Save on Income Tax when You Travel
You can pay less tax anytime you have a business reason for
your travel. The IRS absolutely will allow you to call your hotel
bill in Orlando a business expense - if you had a business reason
to be there. So find one. If you sell Amway, try to convince
two or three people to join your downline. If you have real estate
rentals, look spend an afternoon with a real estate sales person,
looking at investments. There are, of course, all sorts of rules
to this, and you probably should talk to a qualified tax expert.
In the meantime, here are a few guidelines, straight from the
Tax Deductions for Travel
Travel expenses are the ordinary and necessary expenses
of traveling away from home for your business, profession, or
job. Generally, employees deduct these expenses using Form
2106 (PDF) or Form 2106-EZ (PDF) and on Schedule A, Form 1040
(PDF). You cannot deduct expenses that are lavish or extravagant
or that are for personal purposes.
You are traveling away from home if your duties require you
to be away from the general area of your tax home for a period
substantially longer than an ordinary day's work, and you
need to get sleep or rest to meet the demands of your work while
Generally, your tax home is the entire city or general area
where your main place of business or work is located, regardless
of where you maintain your family home. For example, you live
with your family in Chicago but work in Milwaukee where you stay
in a hotel and eat in restaurants. You return to Chicago every
weekend. You may not deduct any of your travel, meals, or lodging
in Milwaukee because that is your tax home. Your travel on weekends
to your family home in Chicago is not for your work, so these
expenses are also not deductible. If you regularly work in more
than one place, your tax home is the general area where your
main place of business or work is located.
In determining which is your main place of business, take
into account the length of time you are normally required to
spend at each location for business purposes, the degree of business
activity in each area, and the relative significance of the financial
return from each area. However, the most important consideration
is the length of time spent at each location.
Travel expenses paid or incurred in connection with a temporary
work assignment away from home are deductible. However, travel
expenses paid in connection with an indefinite work assignment
are not deductible. Any work assignment in excess of one year
is considered indefinite. Also, you may not deduct travel expenses
at a work location if it is realistically expected that you will
work there for more than one year, whether or not you actually
work there that long. If you realistically expect to work at
a temporary location for less than one year, and the expectation
changes so that at some point you realistically expect to work
there for more than one year, travel expenses become nondeductible
when your expectation changes.
You may deduct travel expenses, including meals and lodging,
you had in looking for a new job in your present trade or business.
You may not deduct these expenses if you had them while looking
for work in a new trade or business or while looking for work
for the first time. If you are unemployed and there is a substantial
break between the time of your past work and your looking for
new work, you may not deduct these expenses, even if the new
work is in the same trade or business as your previous work.
Travel expenses for conventions are deductible if you
can show that your attendance benefits your trade or business.
Special rules apply to conventions held outside the North American
Deductible travel expenses while away from home include,
but are not limited to, the costs of:
*Travel by airplane, train, bus, or car between your home
and your business destination.
*Using your car while at your business destination.
*Fares for taxis or other types of transportation between the
airport or train station and your hotel, the hotel and the work
location, and from one customer to another, or from one place
of business to another.
*Meals and lodging.
*Tips you pay for services related to any of these expenses.
Instead of keeping records of your meal expenses and deducting
the actual cost, you can generally use a standard meal allowance
ranging from $31 to $51 for certain high cost areas, depending
on where you travel.
The deduction for business meals is generally limited to 50%
of the unreimbursed cost.
If you are an employee, your allowable travel expenses are
figured on Form 2106 or 2106EZ. Your allowable unreimbursed
expenses are carried from Form 2106 or 2106EZ to Schedule
A, Form l040, and are subject to a limit based on 2% of adjusted
gross income. Refer to Topic 508 for information on the 2% limit.
If you do not itemize your deductions, you cannot deduct these
expenses. If you are selfemployed, travel expenses are
deductible on Schedule C, CEZ, or, if you are a farmer,
Schedule F, Form 1040 (PDF).
Good records are essential. Refer to Topic 305 for
information on record keeping.
For more information on travel expenses, refer to Publication
463, Travel, Entertainment, Gift and Car Expenses. If you are
a member of the National Guard or military reserve you may be
able to claim a deduction from income rather than an itemized
deduction on Schedule A, Form 1040, for unreimbursed travel expense.
To qualify the travel must be overnight, more than 100 miles
from your home, and for drill or meeting. Expenses must be ordinary
This deduction is limited to the regular federal per diem
rate (for lodging, meals, and incidental expenses) and the standard
mileage rate (for car expenses) plus any parking fees, ferry
fees, and tolls. These expenses are claimed on Form 2106/2106EZ
and carried to line 24 of Form 1040. Expenses in excess of the
limit can be claimed only as an itemized deduction on Schedule
For more information, visit the IRS Website and search "travel deductions."
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