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Deductible or Not: Tax Tips Regarding Travel Expenses

Deductible or Not: Tax Tips Regarding Travel Expenses

It can be challenging at times to determine the travel expenses that are deductible for tax purposes and the ones that are not unless you are an accountant. While the goal is to have all your travel costs deductible, it is good to know the ones that are and the ones that are not. Here are tax tips regarding travel expenses.

1. Combined Personal/Business Travel Costs Can Be Deducted

In case you are traveling within the US, the trip requires being fully business-related for the travel costs to be deductible for tax purposes. However, incidental personal time is still okay. For instance, in case you take a business trip to Florida, and you have dinner with relatives in the area, this is incidental to the central reason for the trip. However, if you take an international business trip, the IRS separates business time and personal time.

2. Per Diems Can Be Utilized in Calculating Business Travel Expenses

The phrase per diem refers to per day. Per diems are amounts that are deemed reasonable for daily costs while on a trip, for food and miscellaneous costs. Per diem rates are established for domestic and international trips, and the rates vary based on the region. For instance, per diem rates in big domestic cities are higher when compared to areas outside bigger metropolitan areas. Firms can establish their per diem rates, but the majority of companies utilize the per diem rates established by the federal government. In case an employee gets more per diem compared to the ceiling established by the General Services Administration, the extra is taxable to the staff.

3. Be Keen on the Frequent Flyer Mile Credits

In case you utilize frequent flyer miles for business air travel, the expense cannot be deducted as a business travel cost. For instance, in case you book a $350 trip, and you utilize $300 of frequent flyer miles, only $50 is deductible as a business expense.

4. Not All Hotel Bill Charges are Deductible Business Expenses

The laundry expenses, taxes, and room charge are deductible, but additional personal costs like a fitness center or gym fees, game costs, or movie costs are not deductible. You can deduct hotel costs for the use of a fax machine or making phone calls.

5. The Cost of Bringing a Family Member to a Business Trip is Not Deductible

The cost of bringing a child, a spouse, or any other person along on a business trip is deemed a personal cost and is not deductible. But in case you can show that the other individual is hired by the business and is undertaking critical company-related activities while on the trip, you can deduct the expenses of this individual’s travel. These activities involve meeting with company clients, writing minutes at meetings, and more.

Conclusion

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Posted on Mar 06 2019

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