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Before you deduct your travel expenses, it’s important to determine if they are truly business expenses or the IRS will consider it a personal day. There is a fine line between both and understanding the differences will ensure you file your taxes correctly.
To be clear, we are talking about overnight business stays – not day trips. There usually isn’t an issue with day trip expenses, it’s when your travels keep you overnight that there can be a grey area.
Determining if Transportation Days are Deductible
Transportation days aren’t always deductible, even if you go on a business trip. It depends on the circumstances of the travels.
For example, if you take a “detoured” route and there is a more direct route to your destination, you may only count the time it would have taken for a direct route, even if your longer route took you hours or days longer and cost more.
The same is true if you divulge from your original plans. For example, if your business trip takes you to New York, but you stop at other destinations along the way, you can only count the time it would have taken to travel to your destination directly.
Keep in mind, this matters no matter what type of transportation you take. Whether you fly and make a “pit stop” at another destination or you drive and stop at attractions along the way, you can only deduct the expenses that the direct route would have cost.
The Time Spent
Another big determining factor is how long you’re at your destination. If you must travel outside of your normal business area, it doesn’t matter how long the business took – you can write off expenses from the entire day.
But, if the business keeps you within a reasonable distance, you must work at least 50% of the normal workday, so typically working at least 4 hours of an 8-hour day.
Weekends, Holidays, and Interruptions
Sometimes things happen outside of our control. For example, if you must travel for business on a Friday, but your meeting is not until Monday morning, Saturday and Sunday expenses count as your business expenses.
The same is true if you go to a business event, but it gets canceled for reasons outside of your control. You still traveled to the destination and must do what’s necessary to take care of yourself for the day, so the expenses still count.
Final Thoughts
It can feel like a lot of grey area when deciding which expenses will be business write-offs and which won’t.
Contact us today at 714-383-2307 to find out which expenses you can write off. All too often we see clients that don’t take advantage of the expenses they could write off because they don’t feel like business expenses, but in the eyes of the IRS they do count.