How to Write Off Travel and Entertainment Expenses

This article will help you narrow down the information available on how to best write off travel and entertainment expenses on your taxes as a small business owner.

How to Write Off Travel and Entertainment Expenses: Business Travel Expenses

Overnight travel expenses, as a small business owner, are eligible for tax deductions! According to tax codes, your “home” is  classified as the place where your business is located. The following are the standard rules on what you are able to deduct (please note : international laws may be different!).

– Transportation : As long as you’ve chosen an appropriate option, you are able to write your transportation expense off on your taxes.  First class may count, for instance, but only if justifiable and for business purposes only.

– Meals : 50% of your meals while on a business trip are deductible, including taxes and tip. If you will be paying for a business client, you must document what business you discussed in order to pass an audit. If you don’t want to document every meal related expense, the IRS offers the option to deduct a set amount of meals for the day (if you are traveling in the United States). Check to see what that amount is – it can vary year to year.

– Lodging : You can deduct 50% of all lodging expenses if an overnight stay is required. You may only deduct the cost of a single room, even with traveling with a partner.

 – Other expenses : Shipping baggage, dry cleaning and business calls may also be deducted.

How to Write Off Travel and Entertainment Expenses: Entertainment

Entertainment expenses may be written off (up to 50%) as long as they are “directly related (meaning the main purpose was for the conduct of business in a business setting and that you expect to make money or achieve another business purpose)” or “associated” to your business. You might not be talking business during the entertainment but you must have either directly before or directly after. Below is a list of expenses you are allowed to deduct.

 – Dues to Civic Organizations : Chamber of Commerce, etc. Country club and other service organizations are non-deductible.

– Meals : You may also deduct spouse’s meals if there is a clear reason to do so. You may only deduct them as an entertainment related expense if you haven’t already used them as a business expense.

– Tickets : You may deduct face value only (taxes and service fees are not deductible)

The most important thing to remember is to document everything. Keep receipts, write down who you spoke to and what you spoke about and how it relates to your business. You must also, according to the IRS, keep a written or electronic log (replacing a traditional expense report). This should include time, place, amount and how it relates to your business. It’s also very important to stay on top of all applicable IRS tax laws, as they may change frequently. Happy traveling!

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