Friday, April 2, 2010

Taxes: Properly Deduct Almost Any Documented Business Travel or Entertainment Expenses

It's that time of year again, and - like the rest of us - all of you business travelers out there need to make sure you keep as much of your money as legally possible. With regard to business travel expenses, almost any expense is deductible as long as it is properly supported.  The general rule of thumb is to document the following information for each expense deducted: 1) person; 2) place; 3) purpose; 4) price; and 5) date.  Formal receipts are not always necessary, though generally required for hotel stays, as well as for entertainment or meal expenses over $75.  Here is a brief summary of some general* rules on certain business expenses:

Expense TypeDeduction AvailableFormal Receipt ?
Hotel100% of reasonable totalYes
Business Meal (local)50% (of reasonable total, including tax + tip)If over $75
Business Meal (personal, while traveling)Daily meal allowance amount (was $39-$46 in most of USA)Preferred
Travel (air, auto, train)100% of reasonable totalPreferred
Entertainment50% of expenses "directly related or associated with work"Yes if over $75
Personal Car Mileage100% for work travel (generally can't include normal trip to office)No but must keep written log
Misc.100% of "ordinary and necessary expenses"Preferred

The bottom line is be truthful, be accurate, be reasonable - but also be well aware of the ins and outs of the parts of the tax code which can benefit you.

* This short article is not legal advice, and is not a substitute for consulting with a tax expert.  These rules are general in nature, and may not apply to your situation.