The Corporate Housing Network Blog

Travel for Business? ‘Tis the Season for Travel Expense Deductions Too!

Posted on 26. Feb, 2010 by Kat Schneider Fotheringham in Blog, Business Travel, Uncategorized, corporate housing, executive accommodations, international business travel

We led off this mini-series with tips on what is tax deductible for the corporate housing industry. Despite the weather today, believe it or not, summer is coming along with the opportunity to perhaps mix your winter-weary business travel with some pleasure.  To keep things simple and in compliance with the IRS, here are some tips on what is tax deductible and what is not.

For the record, the IRS allows ordinary and necessary travel expenses related to business. What does this mean?  It means your business expenses should be directly tied to the primary purpose of your business trip.  Despite the temptation, overnight accommodations shouldn’t be extravagant by any means. There are two types of plans you can file under. Under the accountable plan, there is no tax reporting on actual receipts.  The non-accountable plan, however, is fully reportable on a Form W-2 for employees (like so many of us) who get travel reimbursements in excess of actual receipts such as per diem, or advance payments without using all of the funds.

Here’s an example. If a software salesman takes a commercial jet to Los Angeles, stays at the  OMNI hotel, rents a Lincoln Town Car and drives around with his customers, then this could be considered an appropriate business tax deduction.  Using a limousine in Manhattan where transportation fares like using a limousine are reasonable and appropriate could also be acceptable.  But it’s not tax deductible for a local small business owner to take a private jet, rent a limousine, and a book a big beach house for himself for a business lunch in Miami.  Suffice it to say, some judgment is required in determining which business expenses appear reasonable and necessary.

Mileage, expense such as depreciation, lease payments, insurance, gasoline, oil change, auto license, inspection fees, repairs, and tire replacement are all deductible.  Meals and incidental expenses also qualify if you’re traveling on business.

Want to learn more?  Take a look at the IRS’ topic 511–rules for business travel expenses.  You’ll find a lot of the answers you are looking for here.

Happy trails!

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