taxation of reimbursed travel expenses

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Tax issues arise when employers pay employee business travel expenses

Employers must determine proper tax treatment for employees.

Most employers pay or reimburse their employees’ expenses when traveling for business. Generally, expenses for transportation, meals, lodging and incidental expenses can be paid or reimbursed by the employer tax-free if the employee is on a short-term trip. However, the tax rules become more complex when the travel is of a longer duration. Sometimes the travel expenses paid or reimbursed by the employer must be treated as taxable compensation to the employee subject to Form W-2 reporting and payroll taxes.

The purpose of this article is to address some of the more common travel arrangements which can result in taxable income to employees for federal tax purposes. Although business travel can also raise state tax issues, those issues are beyond the scope of this article. This article is intended to be only a general overview as the tax consequences to an employee for a given travel arrangement depend on the facts and circumstances of that arrangement.

In the discussion below, it is assumed that all travel expenses are ordinary and necessary and incurred by an employee (or a partner in a partnership) while traveling away from home overnight for the employer’s business. In addition, it is assumed that the expenses are properly substantiated so that the employer knows (1) who incurred the expense; (2) where, when, why and for whom the expense was incurred, and (3) the dollar amount. Employers need to collect this information within a reasonable period of time after an expense is incurred, typically within 60 days.

Certain meal and lodging expenses can fall within a simplified substantiation process called the “per diem” rules (although even these expenses must still meet some of the substantiation requirements). The per diem rules are outside the scope of this article.

One of the key building blocks for the treatment of employee travel expenses is the location of the employee’s “tax home.” Under IRS and court holdings, an employee’s tax home is the employee’s regular place of work, not the employee’s personal residence or family home. Usually the tax home includes the entire city or area in which the regular workplace is located. Generally, only expenses paid or reimbursed by an employer for an employee’s travel away from an employee’s tax home are eligible for favorable tax treatment as business travel expenses.

Travel to a regular workplace

Usually expenses incurred for travel between the employee’s residence and the employee’s regular workplace (tax home) are personal commuting expenses, not business travel. If these expenses are paid or reimbursed by the employer, they are taxable compensation to the employee. This is the case even when an employee is traveling a long distance between the employee’s residence and workplace, such as when an employee takes a new job in a different city. According to the IRS, if it is the employee’s choice to live away from his or her regular workplace (tax home), then the travel expenses between the two locations which are paid or reimbursed by the employer are taxable income to the employee.

Example: Bob’s personal residence is in Chicago, but his regular workplace is in Atlanta. Bob’s employer reimburses him for an apartment in Atlanta plus his transportation expenses between the two cities. Since Atlanta is Bob’s tax home, these travel expenses are personal commuting expenses and the employer’s reimbursement of the expenses is taxable compensation to Bob.

Travel to two regular workplaces

Sometimes an employer requires an employee to consistently work in two business locations because of the needs of the employer’s business. Factors such as where the employee spends the most time, has the most business activity, and earns the highest income determine which is the primary location with the other being the secondary location. The employee’s residence may be in either the primary or the secondary location. In general, the IRS holds that transportation costs between the two locations can be paid or reimbursed by the employer tax-free. In addition, lodging and meals at the location which is away from the employee’s residence can generally be paid or reimbursed tax-free.

Example: Caroline lives in Location A and works at her company headquarters there. Her employer opens a new store in Location B and asks her to handle the day-to-day operations for two years while the store is getting up to speed. But Caroline is also needed at the headquarters so her employer asks her to spend two days a week at the headquarters in Location A and three days a week at the store in Location B. Because the work at each location is driven by a business need of Caroline’s employer, she is treated as having primary and secondary work locations and is not treated as commuting between the two locations. Caroline’s travel between the two locations and her meals and lodging at Location B can be reimbursed tax-free by her employer.

As a practical matter, the employer must carefully consider and be able to support the business need for the employee to routinely go back and forth between two business locations. In cases involving two business locations, the courts have looked at time spent, business conducted and income generated in each location. Merely having an employee “sign in” or “touch down” at a business location near his or her residence is unlikely to satisfy the requirements for having two regular workplaces. Instead, the IRS would likely consider the employee as having only one regular workplace with employer-paid travel between the employee’s residence and the regular workplace being taxable commuting expenses.

Travel when a residence is a regular workplace

In some cases an employer hires an employee to work generally, or only, from the employee’s home, as he or she is not physically needed at an employer location. If the employer requires the employee to work just from his or her residence on a regular basis, does not require or expect the employee to travel to another office on a regular basis, and does not provide office space for the employee elsewhere, then the residence can be the tax home since it is the regular workplace for the employee. When the employee does need to travel away from his or her residence (tax home), the temporary travel expenses can be paid or reimbursed by the employer on a tax-free basis.

Example: Jason is a computer programmer and works out of his home in Indianapolis for an employer in Seattle. He periodically travels to Seattle for meetings with his team. Since Jason has no assigned office space in Seattle and is expected by his employer to work from his home, Jason’s travel expenses to Seattle can be reimbursed by his employer on a tax-free basis.

Travel to a temporary workplace

Sometimes an employer temporarily assigns an employee to work in a location that is far from the employee’s regular workplace, with the expectation that the employee will return to his or her regular workplace at the end of the assignment. In this event, the key question is whether the employee’s tax home moves to the temporary workplace. If the tax home moves to the temporary workplace, the travel expenses between the employee’s residence and the temporary workplace that are paid or reimbursed by the employer are taxable compensation to the employee because they are personal commuting expenses rather than business travel expenses. Whether or not the employee’s tax home moves to the temporary workplace depends on the duration of the assignment and the expecations of the parties.

One year or less . If the assignment is expected to last (and actually does last) one year or less, the employee’s tax home generally does not move to the temporary workplace. Therefore, travel expenses between the employee’s residence and temporary workplace that are paid or reimbursed by the employer are typically tax-free to the employee as business travel.

Example: Janet lives and works in Denver but is assigned by her employer to work in San Francisco for 10 months. She returns to Denver after the 10-month assignment. Janet’s travel expenses associated with her assignment in San Francisco that are reimbursed by her employer are not taxable income to her as they are considered temporary business travel and not personal commuting expenses.

More than one year or indefinite . If the assignment is expected to last more than one year or is for an indefinite period of time, the employee’s tax home generally moves to the temporary workplace. This is the case even if the assignment ends early and actually lasts one year or less. Consequently, travel expenses between the employee’s residence and the temporary workplace that are paid or reimbursed by the employer are taxable compensation to the employee as personal commuting expenses.

Example: Chris lives and works in Dallas but is assigned by his employer to work in Oklahoma City for 15 months before returning to Dallas. Chris’s travel expenses associated with his assignment to Oklahoma City that are reimbursed by his employer are taxable income to him as personal commuting expenses.

One year or less then extended to more than one year . Sometimes an assignment is intended to be for one year or less, but then is extended to more than one year. According to the IRS, the tax home moves from the regular workplace to the temporary workplace at the time of the extension. Therefore, travel expenses incurred between the employee’s residence and the temporary workplace that are paid or reimbursed by the employer are non-taxable business travel expenses until the time of the extension, but are taxable compensation as personal commuting expenses after the extension.

Example: Beth’s employer assigns her to a temporary workplace in January with a realistic expectation that she will return to her regular workplace in September. However, in August, it is clear that the project will take more time so Beth’s assignment is extended to the following March. Once Beth’s employer knows, or has a realistic expectation, that Beth’s work at the temporary location will be for more than one year, changes are needed to the tax treatment of Beth’s travel expenses. Only the travel expenses incurred prior to the extension in August can be reimbursed tax-free; travel expenses incurred and reimbursed after the extension are taxable compensation.

When an employee’s residence and regular workplace are in the same geographic location and the employee is away on a temporary assignment, the employee will often return to the residence for weekends, holidays, etc. Expenses associated with travel while enroute to and from the residence can be paid or reimbursed by an employer tax-free, but only up to the amount that the employee would have incurred if the employee had remained at the temporary workplace instead of traveling home.

Travel to a temporary workplace – Special situations

In order for an employer to treat its payment or reimbursement of travel expenses as tax-free rather than as taxable compensation, the employee’s ties to the regular workplace must be maintained. The employee must expect to return to the regular workplace after the assignment, and actually work in the regular workplace long enough or regularly enough that it remains the employee’s tax home. Special situations arise when an employee’s assignment includes recurring travel to a temporary workplace, continuous temporary workplaces, and breaks in assignments to temporary workplaces.

Recurring travel to a temporary workplace . Although the IRS has not published formal guidance which can be relied on, it has addressed situations where an employee has a regular workplace and a temporary workplace to which the employee expects to travel over more than one year, but only on a sporadic and infrequent basis. Under the IRS guidance, if an employee’s travel to a temporary workplace is (1) sporadic and infrequent, and (2) does not exceed 35 business days for the year, the travel is temporary even though it occurs in more than one year. Consequently, the expenses can be paid or reimbursed by an employer on a tax-free basis as temporary business travel.

Example: Stephanie works in Location A but will travel on an as-needed basis to Location B over the next three years. If Stephanie’s travel to Location B is infrequent and sporadic and does not exceed 35 business days a year, her travel to Location B each year can be reimbursed by her employer on a tax-free basis as temporary business travel.

Continuous temporary workplaces . Sometimes an employee does not have a regular workplace but instead has a series of temporary workplaces. If the employee’s residence cannot qualify as his or her tax home under a three-factor test developed by the IRS, the employee is considered to have no tax home and is “itinerant” for travel reimbursement purposes. In this case, travel expenses paid by the employer generally would be taxable income to the employee.

Example: Patrick originally worked in Location A, but his employer sends him to Location B for eleven months, then assigns Patrick to Location C for another eight months. Patrick will be sent to Location D after Location C with no expectation of returning to Location A. Patrick does not maintain a residence in Location A. Travel expenses paid to Patrick by his employer will likely be taxable income to him.

Breaks between temporary workplaces . In an internal memorandum, the IRS addresses the outcome when an employee has a break in assignments to temporary workplaces. When applying the one-year rule, the IRS notes that a break of three weeks or less is not enough to prevent aggregation of the assignments, but a break of at least seven months would be. Some companies choose to not aggregate assignments when the breaks are shorter than seven months but are considerably longer than three weeks, given the lack of substantive guidance from the IRS on this issue.

Example: Don’s regular workplace is in Location A. Don’s employer sends him to Location B for ten months, back to Location A for eight months, and then to Location B again for four months. Although Don’s time in Location B totals 14 months, since the assignments there are separated by a break of at least seven months, they are not aggregated for purposes of applying the one-year rule. Consequently, the travel expenses associated with each separate assignment to Location B can be reimbursed by the employer on a tax-free basis as temporary business travel since each assignment lasted less than a year.

Conclusion

The tax rules regarding business travel are complex and the tax treatment can vary based on the facts of a situation. Employers must carefully analyze business travel arrangements to determine whether travel expenses that they pay or reimburse are taxable or nontaxable to employees.

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Everything You Need to Know About the Business Travel Tax Deduction

Justin is an IRS Enrolled Agent, allowing him to represent taxpayers before the IRS. He loves helping freelancers and small business owners save on taxes. He is also an attorney and works part-time with the Keeper Tax team.

You don’t have to fly first class and stay at a fancy hotel to claim travel expense tax deductions. Conferences, worksite visits, and even a change of scenery can (sometimes) qualify as business travel.

What counts as business travel?

The IRS does have a few simple guidelines for determining what counts as business travel. Your trip has to be:

Mostly business
An “ordinary and necessary” expense
Someplace far away from your “tax home”

What counts as "mostly business"?

The IRS will measure your time away in days. If you spend more days doing business activities than not, your trip is considered "mostly business". Your travel days are counted as work days.

Special rules for traveling abroad

If you are traveling abroad for business purposes, you trip counts as " entirely for business " as long as you spend less than 25% of your time on personal activities (like vacationing). Your travel days count as work days.

So say you you head off to Zurich for nine days. You've got a seven-day run of conference talks, client meetings, and the travel it takes to get you there. You then tack on two days skiing on the nearby slopes.

Good news: Your trip still counts as "entirely for business." That's because two out of nine days is less than 25%.

What is an “ordinary and necessary” expense?

“Ordinary and necessary” means that the trip:

Makes sense given your industry, and
Was taken for the purpose of carrying out business activities

If you have a choice between two conferences — one in your hometown, and one in London — the British one wouldn’t be an ordinary and necessary expense.

What is your tax home?

