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Monday, August 1, 2016

Deducting Business Travel Expenses


Business owners can deduct business related travel expenses if the travel is:
Ordinary AND necessary
Business related
Temporary
Away From Tax Home
Documented and Substantiated in writing
Not personal (unrelated to business)

An ordinary expense is one that is common and accepted in your trade or business.

A necessary expense is one that is helpful and appropriate for your business.

A business related expense is one that is incurred for the active conduct of present or future business.

Travel is temporary if it is reasonably expected to last (and does in fact last) for 1 year or less.

Traveling away from home occurs if:

Your duties require you to be away from the general area of your tax home substantially longer than an ordinary day's work, and

You need sleep or rest to meet the demands of your work while away from home.

Tax Home is your regular or main place of business, regardless of where you maintain your family home. It includes the entire city or general area in which your business or work is located.

You must document and substantiate travel expenses included on your tax return with the following information:
Dates
Locations
Description and amount of each travel expense
Business Purpose
Business Relationship

The following business related travel expenses are generally deductible:
Airfare
Bus
Limo
Subway
Taxi
Auto Rental
Dry Cleaning/Laundry
Entertainment
Lodging
Meals
Parking
Road Tolls
Telephone/Fax Fees
Tips
Wi Fi fees
Other if business related.

You can deduct travel expenses of someone who goes with you (an employee, business associates, a spouse) if that person:
                        1- Is your employee
                        2-Has a substantial (bona fide or real) business purpose for the travel, and
                        3-Would otherwise be allowed to deduct the travel expenses.

Personal and Not Business Related
You cannot deduct personal travel days or expenses that are personal in nature and unrelated to the active conduct of business.

This article was written by  Donald M. Scherzi, CPA, CFP, LLC 
Mike Lupo, SCORE Counselor

 

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