How to Travel – and Write Off Your Expenses

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It seems to be expense week here at TaxLoopholes. As I’ve already done meals and home office, I thought I’d share the rules for deducting your business travel expenses.

If you travel within the United States, your travel expenses are fully deductible, as long as you do business on the first and the last days of your trip. Those expenses could include airfare, gas, taxi and train fares, travel insurance, hotel accommodation, and more. The business you conduct needs to be more than a single telephone call each day, and it is best to try and document that you conducted business every day of your trip, even if you also spend part of each day doing personal things. That documentation might include keeping a log of stores or other places that you have visited looking for merchandise, and any other business-related activities that you conduct – which could include stopping at an Internet café to check your business email and web sales status.

If you are traveling outside the United States, you can deduct a percentage of your overall expenses that are equivalent to the number of days of your trip you spent on business. For example, if you headed to Mexico for seven days and spent three of them browsing Mexican artisan markets for goods to resell, you could deduct about 42 percent of your travel expenses.

If you are combining your business trip with some personal time, the things that you do on your own time are considered your own expense. For example, you can’t make a business stop on your way to Disneyland, and then claim the cost of entry into Disneyland as an expense. Sometimes you can claim items such as dry cleaning or the cost of a haircut as a legitimate business travel expense, but you must prove that you had a valid business intention for that day, and that the costs you incurred were relevant to your business purpose. Clothing itself is usually a nondeductible item, unless you can prove that the clothing was necessary for your business purpose. So if you were being interviewed on TV about the secret behind your great business success and decided to purchase a new suit or outfit for the taping, those costs (along with the costs for hair cutting or styling, makeup, and jewelry) could be considered legitimate business deductions.

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