A taxpayer can deduct travel expenses anytime you are traveling away from home but depending on where you work the IRS definition of “home” can get complicated.

Your tax home is often — but not always — where you live with your family (what the IRS calls your "family home"). When it comes to defining it, there are two factors to consider:

What's your main place of business, and
How large is your tax home

What's your main place of business?

If your main place of business is somewhere other than your family home, your tax home will be the former — where you work, not where your family lives.

For example, say you:

Live with your family in Chicago, but
Work in Milwaukee during the week (where you stay in hotels and eat in restaurants)

Then your tax home is Milwaukee. That's your main place of business, even if you travel back to your family home every weekend.

How large is your tax home?

In most cases, your tax home is the entire city or general area where your main place of business is located.

The “entire city” is easy to define but “general area” gets a bit tricker. For example, if you live in a rural area, then your general area may span several counties during a regular work week.

Rules for business travel

Want to check if your trip is tax-deductible? Make sure it follows these rules set by the IRS.

1. Your trip should take you away from your home base

A good rule of thumb is 100 miles. That’s about a two hour drive, or any kind of plane ride. To be able to claim all the possible travel deductions, your trip should require you to sleep somewhere that isn’t your home.

2. You should be working regular hours

In general, that means eight hours a day of work-related activity.

It’s fine to take personal time in the evenings, and you can still take weekends off. But you can’t take a half-hour call from Disneyland and call it a business trip.

Here's an example. Let’s say you’re a real estate agent living in Chicago. You travel to an industry conference in Las Vegas. You go to the conference during the day, go out in the evenings, and then stay the weekend. That’s a business trip!

3. The trip should last less than a year

Once you’ve been somewhere for over a year, you’re essentially living there. However, traveling for six months at a time is fine!

For example, say you’re a freelancer on Upwork, living in Seattle. You go down to stay with your sister in San Diego for the winter to expand your client network, and you work regular hours while you’re there. That counts as business travel.

What about digital nomads?

With the rise of remote-first workplaces, many freelancers choose to take their work with them as they travel the globe. There are a couple of requirements these expats have to meet if they want to write off travel costs.

Requirement #1: A tax home

Digital nomads have to be able to claim a particular foreign city as a tax home if they want to write off any travel expenses. You don't have to be there all the time — but it should be your professional home base when you're abroad.

For example, say you've rent a room or a studio apartment in Prague for the year. You regularly call clients and finish projects from there. You still travel a lot, for both work and play. But Prague is your tax home, so you can write off travel expenses.

Requirement #2: Some work-related reason for traveling

As long as you've got a tax home and some work-related reason for traveling, these excursion count as business trips. Plausible reasons include meeting with local clients, or attending a local conference and then extending your stay.

However, if you’re a freelance software developer working from Thailand because you like the weather, that unfortunately doesn't count as business travel.

The travel expenses you can write off

As a rule of thumb, all travel-related expenses on a business trip are tax-deductible. You can also claim meals while traveling, but be careful with entertainment expenses (like going out for drinks!).

Here are some common travel-related write-offs you can take.

🛫 All transportation

Any transportation costs are a travel tax deduction. This includes traveling by airplane, train, bus, or car. Baggage fees are deductible, and so are Uber rides to and from the airport.

Just remember: if a client is comping your airfare, or if you booked your ticket with frequent flier miles, then it isn't deductible since your cost was $0.

If you rent a car to go on a business trip, that rental is tax-deductible. If you drive your own vehicle, you can either take actual costs or use the standard mileage deduction. There's more info on that in our guide to deducting car expenses .

Hotels, motels, Airbnb stays, sublets on Craigslist, even reimbursing a friend for crashing on their couch: all of these are tax-deductible lodging expenses.

🥡 Meals while traveling

If your trip has you staying overnight — or even crashing somewhere for a few hours before you can head back — you can write off food expenses. Grabbing a burger alone or a coffee at your airport terminal counts! Even groceries and takeout are tax-deductible.

One important thing to keep in mind: You can usually deduct 50% of your meal costs. For 2021 and 2022, meals you get at restaurants are 100% tax-deductible. Go to the grocery store, though, and you’re limited to the usual 50%.

{upsell_block}

🌐 Wi-Fi and communications

Wi-Fi — on a plane or at your hotel — is completely deductible when you’re traveling for work. This also goes for other communication expenses, like hotspots and international calls.

If you need to ship things as part of your trip — think conference booth materials or extra clothes — those expenses are also tax-deductible.

👔 Dry cleaning

Need to look your best on the trip? You can write off related expenses, like laundry charges.

{write_off_block}

Travel expenses you can't deduct

Some travel costs may seem like no-brainers, but they're not actually tax-deductible. Here are a couple of common ones to watch our for.

The cost of bringing your child or spouse

If you bring your child or spouse on a business trip, your travel expense deductions get a little trickier. In general, the cost of bring other people on a business trip is considered personal expense — which means it's not deductible.

You can only deduct travel expenses if your child or spouse:

Is an employee,
Has a bona fide business purpose for traveling with you, and
Would otherwise be allowed to deduct the travel expense on their own

Some hotel bill charges

Staying in a hotel may be required for travel purposes. That's why the room charge and taxes are deductible.

Some additional charges, though, won't qualify. Here are some examples of fees that aren't tax-deductible:

Gym or fitness center fees
Movie rental fees
Game rental fees

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Where to claim travel expenses when filing your taxes

If you are self-employed, you will claim all your income tax deduction on the Schedule C. This is part of the Form 1040 that self-employed people complete ever year.

What happens if your business deductions are disallowed?

If the IRS challenges your business deduction and they are disallowed, there are potential penalties. This can happen if:

The deduction was not legitimate and shouldn't have been claimed in the first place, or
The deduction was legitimate, but you don't have the documentation to support it

When does the penalty come into play?

The 20% penalty is not automatic. It only applies if it allowed you to pay substantially less taxes than you normally would. In most cases, the IRS considers “substantially less” to mean you paid at least 10% less.

In practice, you would only reach this 10% threshold if the IRS disqualified a significant number of your travel deductions.

How much is the penalty?

The penalty is normally 20% of the difference between what you should have paid and what you actually paid. You also have to make up the original difference.

In total, this means you will be paying 120% of your original tax obligation: your original obligation, plus 20% penalty.

Justin W. Jones, EA, JD

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Everything You Need to Know About the Business Travel Tax Deduction

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At Keeper, we’re on a mission to help people overcome the complexity of taxes. We’ve provided this information for educational purposes, and it does not constitute tax, legal, or accounting advice. If you would like a tax expert to clarify it for you, feel free to sign up for Keeper. You may also email [email protected] with your questions.

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KPMG report: Taxation of paid or reimbursed travel expenses and determination of employee’s tax home

Issues relating to whether paid or reimbursed travel expenses may be taxable or nontaxable to employees

Issues relating to whether paid or reimbursed travel expenses may be taxable or nontaxable

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In response to the coronavirus (COVID-19) pandemic, organizations across the globe experienced a workplace transformation by expanding and enabling remote work practically overnight. The rise in flexible worksite arrangements presents a challenge to employers that provide them and pay or reimburse employees for business travel because the rules for when reimbursed expenses related to business travel can be excluded from an employee’s compensation are complex, often outdated, and derived from court decisions with very specific facts and circumstances.

Read a May 2023 report * [PDF 431 KB] prepared KPMG LLP tax professionals that discusses the issues relating to whether paid or reimbursed travel expenses may be taxable or nontaxable to employees, focusing in particular on the analysis of the location of an employee’s tax home, including whether a personal residence may be considered a tax home.

*This article originally appeared in Tax Notes Federal (May 1, 2023) and is provided with permission.

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.

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Tax Deductions for Business Travelers

When you are self-employed, you generally can deduct the ordinary and necessary expenses of traveling away from home for business from your income. But before you start listing travel deductions, make sure you understand what the Internal Revenue Service (IRS) means by "home," "business," and "ordinary and necessary expenses."

Ordinary vs. necessary expenses

Business home, not home sweet home, transportation expenses on a business trip are deductible, fees for getting around are deductible, lodging, meals and tips are deductible.

Key Takeaways

Typically, you can deduct travel expenses if they are ordinary (common and accepted in your industry) and necessary (helpful and appropriate for your business).
You can deduct business travel expenses when you are away from both your home and the location of your main place of business (tax home).
Deductible expenses include transportation, baggage fees, car rentals, taxis and shuttles, lodging, tips, and fees.
You can also deduct 50% of either the actual cost of meals or the standard meal allowance, which is based on the federal meals and incidental expense per diem rate.

The IRS defines expense ordinary and necessary expenses this way:

An expense is ordinary if it is common and accepted in your industry
An expense is necessary if it is helpful and appropriate for your business

You can claim business travel expenses when you're away from home but "home" doesn't always mean where your family lives. You also have a tax home—the city where your main place of business is located—which may not be the same as the location of your family home.

For example, if you live in Petaluma, California but your permanent work location is in San Jose where you stay in hotels and eat out during the work week, you typically can't deduct your expenses in San Jose or your transportation home on weekends.

In this situation San Jose is your tax home , so no deductions are permitted for ordinary and necessary expenses there.
Your trips to your home in Petaluma are not mandated by business.

Go by plane, train or bus—the actual cost of the ticket to ride is deductible, as well as any baggage fees. If you have to pay top dollar for a last-minute flight, the high-priced ticket is a business expense, but if you use frequent-flyer miles for a free ticket, the deduction is zero.

If you decide to rent a car to go on a business trip, the car rental is deductible. If you drive your own vehicle, you can usually take actual costs or the IRS standard mileage rate. For 2023 the rate is 65.5 cents per mile. You also can add tolls and parking costs onto your deduction. This amount increases to 67 cents per mile for 2024.

TurboTax Tip: Even if you use the federal meals and incidental expense per diem rates to calculate your deductions, be sure to keep receipts from all your meals and incidental expenses.

Fares for taxis or shuttles can be deducted as business travel expenses. For example, you can deduct the fare or other costs to go to:

Airport or train station
Hotel from the airport or train station
Between your hotel and the work location
Between clients in the area

If you rent a car when you arrive at your destination, the expense is deductible as long as the car is used exclusively for business. If you use it both for business and personal purposes, you can only deduct the portion of the rental used for business.

The IRS allows business travelers to deduct business-related meals and hotel costs, as long as they are reasonable considering the circumstances—not lavish or extravagant.

You would have to eat if you were home, so this might explain why the IRS limits meal deductions to 50% of either the:

Actual cost of the meal
Standard meal allowance

This allowance is based on the federal meals and incidental expense per diem rate that depends on where and when you travel.

Generally, you can deduct 50% of the cost of meals. Alternatively, if you do not incur any meal expenses nor claim the standard meal allowance, you can deduct the amount of $5 per day for incidental expenses. You can also deduct incidental expenses, such as:

Fees and tips given to hotel staff
Fees for porters and baggage carriers

But don't forget to keep track of the actual costs.

Let a local tax expert matched to your unique situation get your taxes done 100% right with TurboTax Live Full Service . Your expert will uncover industry-specific deductions for more tax breaks and file your taxes for you. Backed by our Full Service Guarantee . You can also file taxes on your own with TurboTax Premium . We’ll search over 500 deductions and credits so you don’t miss a thing.

Get unlimited advice, an expert final review and your maximum refund, guaranteed .

~37% of taxpayers qualify. Form 1040 + limited credits only .

Looking for more information?

Related articles, more in jobs and career.

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.

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What Are Travel Expenses?

Understanding travel expenses, the bottom line.

Deductions & Credits
Tax Deductions

Travel Expenses Definition and Tax Deductible Categories

Michelle P. Scott is a New York attorney with extensive experience in tax, corporate, financial, and nonprofit law, and public policy. As General Counsel, private practitioner, and Congressional counsel, she has advised financial institutions, businesses, charities, individuals, and public officials, and written and lectured extensively.

For tax purposes, travel expenses are costs associated with traveling to conduct business-related activities. Reasonable travel expenses can generally be deducted from taxable income by a company when its employees incur costs while traveling away from home specifically for business. That business can include conferences or meetings.

Key Takeaways

Travel expenses are tax-deductible only if they were incurred to conduct business-related activities.
Only ordinary and necessary travel expenses are deductible; expenses that are deemed unreasonable, lavish, or extravagant are not deductible.
The IRS considers employees to be traveling if their business obligations require them to be away from their "tax home” substantially longer than an ordinary day's work.
Examples of deductible travel expenses include airfare, lodging, transportation services, meals and tips, and the use of communications devices.

