Business Travel and Tax Deductions

If you travel for your small business and wondering what small business travel expenses are deductible, you are not alone. With the tax filing deadline just weeks away, knowing what business travel and entertainment expenses you can and can't deduct is critical. Every small business wants to retain as much profit as possible in this economy, and no one wants to pay the IRS more than is required.

The bottom line is that there is a lot you can write off when you have business travel expenses. Everything from your dry cleaning bill to the client calls you made from the hotel phone. The main thing is that you have the receipts to document the expense and that you do not go overboard.

"Record keeping is so crucial," says Frank Degen, an agent licensed by the IRS to work with taxpayers. "You need to have records of the four 'P's' and a 'D,' and the four 'P's' are the person, the place, the purpose and the price, and the 'D' is the date. That's an easy way for business owners or self-employed people to remember what they need to do."

There is a variety of ways to document your expenses. You can show it in a spreadsheet, have copies of your cancelled checks, hand write out a log, and of course the best way is to have the printed receipt. None of these items are provided to the IRS when you file, but, you must have it on hand in case of an audit.

No matter if you are a sole proprietor, incorporated have a partnership based business, the deductions for travel and entertainment are generally the same and can include the following:
  • Deduct 50% of business meals (including tax and tip) – or claim a daily meal allowance.

  • Deduct 50% of entertainment as long as business was discussed right before, during or after the event.

  • When traveling out of town, deduct 100% of domestic travel costs, including air, train, cab or bus fare and parking costs.

  • Deduct 100% of your accommodations at a hotel or timeshare rental.
For more details, talk to your accountant or visit
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