While the IRS doesn't offer you tax deductions for taking personal vacations and trips, you can reduce your tax liability if you take a trip for work purposes.
Let's find out under which conditions a trip is tax deductible.
You're traveling away from your tax home
The requirements are that you have to travel away from your tax home, the trip is longer than a regular work day, and you require time to rest to carry out your designated work. Now the question is, which place is your tax home? It's the city where you operate your business, or where your workplace is located. It can be different from the city where your family resides. If you work from multiple locations, your tax home is the place where most of your business is located or the place where you spend the maximum amount of your time while working. However, remember that the weekend trips from your tax home to the city where your family stays are not considered business-related travel, so you cannot write them off.
Temporary project
In case you have to travel away from home for a work assignment, you can claim deductions on your expenses. But the prerequisite is, the duration of the project or the stay has to be less than a year. If it's beyond one year, the duration is considered infinite, and it's not eligible for a write-off.
You're attending a convention
If you travel to attend a seminar or convention related to your line of business, you might be able to claim a deduction for it. The expenses eligible for deduction include the transportation cost, taxi fare, car usage during your stay, lodging at an Airbnb or hotel, meals, business calls, laundry, and other related expenses directly related to a business purpose. Expenses for entertainment purposes are not eligible for a deduction.
Special cases
The IRS has some special provisions for members of the military or the National Guard. The travel expenses (unreimbursed) you incurred while working as a reservist may fall under tax deductions. To be eligible, the place of travel must be at least 100 miles or farther away from your home, and the trip should be overnight. Only ordinary and necessary expenses are allowed for a deduction, such as food, lodging, car expenses, and parking fee, to mention a few.
Visit the IRS website for more details.
As a busy professional, figuring out the nuances of taxation can be tedious and time-consuming. But at the same time, you cannot avoid devising a proper tax plan, as it helps you get the eligible write-offs, save taxes, and prevent hefty cash outgo. If you're not sure how to go about it, our experts at Accountants Now are here to assist you. Contact us today and simplify business tax.