Travel expenses incurred while on an indefinite work assignment that lasts more than one year are not deductible for tax purposes.

The Internal Revenue Service (IRS) considers employees to be traveling if their business obligations require them to be away from their "tax home" (the area where their main place of business is located) for substantially longer than an ordinary workday, and they need to get sleep or rest to meet the demands of their work while away.

Well-organized records—such as receipts, canceled checks, and other documents that support a deduction—can help you get reimbursed by your employer and can help your employer prepare tax returns. Examples of travel expenses can include:

Airfare and lodging for the express purpose of conducting business away from home
Transportation services such as taxis, buses, or trains to the airport or to and around the travel destination
The cost of meals and tips, dry cleaning service for clothes, and the cost of business calls during business travel
The cost of computer rental and other communications devices while on the business trip

Travel expenses do not include regular commuting costs.

Individual wage earners can no longer deduct unreimbursed business expenses. That deduction was one of many eliminated by the Tax Cuts and Jobs Act of 2017.

While many travel expenses can be deducted by businesses, those that are deemed unreasonable, lavish, or extravagant, or expenditures for personal purposes, may be excluded.

Types of Travel Expenses

Types of travel expenses can include:

Personal vehicle expenses
Taxi or rideshare expenses
Airfare, train fare, or ferry fees
Laundry and dry cleaning
Business meals
Business calls
Shipment costs for work-related materials
Some equipment rentals, such as computers or trailers

The use of a personal vehicle in conjunction with a business trip, including actual mileage, tolls, and parking fees, can be included as a travel expense. The cost of using rental vehicles can also be counted as a travel expense, though only for the business-use portion of the trip. For instance, if in the course of a business trip, you visited a family member or acquaintance, the cost of driving from the hotel to visit them would not qualify for travel expense deductions .

The IRS allows other types of ordinary and necessary expenses to be treated as related to business travel for deduction purposes. Such expenses can include transport to and from a business meal, the hiring of a public stenographer, payment for computer rental fees related to the trip, and the shipment of luggage and display materials used for business presentations.

Travel expenses can also include operating and maintaining a house trailer as part of the business trip.

Can I Deduct My Business Travel Expenses?

Business travel expenses can no longer be deducted by individuals.

If you are self-employed or operate your own business, you can deduct those "ordinary and necessary" business expenses from your return.

If you work for a company and are reimbursed for the costs of your business travel , your employer will deduct those costs at tax time.

Do I Need Receipts for Travel Expenses?

Yes. Whether you're an employee claiming reimbursement from an employer or a business owner claiming a tax deduction, you need to prepare to prove your expenditures. Keep a running log of your expenses and file away the receipts as backup.

What Are Reasonable Travel Expenses?

Reasonable travel expenses, from the viewpoint of an employer or the IRS, would include transportation to and from the business destination, accommodation costs, and meal costs. Certainly, business supplies and equipment necessary to do the job away from home are reasonable. Taxis or Ubers taken during the business trip are reasonable.

Unreasonable is a judgment call. The boss or the IRS might well frown upon a bill for a hotel suite instead of a room, or a sports car rental instead of a sedan.

Individual taxpayers need no longer fret over recordkeeping for unreimbursed travel expenses. They're no longer tax deductible by individuals, at least until 2025 when the provisions in the latest tax reform package are due to expire or be extended.

If you are self-employed or own your own business, you should keep records of your business travel expenses so that you can deduct them properly.

Internal Revenue Service. " Topic No. 511, Business Travel Expenses ."

Internal Revenue Service. " Publication 463, Travel, Gift, and Car Expenses ," Page 13.

Internal Revenue Service. " Publication 5307, Tax Reform Basics for Individuals and Families ," Page 7.

Internal Revenue Service. " Publication 463, Travel, Gift, and Car Expenses ," Pages 6-7, 13-14.

Internal Revenue Service. " Publication 463, Travel, Gift, and Car Expenses ," Page 4.

Internal Revenue Service. " Publication 5307, Tax Reform Basics for Individuals and Families ," Pages 5, 7.

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How to Deduct Travel Expenses (with Examples)

Reviewed by

November 3, 2022

This article is Tax Professional approved

Good news: most of the regular costs of business travel are tax deductible.

Even better news: as long as the trip is primarily for business, you can tack on a few vacation days and still deduct the trip from your taxes (in good conscience).

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Even though we advise against exploiting this deduction, we do want you to understand how to leverage the process to save on your taxes, and get some R&R while you’re at it.

Follow the steps in this guide to exactly what qualifies as a travel expense, and how to not cross the line.

The travel needs to qualify as a “business trip”

Unfortunately, you can’t just jump on the next plane to the Bahamas and write the trip off as one giant business expense. To write off travel expenses, the IRS requires that the primary purpose of the trip needs to be for business purposes.

Here’s how to make sure your travel qualifies as a business trip.

1. You need to leave your tax home

Your tax home is the locale where your business is based. Traveling for work isn’t technically a “business trip” until you leave your tax home for longer than a normal work day, with the intention of doing business in another location.

2. Your trip must consist “mostly” of business

The IRS measures your time away in days. For a getaway to qualify as a business trip, you need to spend the majority of your trip doing business.

For example, say you go away for a week (seven days). You spend five days meeting with clients, and a couple of days lounging on the beach. That qualifies as business trip.

But if you spend three days meeting with clients, and four days on the beach? That’s a vacation. Luckily, the days that you travel to and from your location are counted as work days.

3. The trip needs to be an “ordinary and necessary” expense

“Ordinary and necessary ” is a term used by the IRS to designate expenses that are “ordinary” for a business, given the industry it’s in, and “necessary” for the sake of carrying out business activities.

If there are two virtually identical conferences taking place—one in Honolulu, the other in your hometown—you can’t write off an all-expense-paid trip to Hawaii.

Likewise, if you need to rent a car to get around, you’ll have trouble writing off the cost of a Range Rover if a Toyota Camry will get you there just as fast.

What qualifies as “ordinary and necessary” can seem like a gray area at times, and you may be tempted to fudge it. Our advice: err on the side of caution. if the IRS chooses to investigate and discovers you’ve claimed an expense that wasn’t necessary for conducting business, you could face serious penalties .

4. You need to plan the trip in advance

You can’t show up at Universal Studios , hand out business cards to everyone you meet in line for the roller coaster, call it “networking,” and deduct the cost of the trip from your taxes. A business trip needs to be planned in advance.

Before your trip, plan where you’ll be each day, when, and outline who you’ll spend it with. Document your plans in writing before you leave. If possible, email a copy to someone so it gets a timestamp. This helps prove that there was professional intent behind your trip.

The rules are different when you travel outside the United States

Business travel rules are slightly relaxed when you travel abroad.

If you travel outside the USA for more than a week (seven consecutive days, not counting the day you depart the United States):

You must spend at least 75% of your time outside of the country conducting business for the entire getaway to qualify as a business trip.

If you travel outside the USA for more than a week, but spend less than 75% of your time doing business, you can still deduct travel costs proportional to how much time you do spend working during the trip.

For example, say you go on an eight-day international trip. If you spend at least six days conducting business, you can deduct the entire cost of the trip as a business expense—because 6 is equivalent to 75% of your time away, which, remember, is the minimum you must spend on business in order for the entire trip to qualify as a deductible business expense.

But if you only spend four days out of the eight-day trip conducting business—or just 50% of your time away—you would only be able to deduct 50% of the cost of your travel expenses, because the trip no longer qualifies as entirely for business.

List of travel expenses

Here are some examples of business travel deductions you can claim:

Plane, train, and bus tickets between your home and your business destination
Baggage fees
Laundry and dry cleaning during your trip
Rental car costs
Hotel and Airbnb costs
50% of eligible business meals
50% of meals while traveling to and from your destination

On a business trip, you can deduct 100% of the cost of travel to your destination, whether that’s a plane, train, or bus ticket. If you rent a car to get there, and to get around, that cost is deductible, too.

The cost of your lodging is tax deductible. You can also potentially deduct the cost of lodging on the days when you’re not conducting business, but it depends on how you schedule your trip. The trick is to wedge “vacation days” in between work days.

Here’s a sample itinerary to explain how this works:

Thursday: Fly to Durham, NC. Friday: Meet with clients. Saturday: Intermediate line dancing lessons. Sunday: Advanced line dancing lessons. Monday: Meet with clients. Tuesday: Fly home.

Thursday and Tuesday are travel days (remember: travel days on business trips count as work days). And Friday and Monday, you’ll be conducting business.

It wouldn’t make sense to fly home for the weekend (your non-work days), only to fly back into Durham for your business meetings on Monday morning.

So, since you’re technically staying in Durham on Saturday and Sunday, between the days when you’ll be conducting business, the total cost of your lodging on the trip is tax deductible, even if you aren’t actually doing any work on the weekend.

It’s not your fault that your client meetings are happening in Durham—the unofficial line dancing capital of America .

Meals and entertainment during your stay

Even on a business trip, you can only deduct a portion of the meal and entertainment expenses that specifically facilitate business. So, if you’re in Louisiana closing a deal over some alligator nuggets, you can write off 50% of the bill.

Just make sure you make a note on the receipt, or in your expense-tracking app , about the nature of the meeting you conducted—who you met with, when, and what you discussed.

On the other hand, if you’re sampling the local cuisine and there’s no clear business justification for doing so, you’ll have to pay for the meal out of your own pocket.

Meals and entertainment while you travel

While you are traveling to the destination where you’re doing business, the meals you eat along the way can be deducted by 50% as business expenses.

This could be your chance to sample local delicacies and write them off on your tax return. Just make sure your tastes aren’t too extravagant. Just like any deductible business expense, the meals must remain “ordinary and necessary” for conducting business.

How Bench can help

Surprised at the kinds of expenses that are tax-deductible? Travel expenses are just one of many unexpected deductible costs that can reduce your tax bill. But with messy or incomplete financials, you can miss these tax saving expenses and end up with a bigger bill than necessary.

Enter Bench, America’s largest bookkeeping service. With a Bench subscription, your team of bookkeepers imports every transaction from your bank, credit cards, and merchant processors, accurately categorizing each and reviewing for hidden tax deductions. We provide you with complete and up-to-date bookkeeping, guaranteeing that you won’t miss a single opportunity to save.

Want to talk taxes with a professional? With a premium subscription, you get access to unlimited, on-demand consultations with our tax professionals. They can help you identify deductions, find unexpected opportunities for savings, and ensure you’re paying the smallest possible tax bill. Learn more .

Bringing friends & family on a business trip

Don’t feel like spending the vacation portion of your business trip all alone? While you can’t directly deduct the expense of bringing friends and family on business trips, some costs can be offset indirectly.

Driving to your destination

Have three or four empty seats in your car? Feel free to fill them. As long as you’re traveling for business, and renting a vehicle is a “necessary and ordinary” expense, you can still deduct your business mileage or car rental costs even when others join you for the ride.

One exception: If you incur extra mileage or “unnecessary” rental costs because you bring your family along for the ride, the expense is no longer deductible because it isn’t “necessary or ordinary.”

For example, let’s say you had to rent an extra large van to bring your children on a business trip. If you wouldn’t have needed to rent the same vehicle to travel alone, the expense of the extra large van no longer qualifies as a business deduction.

Renting a place to stay

Similar to the driving expense, you can only deduct lodging equivalent to what you would use if you were travelling alone.

However, there is some flexibility. If you pay for lodging to accommodate you and your family, you can deduct the portion of lodging costs that is equivalent to what you would pay only for yourself .

For example, let’s say a hotel room for one person costs $100, but a hotel room that can accommodate your family costs $150. You can rent the $150 option and deduct $100 of the cost as a business expense—because $100 is how much you’d be paying if you were staying there alone.

This deduction has the potential to save you a lot of money on accommodation for your family. Just make sure you hold on to receipts and records that state the prices of different rooms, in case you need to justify the expense to the IRS

Heads up. When it comes to AirBnB, the lines get blurry. It’s easy to compare the cost of a hotel room with one bed to a hotel room with two beds. But when you’re comparing significantly different lodgings, with different owners—a pool house versus a condo, for example—it becomes hard to justify deductions. Sticking to “traditional” lodging like hotels and motels may help you avoid scrutiny during an audit. And when in doubt: ask your tax advisor.

So your trip is technically a vacation? You can still claim any business-related expenses

The moment your getaway crosses the line from “business trip” to “vacation” (e.g. you spend more days toasting your buns than closing deals) you can no longer deduct business travel expenses.

