather than at the beginning or at the end.
For domestic travel to count as business travel, it needs to meet four criteria.
The trip has to be planned in advance. Have an itinerary and stick to it.
The trip also has to include reasonable business activities for your industry. When considering this, err on the side of caution, though you should remember that the days you travel count as working days.
Your trip should also consist mostly of business. The tax code measures this by the number of days spent working as opposed to lounging, but remember that the days you travel to and from your destination count as work.
Finally: you need to actually leave your backyard. The IRS defines your tax home as the city or general locality of your business, and you need to go somewhere else for it to count.
Deduct With Care
“Is business travel tax deductible?” Yes, if you cross your Ts and dot your Is. As long as you do your best to stay on the right side of the law, you can enjoy a nice trip and keep your taxes low.
If you want to make sure you have all of your ducks in a row, don’t be afraid to rely on software to take care of it for you. Modern business expense software can do a lot to take the mystery out of business travel planning.
Planning your next business getaway? Check out one of our travel articles before you plan your trip.