Travel Expenses: What Can and Can't be Deducted

Many people ask about travel expenses and since I'm on the road today, I thought it might be a good topic to discuss what you can deduct and when you can deduct it. Right now I am in beautiful Jefferson, New Hampshire at Jefferson Campground. When you travel for business, you can deduct your travel costs. So travel costs include hotel stays, airfare, your campsite stays, if you're traveling in an RV or staying in a campground. And you can deduct those things while you're on the road as long as your purpose for that travel is business. I am here on business. I'm actually here with a colleague and we are doing some brainstorming sessions and working on our future planning for our accounting firms. So this is a travel deduction for me. Now often see that people either have way too much or not enough travel expenses. So how do you find that happy medium? Well, look at your travel when you're traveling. Is it for business purposes? If the primary reason is for business purposes, you can deduct it. Now, if you have a situation where you're traveling for both business and personal, you can still do that. You just have to have a method to this and prorate the business travel so that you're not deducting a full trip. So for example, if I were to go to Ohio to see all of my family, I have some clients there as well. I can't deduct the whole trip if my primary purpose was going to see my family. But if my primary purpose was going to visit clients and I happened to pop in to see my family while I was there, that's deductible. Travel expenses are 100% deductible for you again, so long as you document what your business purpose was for that travel. Keep your receipts, of course. So another piece of this that I often hear is what if my spouse and I own the business as I do, my spouse and I can travel. And if our purpose is for business, then we can deduct it. So a really good example I see oftentimes with family owned businesses is having an annual meeting to look at your planning for next year. What are your goals? What has changed in your business life? Do you plan to do anything differently or start up any new lines of business? If so, there's nothing wrong with having that meeting out of town and deducting your travel. This also leads into some meals. We're going to talk about that in another video because that's a another area where I either see too much or not enough. How do you balance this well. If you're traveling consistently for your business, your travel numbers are going to be a lot higher. But if your business is pretty much a stationary business, but maybe you go see a vendor or go to a conference once or twice a year, then you're going to have probably smaller travel amounts than somebody who's doing traveling sales, say. Now, one other thing you want to keep in mind is keeping up with your mileage when you're out of town traveling. If you drove there in your car, you can deduct your mileage expenses, but you must keep a mileage log. We've said for years we recommend highly that every business owner track their mileage through an app on their phone. MileIQ is the easiest one that we've found to use, so we highly recommend using that rather than trying to do this manually. Yes, It'll cost you maybe $59, $69, but you will save far more in taxes if you're able to track your mileage accurately. One other thing to mention, entertainment. Entertainment costs are not deductible. That started back in 2021. They used to be 50% deductible. They are no longer deductible. So if you're going on a golf trip, if you're going to a sporting event, those things cannot be deducted at all. Only your food at those events can be deducted if they are truly for business purposes. So I hope that helps you gauge and make sure that you're squeezing every dollar out of the travel expenses that you can through your business and that you get a little break away even when you're traveling for business purposes.