Generally, a “vacation” is:

A trip where you don’t spend the majority of your days doing business
A business trip you can’t back up with correct documentation

However, you can still deduct regular business-related expenses if you happen to conduct business while you’re on vacay.

For example, say you visit Portland for fun, and one of your clients also lives in that city. You have a lunch meeting with your client while you’re in town. Because the lunch is business related, you can write off 50% of the cost of the meal, the same way you would any other business meal and entertainment expense . Just make sure you keep the receipt.

Meanwhile, the other “vacation” related expenses that made it possible to meet with this client in person—plane tickets to Portland, vehicle rental so you could drive around the city—cannot be deducted; the trip is still a vacation.

If your business travel is with your own vehicle

There are two ways to deduct business travel expenses when you’re using your own vehicle.

Actual expenses method
Standard mileage rate method

Actual expenses is where you total up the actual cost associated with using your vehicle (gas, insurance, new tires, parking fees, parking tickets while visiting a client etc.) and multiply it by the percentage of time you used it for business. If it was 50% for business during the tax year, you’d multiply your total car costs by 50%, and that’d be the amount you deduct.

Standard mileage is where you keep track of the business miles you drove during the tax year, and then you claim the standard mileage rate .

The cost of breaking the rules

Don’t bother trying to claim a business trip unless you have the paperwork to back it up. Use an app like Expensify to track business expenditure (especially when you travel for work) and master the art of small business recordkeeping .

If you claim eligible write offs and maintain proper documentation, you should have all of the records you need to justify your deductions during a tax audit.

Speaking of which, if your business is flagged to be audited, the IRS will make it a goal to notify you by mail as soon as possible after your filing. Usually, this is within two years of the date for which you’ve filed. However, the IRS reserves the right to go as far back as six years.

Tax penalties for disallowed business expense deductions

If you’re caught claiming a deduction you don’t qualify for, which helped you pay substantially less income tax than you should have, you’ll be penalized. In this case, “substantially less” means the equivalent of a difference of 10% of what you should have paid, or $5,000—whichever amount is higher.

The penalty is typically 20% of the difference between what you should have paid and what you actually paid in income tax. This is on top of making up the difference.

Ultimately, you’re paying back 120% of what you cheated off the IRS.

If you’re slightly confused at this point, don’t stress. Here’s an example to show you how this works:

Suppose you would normally pay $30,000 income tax. But because of a deduction you claimed, you only pay $29,000 income tax.

If the IRS determines that the deduction you claimed is illegitimate, you’ll have to pay the IRS $1200. That’s $1000 to make up the difference, and $200 for the penalty.

Form 8275 can help you avoid tax penalties

If you think a tax deduction may be challenged by the IRS, there’s a way you can file it while avoiding any chance of being penalized.

File Form 8275 along with your tax return. This form gives you the chance to highlight and explain the deduction in detail.

In the event you’re audited and the deduction you’ve listed on Form 8275 turns out to be illegitimate, you’ll still have to pay the difference to make up for what you should have paid in income tax—but you’ll be saved the 20% penalty.

Unfortunately, filing Form 8275 doesn’t reduce your chances of being audited.

Where to claim travel expenses

If you’re self-employed, you’ll claim travel expenses on Schedule C , which is part of Form 1040.

When it comes to taking advantage of the tax write-offs we’ve discussed in this article—or any tax write-offs, for that matter—the support of a professional bookkeeping team and a trusted CPA is essential.

Accurate financial statements will help you understand cash flow and track deductible expenses. And beyond filing your taxes, a CPA can spot deductions you may have overlooked, and represent you during a tax audit.

Learn more about how to find, hire, and work with an accountant . And when you’re ready to outsource your bookkeeping, try Bench .

Join over 140,000 fellow entrepreneurs who receive expert advice for their small business finances

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Tax Resources for Accountants and Small Businesses (U.S.)

Expense Reimbursements / IRS / Meals and Incidental Expenses / Mileage / Payroll / Per Diem Rates / Small business
Complete Guide to Reimbursing Employees for Travel Expenses

Published September 2, 2020 · Updated April 21, 2021

When an employee travels away from the office and incurs expenses, the company should reimburse them. Whether travelling across the world or just driving their car to a client’s location, getting the reimbursement right isn’t hard.

Keep reading to learn how to make proper employee reimbursements.

Accountable Plans

You’ll first need to decide if you will implement an accountable or nonaccountable plan. This is just as it sounds; either you’ll have employees be accountable for business expense reimbursements or not.

All businesses should have an expense reimbursement plan in writing. This includes corporations, sole proprietors, the self-employed, and non-profits. Non-profits should be extremely careful when reimbursing disqualified persons because nonaccountable plan reimbursements not properly approved or recorded can cause significant tax exposure to the charitable organization.

An accountable plan must follow the IRS guidelines for expense reimbursement. To qualify, the following rules must be met:

Expenses must be for business purposes.
Expenses must be adequately reported to the company in reasonable time.
Any excess reimbursement or allowance must be returned in a reasonable amount of time.

Any expense that doesn’t meet these three criteria is considered a reimbursement under a nonaccountable plan.

This distinction between these two types of plans is important because accountable plan reimbursements are not taxable to the employee, whereas nonaccountable plans are taxable.

Business Purpose

Expenses incurred as an employee while completing work for an employer have a business purpose. Examples include things like registration fees for a conference, taxi rides to the airport for a business trip, or meals while away on a business trip.

If however, an employer reimburses an employee for dinner when the employee works late, this does not qualify as a business purpose. This reimbursement would be taxable to the employee because it was made under a nonaccountable plan.

Reporting in a Reasonable Time

While what is considered a reasonable amount of time is subjective, the general rule is that all reimbursable expenses must be submitted within 60 days of when they were incurred.

Adequate reporting involves providing a record, like an expense report, of all expenses incurred and providing evidence, like receipts, to support the expenses.

Excess Reimbursement

If an employee receives a travel advance to cover travel expenses but spends less than the advance, the difference is an excess reimbursement and must be returned to the employer to not be taxable. If the excess isn’t returned in a reasonable amount of time, it’s taxable.

A reasonable period of time in this instance is generally deemed to be within 120 days of when the expense was incurred.

With a travel advance, employees should submit an expense report and receipts to substantiate all expenses.

Mileage and Business Use of Personal Vehicle

When an employee uses their personal vehicle for company business, you’ll need to reimburse them. You have three options.

Standard mileage rate
Actual costs
Monthly allowance

Standard Mileage Rate

If you use the standard mileage rate, it is 57.5 cents per mile for 2020.

You can pay more, but the IRS’ safe-harbor threshold of 57.5 cents per mile will allow you a tax deduction without having to substantiate the rate.

Note that the IRS typically updates rates in December. So, you can expect to see the 2021 rate announced in December 2020. IRS 2021 Mileage Rates are here.

IRS Standard Mileage Rates 2020

Actual Costs

Instead of using the standard rate, you can reimburse employees for actual expenses.

The employee will sum up all the costs of owning the vehicle including everything from fuel, maintenance, tolls, registration, and insurance. And based upon the percentage of business miles driven, that portion of the total actual costs is reimbursed.

Monthly Allowance

Using the monthly allowance method is relatively easy. Each month you provide a set dollar amount to the employee.

If you require the employee to provide a mileage log at the end of the month, this will determine if any part of the allowance is taxable. If no mileage log is required, the entire allowance is taxable under an unaccountable plan.

If a mileage log is provided and the employee drove less than expected, they should return the excess allowance within 30 days. If they don’t, the excess becomes taxable to them.

An employee’s commute from their home to their normal place of business is not a reimbursable expense. Any business miles driven in excess of the commute miles is reimbursable.

For example, an employee’s normal round-trip commute is 20 miles. On Fridays, the employee works on-site at a client’s office that is 30 miles away from the employee’s home. So, the employee drives 60 miles round-trip on Fridays. Since this is longer than he would drive if he commuted to the office, you’ll want to reimburse the employee for 40 miles (60 miles – 20 miles).

Mileage Logs

Employees should keep mileage logs when using a personal vehicle for business use. The log should include:

Employee’s name
Description of vehicle
Date of business use
Purpose of business use
Starting mileage on odometer
Ending mileage on odometer
Approval authorization

Here’s an example of a mileage log using Microsoft Excel.

Mileage log and expense report – employee reimbursement

Note that in this example, the employee drove from the office to a client and then back to the office. Therefore, there is no need to deduct commuting mileage.

But suppose, like in our example from above, that on Fridays the employee drives from home to the client’s location and back home. His mileage log would look like this:

Mileage log and expense report example – employee reimbursement

But what if in this example, the drive to the client’s office from the employee’s home was shorter than his regular commute? In this case there is nothing to reimburse and the employee enjoys the benefit of less driving.

What would happen if this same employee didn’t normally work on Fridays or he always worked from home on Fridays? Then the entire drive to the client’s office would be reimbursable since the employee’s normal work schedule didn’t require him to commute on Fridays.

Many employees will forget to deduct their normal commute from mileage reimbursement requests. You’ll want to remind them.

Direct Expense Reimbursement of Travel Expenses

For employees who travel frequently, providing them with a company credit card is ideal. But for those times when an employee must use their own money for business expenses, you’ll want to reimburse employees quickly.

For easy recordkeeping, have employees complete expense reports when seeking reimbursements. Like the mileage log, it will detail who incurred the expense and when, what it was for, and the amount.

You can reimburse your employees with cash; however best practices would be to pay with check or some other trackable means, like ACH.

Here’s an example of an easy expense report in Excel.

Travel expense report - employee reimbursement

Travel expense report example – employee reimbursement

For each expense, the employee should include receipts to support the amounts requested.

Receipts for purchases should contain the amount, date, place, and a brief description of the expense.

For example, hotel receipts should include:

The name and location of the hotel.
The dates stayed.
Separate amounts for charges (i.e. lodging, meals, or food).

Restaurant and meal receipts should include:

The name and location of the restaurant.
The names of people in attendance.
The date and amount of the meal.

You may choose to reimburse employees for meal tips. Be sure to have a clear policy of what will be reimbursed and what will not. For example, you’ll reimburse up to 20% for tips. Anything above that will not be reimbursed.

You’ll also need to consider your policy for lost receipts. You can still reimburse but have the employee fill out a missing receipt form to document the expense.

In lieu of direct expense reimbursement, consider using a per diem.

A per diem provides the employee with a specified dollar amount per day to use on meals, snacks, lodging, or other miscellaneous purchases. Larger expenses like airfare would be paid using the direct expense reimbursement method or paid for directly by the company.

Per diems should be prorated for partial days of travel. Acceptable methods include the ¾’s method or any other method you choose that is reasonable. The ¾’s method adds ¾ of a daily per diem rate on departure days and another ¾’s on return days.

The IRS sets per diem rates for cities and metropolitan areas. More expensive locales have higher daily rates than cheaper cities. For example, the daily rate for high cost cities like San Francisco, Vail, Colorado, and Nashville, Tennessee is $297. And many cities are designated high cost for only portions of the year. Miami and Park City, Utah are considered high cost only from December 1 – March 31.

And if you’re not in a high cost city, the daily rate is $200. These per diem rates are often updated each year. So you’ll always want to check for the current rates.

For example, Dave is travelling to Seattle for business. Seattle is a high cost locale. He’s leaving on Monday and returning on Thursday. Seattle’s maximum per diem rate is $297 per day. Dave will receive $222.75 ($297 x ¾) for Monday and Thursday and the full $297 for Tuesday and Wednesday.

Per diems are not taxable income to your employee if you use the IRS rates and your employee provides an expense report with receipts. However, using higher rates will create taxable income for the amount above the federal rate. And not submitting an expense report and receipts will make the entire per diem taxable because you’ll have an unaccountable plan and your company will not have the required receipts to support the tax deduction.

If your business operates in the transportation sector (i.e. shipping, trucking, or rail, etc…), it’s important to note that there are different per diem limits and rules you must follow.

Entertainment Expenses

With the 2017 Tax Cuts and Jobs Act, entertainment expenses are no longer tax deductible for companies.

As an employer, you may still reimburse your employees for entertainment expenses; however, these reimbursements will need to be segregated so that they are not included on your tax return. Examples of entertainment expenses include tickets to entertain clients at sporting events or country club fees for golf memberships.

What documentation you require for entertainment reimbursements is up to you but best practices suggest following the same requirements for travel or mileage reimbursements.

Commingling

If travel or meals involve both a business and personal aspect, only the portion of the expense that is business related is reimbursable. Expense reports and receipts should indicate whether there are any personal expenses.

