Business Travel Expenses

Tax Report

Employers ancl employees who travel for business may deduct certain types of travel expenses. Following arc some ge ne ral guide lines.


Business Travel

Generally, the rouncl-trip cost of traveling ["or business is deductible whether the taxpayers stays away from home overnight or not. However, the IRS makes an important distinction between "business transportation" - abroad label that would apply to round -trip travel during the day and "business travel," which includes an overnight stay. For qualifying business travel, the taxpayer is allowed to deduct the entire cost of lodging and incidental expenses (as well as 50% of meal expenses). To qualify for business travel status, the business trip must:

  • Involve overnight travel
  • Be temporary one year or less expect ed to la st
  • Be away from the "tax home" - generally, the taxpayer's principal place of business


To decluct travel expenses, employers may want to first consider implementing an "accountable plan ." Generally, all accountable plan requires that the employee adequately account for the' business expense any unaccounted for advances within a reasonable period of time, Accountable plans benefit both the employee and tle employer because expense reimbursements/advances that are properly accounted for are free of income-tax withholding and the employer's and employee's shares of FICA taxes.

Employees potentially may decluct unreimbursed ordinary and necessary business travel expenses. However this deduction must be taken as an itemized deduction , and only the amount exceeding 2% of adjusted gross income will be deductible.

Employees should be careful to meet the IRS's suhstantiation requirements. generally, employees will be required to retain receipts and keep a logbook recording specific expenss related to business travel. •

2015 Nov Pg 04