Can I Deduct Business Travel on my Taxes?

All of your expenses during “business travel” are deductible on your business taxes.  Let’s go into detail about what the IRS considers to be business travel so that we may plan our trips or accordingly. 

What Is “Business Travel”

Business travel is defined by the IRS as travel away from your tax home that is “substantially longer than an ordinary day’s work” and that requires you to sleep while away from home. You must also sleep away from home to be able to deduct these costs. The travel must also be “temporary” (lasting less than a year). Your tax home is your regular place of business, not your family home (unless you have a home-based business); it’s the place you are traveling from, for business expense purposes.

Travel within the US of A.

To legitimately deduct expenses for “business travel” within the U.S., your trip must be “entirely” business-related. If you had some personal travel within the trip – visiting friends or taking an adventure, for example – the expenses relating to the personal activities (gas miles to someone’s home or hotel at a personal location) are not deductible business expenses.

If the trip is primarily personal, like a vacay, you cannot deduct any of the expenses unless you can prove that the expenses are directly related to your business. For example, if you take a “vacation” and spend a morning visiting a client, you can deduct the cost of the visit, but not the cost of getting from your tax home to the client’s location.

International Travel (outside the USA)

If you travel outside the USA and you spend the entire time performing business activities, you can deduct all your travel expenses.

If you combine business and personal activities as part of an international trip, you must allocate your time between business activities and personal activities. The IRS has very specific rules and formulas for designating time between business and personal days. See IRS publication.

Travel Expenses and Exceptions to the Rule

Even if you don’t spend all your time on business activities, your business expenses may be deductible if they meet at least one exception:

• If you had no “substantial control” over the arrangements for the trip. For example, if you must stay over a weekend outside the U.S. for business meetings on both Friday and Monday, you can’t very well go back to your tax home just for the weekend.
• If you travel outside the US for more than a week, your trip can be considered business, even if you combine personal activities with your business travel.
• If you spend less than 25% of your time on personal activities during the trip.

To determine percentages, divide the total number of days on the trip by the number of personal days.

This article is only educational purposes on this subject and is not intended to be tax or legal advice. I am an accountant.  But I am not YOUR accountant.