For example, an employee makes a business trip to California from Georgia and elects to stay two days after business is finished for a mini-vacation. Best practices would have the employee check out of his hotel room and check back in using his personal credit card to pay the hotel bill for his extended stay. This way he has two different receipts; one for business and one for pleasure. However, if he doesn’t do that and the entire hotel stay is charged on the same receipt, you’ll need to back out the charges related to his personal stay.

None of this information should be taken as legal or financial advice, nor should it deter you from seeking the assistance of a licensed attorney, accountant, or financial services professional. But if you want to make sure your company’s policies for employee reimbursements are consistent with best practices, implementing these policies is a great place to start!

Tags: Business Use of Personal Vehicle Commingling Direct Expense Reimbursement employee Commuting reimbursement Employee Expense Reimbursement employee Monthly Allowance employees reimbursements entertainment expenses Excess Reimbursement Expense Reimbursement IRS Accountable Plans IRS Expense Reimbursement Mileage log and expense report Mileage Logs mileage on odometer Per Diem reimbursed expenses Reimbursing Employees Standard Mileage Rate travel expenses

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Building Your Business
Business Taxes

7 Rules You Should Know About Deducting Business Travel Expenses

What Is Your "Tax Home"?

Charges on Your Hotel Bill

The 50% rule for meals, the cost of bringing a spouse, friend or employee.

Using Per Diems To Calculate Employee Travel Costs

Combined Business/Personal Trips

International business travel.

The Cost of a Cruise (Within Limits)

Frequently Asked Questions (FAQs)

Helde Benser / Getty Images

The IRS has a specific definition for business travel when it comes to determining whether these expenses are tax deductible. The agency says business travel is travel that takes you away from your tax home and is "substantially longer than an ordinary day's work." It requires that you sleep or rest while you're away from home, and that you do so. The travel must be "temporary." This means it can't last a year or more.

Key Takeaways

You can deduct expenses that take you away from your tax home for a period of time that would require you to spend the night.
Your tax home is the city or area where your regular place of business is located.
You’re limited to 50% of the cost of your meals.
Your trip must be entirely business-related for costs to be deductible, but special rules apply if you travel outside the U.S.

What Is Your "Tax Home"?

Your tax home is a concept set by the IRS to help determine whether a trip is tax deductible. It's defined by the IRS as the entire city or general area where your regular place of business is located. It's not necessarily the area where you live.

Your tax home can be used to determine whether your business travel expenses are deductible after you've determined where it's located. You can probably count your expenses during travel as business deductions if you have to leave your tax home overnight or if you otherwise need time to rest and sleep while you're away.

Check with a tax professional to make sure you're accurately identifying the location of your tax home.

Charges for your room and associated tax are deductible, as are laundry expenses and charges for phone calls or for use of a fax machine. Tips are deductible as well. But additional personal charges, such as gym fees or fees for movies or games aren't deductible.

You can deduct the cost of meals while you're traveling, but entertainment expenses are no longer deductible and you can't deduct "lavish or extravagant" meals.

Meal costs are deductible at 50%. The 50% limit also applies to taxes and tips. You can use either your actual costs or a standard meal allowance to take a meal cost deduction, as long as it doesn't exceed the 50% limit.

The cost of bringing a spouse, child, or anyone else along on a business trip is considered a personal expense and isn't deductible. But you may be able to deduct travel expenses for the individual if:

The person is an employee
They have a bona fide business purpose for traveling with you
They would otherwise be allowed to deduct travel expenses

You may be able to deduct the cost of a companion's travel if you can prove that the other person is employed by the business and is performing substantial business-related tasks while on the trip. This may include taking minutes at meetings or meeting with business clients.

Using Per Diems To Calculate Employee Travel Costs

The term "per diem" means "per day." Per diems are amounts that are considered reasonable for daily meals and miscellaneous expenses while traveling.

Per diem rates are set for U.S. and overseas travel, and the rates differ depending on the area. They're higher in larger U.S. cities than for sections of the country outside larger metropolitan areas. Companies can set their own per diem rates, but most businesses use the rates set by the U.S. government.

Per diem reimbursements aren't taxable unless they're greater than the maximum rate set by the General Service Administration. The excess is taxable to the employee.

If you don't spend all your time on business activities during an international trip, you can only deduct the business portion of getting to and from the destination. You must allocate costs between business and personal activities.

Your trip must be entirely business-related for you to take deductions for travel costs if you remain in the U.S., but some "incidental" personal time is okay. It would be incidental to the main purpose of your trip if you travel to Dallas for business and you spend an evening with family in the area while you're there.

But attempting to turn a personal trip into a business trip won't work unless the trip is substantially for business purposes. The IRS indicates that “the scheduling of incidental business activities during a trip, such as viewing videotapes or attending lectures dealing with general subjects, will not change what is really a vacation into a business trip."

The rules are different if part or all of your trip takes you outside the U.S. Your international travel may be considered business-related if you were outside the U.S. for more than a week and less than 25% of the time was spent on personal activities.

You can deduct the costs of your entire trip if it takes you outside the U.S. and you spend the entire time on business activities, but you must have "substantial control" over the itinerary. An employee traveling with you wouldn't have control over the trip, but you would as the business owner would.

The trip may be considered entirely for business if you spend less than 25% of the time on personal activities if your trip takes you outside the U.S. for more than a week.

You can only deduct the business portion of getting to and from the destination if you don't spend all your time on business activities during an international trip. You must allocate costs between your business and personal activities.

The Cost of a Cruise (Within Limits)

The cost of a cruise may be deductible up to the specified limit determined by the IRS, which is $2,000 per year as of 2022. You must be able to show that the cruise was directly related to a business event, such as a business meeting or board of directors meeting.

The IRS imposes specific additional strict requirements for deducting cruise travel as a business expense.

How do you write off business travel expenses?

Business travel expenses are entered on Schedule C if you're self-employed . The schedule is filed along with your Form 1040 tax return. It lists all your business income, then you can subtract the cost of your business travel and other business deductions you qualify for to arrive at your taxable income.

What are standard business travel expenses?

Standard business travel expenses include lodging, food, transportation costs , shipping of baggage and/or work items, laundry and dry cleaning, communication costs, and tips. But numerous rules apply so check with a tax professional before you claim them.

The Bottom Line

These tax deduction regulations are complicated, and there are many qualifications and exceptions. Consult with your tax and legal professionals before taking actions that could affect your business.

IRS. " Topic No. 511: Business Travel Expenses ."

IRS. " Publication 463 (2021), Travel, Gift, and Car Expenses ."

IRS. " Here’s What Taxpayers Need To Know About Business-Related Travel Deductions ."

Credits and deductions
Business expenses

Can I deduct travel expenses?

If you’re self-employed or own a business , you can deduct work-related travel expenses, including vehicles, airfare, lodging, and meals. The expenses must be ordinary and necessary.

For vehicle expenses, you can choose between the standard mileage rate or the actual cost method where you track what you paid for gas and maintenance.

You can generally only claim 50% of the cost of your meals while on business-related travel away from your tax home, provided your trip requires an overnight stay. You can also deduct 50% of the cost of meals for entertaining clients (regardless of location), but due to the Tax Cuts and Jobs Act of 2017 (TCJA), you can no longer deduct entertainment expenses in tax years 2018 through 2025. In 2021 and 2022, the law allows a deduction for 100% of your cost of food and beverages that are provided by a restaurant, instead of the usual 50% deduction.

On the other hand, employees can no longer deduct out-of-pocket travel costs in tax years 2018 through 2025 per the TCJA (this does not apply to Armed Forces reservists, qualified performing artists, fee-basis state or local government officials, and employees with impairment-related work expenses). Prior to the tax rule change, employees could claim 50% of the cost of unreimbursed meals while on business-related travel away from their tax home if the trip required an overnight stay, as well as other unreimbursed job-related travel costs. These expenses were handled as a 2% miscellaneous itemized deduction.

Related Information:

Can I deduct medical mileage and travel?
Can I deduct my moving expenses?
Can I deduct rent?
Can I deduct mileage?
Can employees deduct commuting expenses like gas, mileage, fares, and tolls?

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Are Reimbursements Taxable? Guidance on Employee Expense Reimbursement Plans

Sometimes, an employee might pay for a business expense out of their own pocket. When that happens, you can reimburse the employee.

An employee expense reimbursement does come with some complications. Are reimbursements taxable? Do you need to report the reimbursement? Find out below.

What are expense reimbursements?

Reimbursements are a way for you to pay employees back when they spend their own money on business expenses.

Let’s say an employee is driving the company vehicle between client meetings. They stop to refill the gas tank. The employee pays for the gas themselves and asks you for a reimbursement when they return to the business.

Expense reimbursements are common when employees travel for work . They might need to pay for meals, lodging, gas, and entertaining clients.

Are reimbursements taxable?

When you give money to an employee, you typically have to withhold and contribute taxes on the payment. So, are reimbursed expenses taxable? Well, it depends. The IRS expense reimbursement guidelines have two types of plans: accountable and nonaccountable. Whether or not you must withhold taxes depends on the plan used by your business.

You can learn more about expense reimbursements in Publication 15 .

Accountable plan

If your business uses an accountable plan, reimbursements are not taxable. You do not have to withhold or contribute income, FICA , or unemployment taxes.

To have an accountable plan, your employees must meet all three of the following rules:

The employee must have incurred deductible expenses while performing services as your employee. The reimbursement must be a payment for the expense. The reimbursement must not be an amount that would have otherwise been paid to the employee as wages.
The employee must substantiate the amount, time, place, and purpose for the expenses to you within a reasonable period of time.
The employee must return any amount in excess of the substantiated expense. The employee should return the excess within a reasonable amount of time.

What are reasonable amounts of time for the accountable plan? According to the IRS, it is reasonable for you to reimburse employees within 30 days of when they incur the expense. It is reasonable for employees to account for their expenses within 60 days after they incur the expense. Employees should return excess amounts within 120 days of when the expense was incurred.

If your business uses an accountable plan but an employee fails to follow the plan, the expense reimbursement is taxable. For example, if an employee does not return excess amounts within a reasonable amount of time, the excess amounts are taxable.

Because reimbursements under the accountable plan are not wages and are not taxed, you do not have to report the amount. Do not include the amount with the employee’s wages on Form W-2 . Instead, report it in Form W-2 box 12 with code L.

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Nonaccountable plan

If your business uses a nonaccountable plan, you must pay tax on reimbursement of expenses. They are subject to all income, FICA, and unemployment taxes.

You have a nonaccountable plan if:

The employee doesn’t have to substantiate expenses in a timely manner.
The employee isn’t required to return excess amounts within a certain amount of time.
You pay an amount regardless of whether you expect the employee to have a business expense.
You pay an amount you would otherwise pay as wages.

Reimbursements under a nonaccountable plan are wages and are subject to taxes. You must report these wages and deposit taxes on them. Include the reimbursements and taxes on the employee’s Form W-2.

You might reimburse an employee with a per diem rate. Per diem pay is used to reimburse mileage, meals, lodging, and some other fixed allowances.

With per diem payments, the IRS says your employee accounted to you if the reimbursement does not exceed the established per diem rates.

You should include per diem payments in box 12 of Form W-2 using code L.

If your per diem payment exceeds the preset rates, the excess amount is considered wages. You must withhold and contribute taxes on the excess amount. Include the excess per diem amount and taxes on Form W-2.

Do you give taxable reimbursements to employees? Make recordkeeping and tax withholding easier with payroll software . When you sign up with Patriot Software, we’ll give you a free trial, free setup, and free support.

This article has been updated from its original publication date of November 22, 2017.

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Update on the Government Mileage Rates for the year 2024: Changes to GSA Mileage Reimbursement Rates

Richard Laviña, CPA

April 9, 2024

Curious about the GSA mileage rate? Whether you're driving for business or moving purposes, understanding the rate per mile set by the General Services Administration (GSA) can be crucial. Whether you're traveling by automobile or airplane, knowing the applicable mileage rate can help you budget and plan your expenses accordingly. Let's dive into how the GSA mileage rate impacts your travel costs and how you can make the most of it, whether you're hitting the road or taking to the skies.

Want an easier way to file your taxes? Download our FREE tax guide for individual filers.

What are GSA Mileage Reimbursement Rates?

The GSA mileage reimbursement rates refer to the federal mileage allowance rates set by the General Services Administration in the United States. These rates are established to determine the reimbursement for officially authorized travel by federal employees using privately owned vehicles (POV) for government business purposes. The rates are expressed in cents per mile and are a crucial consideration for federal employees.

