June Walker, a tax advisor to the independent / soloist / self-employed and home office business community since 1979, has guided indies through various tax issues for years.
Today, she offers some guidance on handling business and travel expenses. To June, the questions seem the same: Travel expenses, transportation expenses, vehicle expenses – aren’t they all more or less the same thing?
Well, maybe to you they are, June says. But not to the IRS. There are subtle and there are grand differences. Understanding standard business travel and the expenses related to a typical business trip is the place to start.
Over the river and through the woods to Grandmother’s house goes Pat Personal Trainer. Gram just bought a color laser printer and it’s the cheapest way for Pat to print his new brochures. He leaves Friday afternoon. The bus gets him there in time for dinner. He works at the computer all the next day until the wee hours. (He’s sure these new brochures will get him lots of customers.) Very early the next morning he kisses Grandma good-bye and heads back home on the bus.
Pat was away from his home, for business, overnight. It was BUSINESS TRAVEL. Therefore he may deduct travel expenses.
The IRS says this about BUSINESS TRAVEL . . .
If you temporarily travel away from your tax home for business you may deduct ordinary and necessary TRAVEL expenses. You may not write off “lavish or extravagant” expenses.
According to the IRS an “ordinary expense is one that is common to your profession; a necessary one is one that is helpful and appropriate.” (See Feature No. 3)
The IRS has written thousands of words on business TRAVEL.
Here are the most important:
Your trip is business TRAVEL if your business duties require you to be away from the general area of your tax home longer than an ordinary day’s work, so that you need to get some sleep or rest.
Think of your tax home as your main or regular place of business. It doesn’t matter where you maintain your family home.
And, if you stay overnight that covers needing to get some rest. But, be careful: don’t go around telling people that you ordinarily work 20 hours a day or you’ll miss out on deducting your business trips!
BUSINESS TRAVEL, simply stated …
If you are away from your place of business, overnight, for a purpose that benefits your business then you have been on a business trip and your costs are deductible TRAVEL expenses.