Business Strategies

Business travel, meals and entertainment generate some of the most scrutinized deductions on a return. These answers cover the durable rules; specific rates and percentages change, so confirm current figures with us or at irs.gov.

What makes travel deductible?

Generally you must be traveling away from your tax home overnight, or long enough that you need rest, for a business purpose. Transportation, lodging and incidental costs can qualify. Commuting between home and your regular workplace does not.

What if I mix business and personal travel?

Costs of getting to a destination are generally deductible only if the trip is primarily for business. Expenses at the destination for the business days are deductible, while personal days are not. Keep a record of how each day was spent.

Can I deduct meals?

Business meals can be deductible, but often only a portion of the cost, and the rules have changed several times in recent years. The meal must be ordinary and necessary, not lavish, and you should be able to show the business purpose and who attended.

What about entertainment?

Entertainment expenses such as tickets to events are generally not deductible under current federal law, even if you discuss business. Check the latest rules before you assume a particular expense qualifies, as the details matter.

What records do I need?

For travel and meals, record the amount, date, place, business purpose and, for meals, the people present. Keep receipts for larger items. A calendar note or an expense app makes this simple if you update it at the time.

Can I use a per diem instead of actual costs?

Some taxpayers may use IRS per diem rates for lodging and meals, which simplifies recordkeeping. You still need to document the time, place and purpose of the travel. Eligibility and rates vary, so ask us.

Are these rules the same for employees?

Not exactly. Employees who are reimbursed under an accountable plan are not taxed on the reimbursement. Unreimbursed employee expenses are generally not deductible on a federal return under current law, though self-employed people can deduct them.

If you travel often for work, talk with us about how to track expenses so that you capture every deduction you are entitled to.