The determination of GSA rates for 2023 involves a comprehensive analysis of various factors, including fuel costs, vehicle maintenance expenses, and overall economic indicators. The rates are meticulously set to ensure that federal employees are reasonably reimbursed for their business mileage expenses while maintaining fiscal responsibility.

The impact of GSA rates for 2023 extends beyond mere financial considerations. It affects the mobility and work-related travel arrangements of federal employees, directly influencing their work efficiency and resource allocation.

What are the key changes in the 2024 GSA Mileage Reimbursement Rates?

As professionals and businesses prepare for the fiscal year 2024, understanding the changes in the General Services Administration (GSA) mileage reimbursement rates is crucial. These adjustments reflect shifts in operational costs and are guided by the Internal Revenue Service (IRS) standards. This section aims to detail the specific updates made to the mileage rates for 2024, explaining the new rates for various vehicle types and the broader impact of IRS updates on these figures. Whether for personal vehicle (POV) use, lodging considerations, or per diem calculations, staying informed on these changes ensures proper reimbursement and budgeting for business-related travel.

Changes in mileage rates for 2024

For 2024, the GSA has updated its mileage reimbursement rates, a critical figure for many businesses and employees who use their owned automobile for work-related travel. The new rate is set at 65.5 cents per mile, an adjustment from the previous year's rate, reflecting changes in operational costs, such as fuel prices and vehicle maintenance expenses . Additionally, for those using their vehicles for moving or medical purposes, the rate is set by the IRS at 22 cents per mile. These changes are essential for accurate mileage tracking and reimbursements.

Impact of IRS updates on mileage reimbursement rates

The GSA mileage rates are closely aligned with the standards set by the IRS, meaning any updates from the IRS directly influence the reimbursement rates for the U.S. government employees and contractors. The rate set by the IRS serves as a benchmark for most mileage reimbursement calculations, ensuring uniformity across federal reimbursements. This alignment ensures that the mileage rate reflects the current economic conditions affecting vehicle operation costs. Understanding these connections is vital for anyone looking to accurately calculate travel expenses and reimbursements for the 2024 fiscal year, including lodging and per diem adjustments based on travel requirements.

Analysis of mileage rates for 2024 vs 2023

The 2024 mileage reimbursement rates have been adjusted to reflect the current costs of operating an automobile. This change is based on an annual study of the fixed and variable costs of operating a vehicle, including fuel prices, maintenance, and insurance. The optional standard mileage rate is used by taxpayers who choose to use the standard mileage rate for deducting the costs of operating a privately owned automobile for business purposes. Comparatively, the rate for 2024 has seen an increase to compensate for the heightened costs associated with vehicle operation, a direct reflection of economic shifts and inflation rates that impact fuel prices and vehicle maintenance expenses.

Understanding the standard mileage rate for 2024

The standard mileage rate set for 2024 is used not only for the business use of a car but also for those using their vehicle for medical or moving purposes, as defined by statute. This rate is pivotal for those who opt for the simplicity of using the standard rate over calculating the actual costs of operating their vehicle. The rate is determined based on an extensive review of the fixed and variable costs associated with car ownership, providing a simplified method for individuals and businesses to calculate their vehicle expenses. The use of this rate applies to privately owned automobiles, including cars, vans, pickups, and panel trucks. The standard mileage rate ensures that taxpayers who own these vehicles and choose to use them for eligible purposes are fairly compensated for their expenses while providing a clear, straightforward method for calculating deductions related to vehicle use.

What factors determine the federal mileage reimbursement rate for 2024?

The federal mileage reimbursement rate for 2024 is influenced by various factors that guide its determination. This section provides insights into the considerations made by the Internal Revenue Service (IRS) and the General Services Administration (GSA) when setting the reimbursement rates for mileage.

IRS considerations for setting the federal mileage rate

The IRS evaluates several elements when establishing the federal mileage reimbursement rate. These include prevailing gas prices, vehicle maintenance costs, insurance expenses, and other deductible costs of operating a vehicle for business purposes. The rate aims to fairly reimburse individuals and businesses for the expenses incurred while using their vehicles for work-related travel.

GSA guidelines on mileage rates for federal employees

The GSA outlines specific guidelines for federal employees regarding mileage rates. These guidelines ensure consistency and fairness in reimbursing federal employees for their travel expenses. The GSA's recommendations take into account factors such as vehicle availability, types of vehicles used, and the distance traveled.

How is the per mile reimbursement rate calculated for privately owned vehicles in 2024?

Understanding how the per mile reimbursement rate is calculated for privately owned vehicles in 2024 is essential for individuals and businesses seeking reimbursement for business-related travel expenses.

Detailed breakdown of the cents per mile for privately owned vehicles

The cents-per-mile reimbursement rate for privately owned vehicles is calculated based on factors such as gas prices, vehicle maintenance costs, insurance expenses, and other deductible costs associated with operating a vehicle for business purposes. The rate aims to cover the expenses incurred per mile traveled for work-related activities.

Business use criteria for determining the reimbursement rate

The reimbursement rate for privately owned vehicles is determined based on the percentage of business use versus personal use. The IRS provides guidelines on what qualifies as business use, ensuring that only expenses directly related to work-related travel are eligible for reimbursement.

Are there specific changes in the 2024 government mileage rates for different types of vehicles?

The 2024 government mileage rates may vary depending on the type of vehicle used for work-related travel. Understanding these distinctions is crucial for individuals and businesses seeking reimbursement for travel expenses.

Mileage rate distinctions for different vehicle types in 2024

The GSA may establish different mileage rates for various types of vehicles, including cars, vans, trucks, and motorcycles. These distinctions reflect differences in operating costs, fuel efficiency, and other factors relevant to each vehicle type.

GSA mileage rate variations based on vehicle ownership

The GSA may also consider whether the vehicle used for work-related travel is government-owned or privately owned. Different reimbursement rates may apply based on ownership status, with specific guidelines provided for each scenario.

Implications of IRS mileage rate changes on federal employee reimbursements

Federal employees may experience adjustments in their reimbursement amounts due to changes in the IRS mileage rate . It's essential for employees to stay informed about these changes to ensure they receive accurate reimbursements for their travel expenses.

Best practices for tracking and reporting business mileage under the new reimbursement rate

With the updated IRS mileage reimbursement rate for 2024, federal employees should adopt best practices for tracking and reporting their business mileage. This ensures compliance with IRS regulations and facilitates accurate reimbursement for work-related travel expenses.

Key Takeaways:

Mileage Rate: A set amount you can deduct for every mile driven for business purposes, as determined by the General Services Administration (GSA).
GSA: A government agency that sets the mileage rate for business use of a personal vehicle. This rate changes, so it's important to stay updated.
Business Travel: When you use your personal vehicle for work-related trips, excluding commuting, you can deduct these miles at the GSA rate.
Reimbursement: The money paid back to you for business miles driven. If it's at or below the GSA rate, it's not taxable income.
Record Keeping: Keeping detailed logs of business mileage, including dates, destinations, and purposes, to support your deductions.

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What is a Tax Home, and How Does it Impact Travel Expenses?

Written by Liz Farr, CPA

Modified Aug 8, 2019

Today’s super-mobile workforce means that you may have clients who are splitting their time between multiple work locations. In these situations, understanding the concept of a tax home will help clarify the treatment of travel expenses.

What is a Tax Home?

The IRS defines a tax home as the city or general area where someone’s main place of business or work is located. If your client travels away from their tax home for work purposes, their travel expenses may be deductible.

“May be deductible” has taken on new meaning since the Tax Cuts and Jobs Act was passed in late 2017. Under prior law, employees could deduct unreimbursed work expenses, including travel expenses, as a miscellaneous itemized deduction. However, from 2018 though 2025, that deduction has been suspended, except for Armed Forces reservists, qualified performing artists, and fee-basis state or local government officials.

The best bet for employees who no longer qualify to deduct their travel expenses is to set up an accountable plan with their employer. Reimbursed travel expenses under an accountable plan are not taxable to the employee, while reimbursements under a non-accountable plan are included in the employee’s wages.

However, self-employed individuals can still deduct expenses for travel away from their tax home as business expenses.

A tax home may or may not be the same place as the family home, or a place that your client returns to regularly. For clients who work in more than one place, their tax home is their main place of business or work. This is determined by considering the following factors:

The total time spent in each place.
The level of business or work activity in each place.
The relative amount of income earned in each place.

Expenses for work-related travel away from someone’s tax home are deductible or can be reimbursed tax-free under an accountable plan. Travel expenses include transportation, meals, lodging, laundry and dry cleaning, and incidentals.

For example, Ryan is a self-employed consultant living in Denver. He spends one week of every month working onsite for a client in Salt Lake City. Ryan spends the remaining three weeks of the month working with clients in the Denver area. Ryan’s tax home is Denver, so his travel, lodging and meal expenses for his monthly trips to Salt Lake City are deductible.

Over time, Ryan’s client in Salt Lake City becomes a bigger part of his work. Eventually, Ryan is spending all of his working time in Salt Lake City and flying home to Denver on the weekends. Now, his tax home is Salt Lake City, and neither his living expenses in Salt Lake City nor his plane fare between Denver and Salt Lake City are deductible.

What About Temporary Work Assignments?

It’s not unusual for an employee to be sent to work in a different location. If that assignment is temporary and the employee maintains a home in the original location, the tax home is still the original location. Travel expenses will be deductible for a contractor. Employee reimbursements under an accountable plan will be tax-free.

But, if the assignment is permanent or indefinite, then the person’s tax home is the new location, so travel expenses are not deductible. Accountable plan reimbursements are now taxable to the employee.

The IRS defines “temporary” as a work assignment that’s expected to last a year or less. If a work assignment that started out as a temporary posting is extended to more than a year, then it becomes an indefinite assignment when the anticipated duration changes.

For example, Kimberly has been working for a company in Boston and is sent to Los Angeles for an eight-month project. Kimberly’s tax home is still Boston. Her employer reimburses her for her travel, lodging and meals under an accountable plan, and those reimbursements are tax-free.

However, seven months into the project, Kimberly’s employer decides to extend her posting in Los Angeles for another eight months, to a total of 15 months. At that point, Kimberly’s assignment becomes indefinite, so her tax home changes to Los Angeles. If her employer continues to reimburse her for living expenses, even if it’s done under an accountable plan, those reimbursements are now taxable.

This only scratches the surface of the tangled web that results when people live and work in multiple locations. Depending on the states involved, your clients may also have state tax issues. IRS Publication 463 , Travel, Gift, and Car Expenses , is a good resource, so be sure to check it out if you have clients in this situation.

Editor’s note: This article was published on the Firm of the Future blog .

What to Tell Your Clients About Tax Return Privacy

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Liz spent 15 years working as an accountant with a focus on tax work as well as working on audits, business valuation, and litigation support. Since 2018, she’s been a full-time freelance writer, and has written blog posts, case studies, white papers, web content, and books for accountants and bookkeepers around the world. Her current specialty is ghostwriting for thought leaders in accounting. More from Liz Farr, CPA

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Our newark regional information center will be closed friday, march 15, 2024, and is scheduled to reopen on monday, march 18, 2024. we apologize for the inconvenience., long term travel expense reimbursements.

Under the New Jersey Gross Income Tax Act, all earnings in connection with employment are reported by the taxpayer as wages, salaries, commissions, bonuses and other remuneration received for services rendered, pursuant to N.J.S.A 54A:5-1(a). An employee, as defined in N.J.A.C. 18:35-7.1, cannot deduct any costs and expenses incurred in connection with such employment from gross income.

As a general rule, wage income that is reported on the Federal return will be included on the New Jersey return, with some exceptions. One exception is that employees may exclude from the wages category of income reimbursements for employee business expenses reported as wages on their W-2, provided the following criteria are met: (1) the expenses for which the taxpayer is reimbursed are job related expenses; (2) the taxpayer is required and does account for those expenses to his or her employer; and (3) the taxpayer is reimbursed by the employer in the exact amount of the allowable expenses.

In the case of an employee engaged in long term travel (travel lasting for more than a year) where the employee receives a commuting expense reimbursement and an additional gross-up amount from the employer for traveling from home to a job site, the Division recently opined that these are considered salary adjustments and not reimbursed job expenses. Because the employee received the gross-up amount, the employee is not being reimbursed by the employer in the exact amount of the allowable expenses and consequently does not meet the third criteria of the above three-prong test.

