Plan Your Travel to Maximize Deductions

The next few months are common for people to take vacations and travel. A good business strategy is planning business travel and maximizing your deductions. Here are a few tips you need to know about business travel.

If the trip is all business, all expenses are deductible. If the trip is mostly business, expenses to and from (transportation) and all business related activities are deductible. If the trip is mostly personal, expenses to and from (transportation) are not deductible, but all business activity is deductible.

Typical travel deductions are: flights, train, bus, car, lodging, meals (50%), tips, and laundry/dry cleaning. (Get your suit dry cleaned while traveling because when you get home, it is not deductible!)

The definition of travel is: away from home, overnight and for the purpose of business.

The IRS requires receipts for travel deductions over $75 or more. To get a deduction, you need to show intent. Keeping a copy of the seminar agenda is always a good idea. Put your IRS hat on and ask yourself if the deductions you are claiming make sense. Don’t loose your travel deductions because you don’t keep good records!

When proving your travel deductions, it is a good idea to show your activity in your day planner. A business day is 4 hours and 1 minute – if you plan ahead, you can incorporate some personal travel in between the business days. The requirement for traveling domestically is different than traveling out of the country or on a cruise ship. Consult your tax preparer for your specific situation.