For many people, tax season is a time of dread. It is only understandable that you should want to take advantage of as many tax deductions as possible. If you travel for business, then you might be surprised to find that you qualify for a wide array of expense deductions. Here are some guidelines:
Business Travel Costs
According to the IRS, business travel costs encompass expenses that you incur while traveling for business-only purposes. These include transportation, fuel, meals, overnight accommodations, laundry/dry cleaning, tips, tolls and other travel fares, business communications (calls, faxes, etc.), shipment of your baggage and work supplies/equipment, and more. In some cases, you may even deduct expenses related to traveling for a job search.
Travel and Your Tax Home
Now that you have an understanding of what kinds of business travel costs may be deducted, it is important that you also consider what the IRS considers “travel.” Business travel is defined by the IRS as “traveling away from your home for your business, profession, or job.” When the IRS refers to your “home,” the exact terminology to keep in mind is your tax home. Your tax home is actually the city (or general district/area) where your place of occupation is located–not where you live. Any business-related travel that takes you outside of your tax home for an extended period of time in which you would understandably have to eat and/or sleep is time in which you may deduct your expenses.
There are circumstances in which it might be more difficult to determine what you may and may not deduct. For example, if you work in two or more separate offices, your tax home may be hard to define; additionally, the length of your foreseeable employment at one particular location (temporary work versus indefinitely ongoing work, for example) may determine what qualifies as travel. A good rule of thumb is to use time as the primary deductible determinant: The place you spend the most time is your tax home, and a temp job that is expected to continue for a long time (more than a year) generally won’t qualify for travel expenses if you must commute to it.
How to File for Business Travel Tax Deductions
Although determining which expenses qualify as deductibles may require some careful consideration, filing for deductions for your business travel is actually quite simple. Depending on what your exact circumstances are, you may either need to file IRS form 2106 or 2106-EZ along with Schedule A of your 1040. You can find all three of these IRS guides and forms on the IRS website (IRS.gov), along with instructions for filling them out and advice on which form is the right one for your needs.
You shouldn’t have to take money out of your own pocket to fulfill travel needs for work. Consider these guidelines the next time you travel for business, and be sure to take advantage of all the deductions available to you.