Therefore, the commuting expense reimbursement and the additional gross-up amount are taxable for New Jersey gross income tax purposes if reported on the employee's W-2 and are also taxable for federal income tax purposes.

2024 Guide to HMRC Mileage Rates for Businesses

Dealing with HMRC mileage rates can be tricky, but it doesn't have to be a headache.

If you're looking for a simpler way to manage business travel expenses and stay on top of compliance , we've got some insights that can help.

We'll be covering:

What are the HMRC Mileage Rates?
What is the HMRC Mileage Allowance?
When Can Employees Claim Business Mileage from Home?
What is Travel Allowance in the UK?
What are HMRC Fuel Advisory Rates?
HMRC Mileage Rates for Electric Cars
Taxation of HMRC Mileage Rates
How to Apply the HMRC Business Mileage Rates: A Guide for Employers
Keeping a Mileage Log for HMRC Compliance

Let's make managing travel expenses easier together.

What are the HMRC Mileage Rates?

The HMRC sets specific mileage rates for individuals using their personal vehicles for business purposes. These rates are designed to simplify calculating travel expenses for employers and employees, ensuring fair compensation for business use of a personal car.

Breakdown of HMRC Mileage Rates

Cars & vans : For the first 10,000 miles in a tax year, the rate is 45 pence per mile. Once you exceed this threshold, the rate drops to 25 pence for each additional mile.

Motorcycles : A consistent rate of 24 pence per mile applies, irrespective of the distance travelled within the tax year.

Bicycles : Cyclists can claim 20 pence per mile for business miles travelled.

The HMRC 10,000 Mile Threshold

The initial 10,000 miles are considered to bear a higher cost, accounting for the vehicle's depreciation, maintenance, and running costs.

The rate reduction beyond 10,000 miles acknowledges the supposed decrease in these costs as the vehicle ages and accumulates mileage.

What do HMRC Mileage Rates Cover?

The HMRC mileage rates are meticulously calculated to cover all expenses associated with using a personal vehicle for business purposes.

This includes, but is not limited to:

Maintenance

Insurance costs

The intention is to offer a straightforward, fair mechanism for employees to be reimbursed without having to detail every individual cost incurred.

What is the HMRC Mileage Allowance?

The HMRC mileage allowance is a rate set by HMRC that allows businesses in the UK to reimburse employees for the use of their personal vehicles for business purposes.

The primary goal of the mileage allowance is to provide a tax-free threshold for mileage reimbursement, ensuring that employees are compensated for the business use of their vehicles without incurring additional tax liabilities.

Tax Implications of Mileage Allowances for Employers & Employees

The HMRC mileage allowance is designed with tax efficiency in mind.

Reimbursements made at or below the HMRC-approved rates are not subject to tax or National Insurance contributions. This applies to both employers and employees, making it a tax-efficient way to handle business travel expenses .

For Employers:

Reimbursements within the HMRC rates do not incur additional tax liabilities.

Payments above the HMRC rates must be reported, and the excess is subject to tax and National Insurance contributions.

For Employees:

Receiving mileage allowance at or below the HMRC rates does not affect taxable income.

If reimbursements are below the HMRC rates, employees can claim Mileage Allowance Relief on their tax return for the difference.

When Can Employees Claim Business Mileage from Home?

The HMRC guidelines allow employees to claim mileage for travel from their home to a temporary workplace or for specific business journeys that aren't part of their regular commute.

The key criteria for these claims under the HMRC mileage rates include:

Temporary workplace visits : If you’re travelling to a location for a limited duration or for a temporary purpose, this can qualify as a claimable business journey.

Distinct business journeys : Travelling from home directly to meet clients, attend business meetings at different locations, or carry out site visits are examples of claimable business mileage.

Regular Commute vs Business Travel: The Difference

Regular commute : This is travel between your home and your permanent place of work. These journeys are not claimable under HMRC mileage rates because they’re considered as non-business travel.

Business travel : This encompasses any travel that is solely for business purposes, excluding your normal commute. It's these journeys that the HMRC mileage rates aim to cover, ensuring employees are reimbursed for the additional costs incurred.

Claiming Your Business Mileage

For employees looking to claim their business mileage , here's a simplified process:

Document your journeys. Keep a detailed log of your business journeys, including dates, destinations, and miles travelled. Documentation is key to substantiating your claims.

Calculate your mileage. Use the current HMRC mileage rates to calculate your total claim amount. Remember, the rates differ depending on the vehicle used and the number of business miles covered.

Submit your claim. Provide your documented journey log and calculated mileage to your employer. Employers typically have a process in place for these reimbursements.

For employers:

Ensure clarity around what constitutes claimable business mileage and communicate this effectively to your team to streamline the reimbursement process.

Offer support and guidance on how to log and claim business mileage. This will not only ensure compliance with HMRC guidelines but also foster a transparent and supportive work environment.

What is Travel Allowance in the UK?

Travel allowance encompasses a broader spectrum of work-related travel expenses than mileage allowance. While mileage allowance specifically covers the costs of using a personal vehicle for business purposes, travel allowance can include various other travel-related expenses.

Travel Allowance vs Mileage Allowance: The Difference

Mileage allowance : Directly related to the use of a personal vehicle for business journeys, calculated using the HMRC mileage rates. It's designed to cover vehicle-related costs such as fuel, maintenance, and depreciation.

Travel allowance : Encompasses a wider range of employee travel expenses incurred due to business activities. This can include public transport fares, accommodation costs, and meals during business travel, in addition to mileage costs when using public or alternative modes of transport.

Criteria for Claiming Travel Allowances

To claim travel allowances effectively, understanding the criteria set by HMRC is essential. Claims must be for expenses wholly, exclusively, and necessarily incurred in the performance of the duties of employment.

Key criteria include:

Temporary work locations : Travel expenses to and from temporary work locations can qualify for travel allowance claims.

Necessary overnight stays : Costs incurred during necessary overnight business trips, including accommodation and meals, are claimable.

Public transport usage : Expenses related to business travel via public transport, including trains, buses, and taxis, fall under travel allowance.

What is Included in the Travel Allowance UK?

Transport costs : Train tickets, bus fares, taxi receipts, and airline tickets for business-related travel.

Accommodation : Hotel or other lodging expenses when overnight stays are required for business purposes.

Meals and subsistence : Reasonable costs for meals during business travel, subject to HMRC guidelines.

Incidental expenses : Minor costs associated with business travel, such as internet charges at a hotel.

Both employers and employees need to keep detailed records and receipts for all travel expenses claimed under the travel allowance.

This not only ensures compliance with HMRC regulations but also facilitates a smooth reimbursement process.

What are HMRC Fuel Advisory Rates?

HMRC Fuel Advisory Rates are guidelines set for the reimbursement of fuel expenses incurred during business travel in company cars and vans. These rates are designed to:

Reimburse employees for business travel in their company vehicles.

Allow employees to repay the cost of fuel used for private travel in company vehicles.

It’s important to note that these rates should not be used in circumstances other than those specified above.

How are Fuel Advisory Rates Calculated?

The process of calculating these rates is both systematic and reflective of current market conditions.

Here’s how HMRC determines the advisory fuel rates:

Quarterly reviews : HMRC reviews the rates quarterly, considering the latest fuel prices and vehicle efficiency data.

Fuel prices : The latest prices for petrol, diesel, and LPG are obtained from reliable sources, including the Department for Energy Security and Net Zero and the Automobile Association.

Vehicle efficiency : Average miles per gallon (MPG) figures are derived from manufacturer data and adjusted for annual sales to businesses. For LPG vehicles, the MPG used is 20% lower than for petrol due to lower energy density.

Electric vehicles : The advisory rate for electric cars is calculated using electricity price data and car electrical consumption rates, ensuring a fair assessment of electric vehicle running costs.

Note : You can calculate employee car and fuel benefits using HMRC’s calculator .

Applying the HMRC Fuel Advisory Rates

Employers can apply these rates in two key scenarios:

Reimbursing employees : If the mileage rate paid to employees does not exceed the advisory fuel rates based on the engine size and fuel type of the company car, there’s no taxable profit or National Insurance contribution due.

Employees repaying for private travel : Correct recording and repayment of private travel mileage at these rates or higher ensure there’s no fuel benefit charge.

Key Points for Employers & Employees:

Employers have the flexibility to use their own rates if their vehicles are more fuel-efficient or if the cost of business travel is higher than the guideline rates, provided they can justify the higher cost per mile.

Employees must accurately record all private travel mileage and use the correct rate to calculate repayments for fuel used for private travel.

HMRC Mileage Rates for Electric Cars

Electric vehicles (EVs) offer a unique set of advantages and challenges when it comes to business travel. Recognising this, HMRC provides specific mileage rates for electric cars, distinct from those for petrol, diesel, or hybrid vehicles.

These rates are designed to account for the cost of electricity used for business travel, rather than fuel consumption, offering a fair and equitable means of reimbursement for EV users.

Impact of Electric Cars on Business Travel Expenses & Reimbursements

The adoption of electric vehicles can significantly alter the landscape of corporate travel expenses :

Cost-effectiveness : Generally, electric cars are cheaper to "fuel" compared to traditional petrol or diesel vehicles, potentially reducing overall travel expenses.

Environmental benefits : Encouraging the use of EVs aligns with corporate sustainability goals , reducing the carbon footprint associated with business travel.

Tax incentives : Utilising HMRC’s mileage rates for electric cars can also offer tax benefits, aligning financial incentives with eco-friendly practices.

What is the HMRC Mileage Rate for Electric Cars?

As of 1 March 2024, the HMRC mileage rate for fully electric cars is set at 9 pence per mile .

This rate provides a simple way for businesses and employees to calculate reimbursements for business travel using electric vehicles, ensuring that drivers are compensated for the electricity cost of their journeys.

Note : This rate is subject to periodic reviews by HMRC, reflecting changes in electricity costs and the evolving efficiency of electric vehicles. Make sure to stay updated with the latest rates to ensure compliance and maximise the benefits of integrating electric vehicles into your fleets.

Taxation of HMRC Mileage Rates

The HMRC mileage rates are designed to simplify the reimbursement process for business travel, providing a tax-efficient framework for compensating employees. But, are HMRC mileage rates taxable?

The answer hinges on adherence to the prescribed rates and the purpose of the journeys:

Non-taxable allowances : Mileage allowances paid at or below the HMRC-approved rates for business travel are not considered taxable income. These rates are calculated to cover the vehicle's operating costs, and reimbursements within these limits do not require tax payments from the employee.

Excess payments : Should an employer choose to reimburse at a rate higher than the HMRC-specified mileage rates without justifying the increased expense, the excess amount could be subject to tax and National Insurance contributions as it is considered earnings.

Employer Reporting Obligations

Employers play a crucial role in ensuring the tax efficiency of mileage reimbursements:

P11D forms : When providing mileage allowances, employers must report any amounts that exceed the approved HMRC mileage rates on the employee's P11D form . This form details benefits and expenses that have not been subject to PAYE tax.

PAYE Settlement Agreements : In some cases, employers may opt to cover the tax on excess mileage payments through a PAYE Settlement Agreement (PSA) . This agreement allows the employer to make one annual payment to HMRC covering all taxes due on minor, irregular, or impracticable employee expenses or benefits, including mileage rate excesses.

Are HMRC Mileage Rates Taxable?

As long as mileage allowances do not exceed the prescribed rates for the actual business miles travelled, they remain tax-free.

This approach incentivises the accurate recording and reporting of business travel, aligning employee reimbursements with actual travel costs without additional tax burdens.

How to Apply the HMRC Business Mileage Rates: A Guide for Employers

Understanding how to apply HMRC mileage rates correctly not only aligns with legal requirements but also supports fair and transparent compensation for employees using their personal vehicles for work .

Step 1: Understand the Rates

Familiarise yourself with the current HMRC mileage rates for cars, vans, motorcycles, and bicycles.

These rates are designed to cover the cost of using personal vehicles for business purposes, including fuel, maintenance, and wear and tear.

Step 2: Establish a Policy

Develop a clear corporate expense policy on business mileage that includes how and when mileage can be claimed, the documentation required for claims, and how the HMRC mileage rates will be applied within your organisation.

Need help building your expense policy? Use our free expenses policy template .

Step 3: Educate Your Team

Ensure that all employees understand the policy, the importance of accurate mileage tracking, and how to submit mileage claims.

Clear communication prevents misunderstandings and promotes compliance.

Step 4: Implement Mileage Tracking

Encourage employees to keep detailed logs of their business mileage.

Whether through manual logs or digital tools, accurate records are crucial for compliance and reimbursement.

