Deducting Travel Expenses

Deducting Travel Expenses

Deducting Travel Expenses - The Internal Revenue Service reminds taxpayers that there are specific guidelines to be followed when deducting travel.

Deducting Travel and Related Expenses

Taxpayers who travel away from home on business may deduct related expenses, including the cost of reaching their destination, the cost of lodging and meals and other ordinary and necessary expenses. Taxpayers are considered “traveling away from home” if their duties require them to be away from home substantially longer than an ordinary day’s work and they need to sleep or rest to meet the demands of their work. The actual cost of meals and incidental expenses may be deducted or the taxpayer may use a standard meal allowance and reduced recordkeeping requirements. Only actual costs for lodging may be claimed as an expense and receipts must be kept for documentation. Expenses must be reasonable and appropriate; deductions for extravagant expenses are not allowable.

There are several different ways to deduct meal and lodging expenses when you or your employees are on the road.

Deduct Meal and Lodging Expenses Choices

  • Basic method: Keeping track of actual food and lodging costs is the method with which most small businesses are familiar. Save your receipts, document your costs and the business purposes of your activities and take your deductions.

  • Alternative: per diem for businesses (the "high-low" method). You as the employer can give your employees a per diem allowance. The simplest way of doing this, known as the high-low method, lets you choose from only two different rates for meals, hotels and incidental expenses for business trips within the continental United States.


Deducting Travel Expenses