Step 5: Verify & Calculate Reimbursements

Review submitted mileage logs for accuracy and calculate reimbursements using the HMRC mileage rates.

Ensure that claims are justified and fall within the guidelines provided by HMRC.

Step 6: Process Reimbursements

Timely process mileage expense claims, providing reimbursements through payroll or as a separate payment, according to your business practices.

Keeping a Mileage Log for HMRC Compliance

Let's break down why keeping a detailed mileage log is crucial and how digital tools can make this task simpler and more reliable:

The Benefits of Keeping Detailed Mileage Logs

Ensuring tax compliance : Precise mileage logs are your safeguard against tax issues. They serve as solid evidence that supports your travel expense claims according to HMRC mileage rates, ensuring you stay on the right side of tax laws.

Guaranteeing correct reimbursements : For both individuals and businesses, accurate logs mean accurate reimbursements. No guesswork involved - every mile travelled for business is accounted for and compensated correctly.

Preparedness for audits : Should HMRC inquire further into your travel claims, a comprehensive mileage log provides a clear, detailed account of your business journeys, proving that your claims are justified and compliant.

How Technology Simplifies Mileage Tracking

Gone are the days of pen and paper logs - technology offers a streamlined, error-minimising approach to mileage tracking .

One standout solution is ExpenseIn , an expense management solution that embodies efficiency and compliance in mileage tracking.

Why Choose ExpenseIn for Your Mileage Tracking Needs?

Woman on phone next to her car using ExpenseIn mileage feature.

Automated journey tracking : Utilise GPS technology to automatically record your trips' start and end points, ensuring every business mile is accurately captured without manual input.

HMRC-compliant mileage logs : Generate logs that meet HMRC's strict requirements, detailing every aspect of your business travel, from dates and distances to the purpose of each journey.

Ease of use and integration : With user-friendly interfaces and compatibility with various financial systems, tools like ExpenseIn make mileage logging accessible and straightforward, no matter where you are.

Moving to a digital mileage log system is not just about compliance; it's about embracing a solution that offers clarity, convenience, and confidence in every mile you log for business.

Ready to transform how you track mileage? Take the first step with ExpenseIn. Book a demo today and discover how our tool can simplify your mileage logging, ensure HMRC compliance, and save you time and money.

Explore our faster, simpler and smarter approach to expense management.

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COMMENTS

Publication 463 (2023), Travel, Gift, and Car Expenses
In the previous example, your luxury water travel had a total cost of $6,200. Of that amount, $3,700 was separately stated as non-entertainment-related meals and $1,000 was separately stated as entertainment. Considering that you are self-employed, you aren't reimbursed for any of your travel expenses.
Tax issues arise when employers pay employee business travel expenses
Most employers pay or reimburse their employees' expenses when traveling for business. Generally, expenses for transportation, meals, lodging and incidental expenses can be paid or reimbursed by the employer tax-free if the employee is on a short-term trip. However, the tax rules become more complex when the travel is of a longer duration.
How to Deduct Business Travel Expenses: Do's, Don'ts, Examples
To be able to claim all the possible travel deductions, your trip should require you to sleep somewhere that isn't your home. 2. You should be working regular hours. In general, that means eight hours a day of work-related activity. It's fine to take personal time in the evenings, and you can still take weekends off.
KPMG report: Taxation of paid or reimbursed travel expenses and
Read a May 2023 report * [PDF 431 KB] prepared KPMG LLP tax professionals that discusses the issues relating to whether paid or reimbursed travel expenses may be taxable or nontaxable to employees, focusing in particular on the analysis of the location of an employee's tax home, including whether a personal residence may be considered a tax home.
Tax Deductions for Business Travelers
You can deduct business travel expenses when you are away from both your home and the location of your main place of business (tax home). Deductible expenses include transportation, baggage fees, car rentals, taxis and shuttles, lodging, tips, and fees. You can also deduct 50% of either the actual cost of meals or the standard meal allowance ...
Travel Expenses Definition and Tax Deductible Categories
Travel expenses are costs associated with traveling for the purpose of conducting business-related activities. Travel expenses can generally be deducted by employees as non-reimbursed travel ...
PDF THE COMPLETE GUIDE TO DEDUCTING BUSINESS TRAVEL EXPENSES
taxpayers who may not qualify for tax credits, particularly the refundable kind. There are numerous tax deductions to explore: medical expense, charitable, student loan interest, mortgage interest and more. One of the more complex and varied deductions is related to business travel. This is a tax deduction that
How to Deduct Travel Expenses (with Examples)
For example, let's say a hotel room for one person costs $100, but a hotel room that can accommodate your family costs $150. You can rent the $150 option and deduct $100 of the cost as a business expense—because $100 is how much you'd be paying if you were staying there alone.
What Are Employee Expense Reimbursements and Are They Taxable?
The cost of work-related travel, including transportation, lodging, meals, and entertainment that meet the criteria outlined in IRS Publication 463, Travel, Entertainment, Gift, and Car Expenses, are generally reimbursable expenses. Many employers will reimburse an employee who uses their personal vehicle for business at a standard mileage rate.
Complete Guide to Reimbursing Employees for Travel Expenses
Excess Reimbursement. If an employee receives a travel advance to cover travel expenses but spends less than the advance, the difference is an excess reimbursement and must be returned to the employer to not be taxable. If the excess isn't returned in a reasonable amount of time, it's taxable. A reasonable period of time in this instance is ...
Taxes On Employee Expense Reimbursement
To deduct unreimbursed employee expenses, you will need to make an adjustment to your gross income by using Form 2106, Employee Business Expenses. Unreimbursed employee expenses are deductible only if they meet these criteria: They were paid or incurred during the tax year. The expenses were for carrying on your trade or business of being an ...
PDF Guide to Employee Travel Expense Reimbursement
Plans for Reimbursing an Employee for Deductible Travel Expenses The IRS allows two basic options for reimbursing employees for deductible travel expenses: (1) employers can avoid paying employment tax by excluding reimbursement for travel expenses from employee wages under an accountable plan; or (2) employers can consider all payments to
7 Rules You Should Know About Deducting Business Travel Expenses
The IRS has a specific definition for business travel when it comes to determining whether these expenses are tax deductible. The agency says business travel is travel that takes you away from your tax home and is "substantially longer than an ordinary day's work." It requires that you sleep or rest while you're away from home, and that you do so.
Can I deduct travel expenses?
Prior to the tax rule change, employees could claim 50% of the cost of unreimbursed meals while on business-related travel away from their tax home if the trip required an overnight stay, as well as other unreimbursed job-related travel costs. These expenses were handled as a 2% miscellaneous itemized deduction.
Are Reimbursements Taxable? IRS Guidelines on Reimbursements
Accountable plan. If your business uses an accountable plan, reimbursements are not taxable. You do not have to withhold or contribute income, FICA, or unemployment taxes. To have an accountable plan, your employees must meet all three of the following rules: The employee must have incurred deductible expenses while performing services as your ...
2024 GSA Mileage Reimbursement Rates: Update on Government Mileage
Changes in mileage rates for 2024. For 2024, the GSA has updated its mileage reimbursement rates, a critical figure for many businesses and employees who use their owned automobile for work-related travel. The new rate is set at 65.5 cents per mile, an adjustment from the previous year's rate, reflecting changes in operational costs, such as ...
What is a Tax Home, and How Does it Impact Travel Expenses?
The relative amount of income earned in each place. Expenses for work-related travel away from someone's tax home are deductible or can be reimbursed tax-free under an accountable plan. Travel expenses include transportation, meals, lodging, laundry and dry cleaning, and incidentals. For example, Ryan is a self-employed consultant living in ...
What Is and Isn't Considered a Travel Expense?
You also can't deduct travel expenses that are superfluous or excessive, such as luxury purchases. If your family travels with you on a work trip, their expenses don't count as your travel expenses. When you have business-related expenses in your home city, they may or may be deductible. However, they aren't considered travel expenses.
Long Term Travel Expense Reimbursements
Long Term Travel Expense Reimbursements. Under the New Jersey Gross Income Tax Act, all earnings in connection with employment are reported by the taxpayer as wages, salaries, commissions, bonuses and other remuneration received for services rendered, pursuant to N.J.S.A 54A:5-1 (a). An employee, as defined in N.J.A.C. 18:35-7.1, cannot deduct ...
PDF Division of Personnel Management
Bottled Water Reimbursement (International Travel Only): Bottled water costs will be reimbursed when an employee is in international (outside the contiguous U.S.) travel status. Reimbursement is limited to a total of $7.50 for each day. Motorcycle: EXPENSES FOR REASONABLE ACCOMMODATIONS Individuals traveling on official state business may require a
Textravel
Fiscal 2024 Travel Reimbursement Rates Employees. In-State or Out-of-State Meals and Lodging: Refer to the U.S. General Services Administration's (GSA's) federal Domestic Maximum Per Diem Rates, effective Oct. 1, 2023. If the city is not listed, but the county is listed, use the daily rate of the county.
Here's what taxpayers need to know about business related travel
Business travel deductions are available when employees must travel away from their tax home or main place of work for business reasons. The travel period must be substantially longer than an ordinary day's work and a need for sleep or rest to meet the demands the work while away. Travel expenses must be ordinary and necessary. They can't be ...
2024 Guide to HMRC Mileage Rates
From 2011 onwards, HMRC established clear mileage reimbursement rates for different types of vehicles, which are as follows: Cars & vans: For the first 10,000 miles in a tax year, the rate is 45 pence per mile. Once you exceed this threshold, the rate drops to 25 pence for each additional mile. Motorcycles: A consistent rate of 24 pence per ...
Veteran travel 101: Applying for travel reimbursement
Veteran travel 101: Applying for travel reimbursement - VA News. You may be eligible for travel reimbursement if you pay expenses to and from your appointment. Learn if you're eligible and how to file a claim.
Employee Travel and Reimbursement Fiscal Year End Updates FY 2024
Employee Travel and Reimbursement (ET&R) has included updates for the 2024 fiscal year-end process. Please use the information below as a reference for the fiscal year-end schedule related to out-of-pocket reimbursements, corporate card charges, and experimental subject payment forms. Out of Pocket Expenses* Both electronic and paper reimbursement forms must be submitted,
Expense Report Awaiting Approval?
Expense Report Awaiting Approval? Posted on April 18, 2024. Please see the current timeframe of Expense Report approvals on the Reimbursement page. During this peak period for expense report submissions please expect a longer approval time. Expense reports are reviewed in the order they are submitted and the Central Audit team will continue to ...
Publication 525 (2023), Taxable and Nontaxable Income
Suspension of qualified bicycle commuting reimbursement exclusion. For tax years beginning after 2017, reimbursement you receive from your employer for the purchase, repair, or storage of a bicycle you regularly use for travel between your residence and place of employment must be included in your gross income. Unemployment compensation.

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THE POWER OF BEING UNDERSTOOD

Everything You Need to Know About the Business Travel Tax Deduction

What counts as business travel?

What counts as "mostly business"?

Special rules for traveling abroad

What is an “ordinary and necessary” expense?

What is your tax home?

What's your main place of business?

How large is your tax home?

Rules for business travel

1. Your trip should take you away from your home base

2. You should be working regular hours

3. The trip should last less than a year

What about digital nomads?

Requirement #1: A tax home

Requirement #2: Some work-related reason for traveling

The travel expenses you can write off

🛫 All transportation

🥡 Meals while traveling

🌐 Wi-Fi and communications

👔 Dry cleaning

Travel expenses you can't deduct

The cost of bringing your child or spouse

Some hotel bill charges

Where to claim travel expenses when filing your taxes

What happens if your business deductions are disallowed?

When does the penalty come into play?

How much is the penalty?

KPMG Personalization

Tax Deductions for Business Travelers

Ordinary vs. necessary expenses

Key Takeaways

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What Are Travel Expenses?

Travel Expenses Definition and Tax Deductible Categories

Key Takeaways

Types of Travel Expenses

Can I Deduct My Business Travel Expenses?

Do I Need Receipts for Travel Expenses?

What Are Reasonable Travel Expenses?

How to Deduct Travel Expenses (with Examples)

The travel needs to qualify as a “business trip”

The rules are different when you travel outside the United States

List of travel expenses

Meals and entertainment during your stay

Meals and entertainment while you travel

Bringing friends & family on a business trip

Driving to your destination

Renting a place to stay

So your trip is technically a vacation? You can still claim any business-related expenses

If your business travel is with your own vehicle

The cost of breaking the rules