travel expenses on taxes

How to Deduct Travel Expenses (with Examples)

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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 .

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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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• 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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Small Business Trends

10 tax deductions for travel expenses (2023 tax year).

Tax season can be stressful, especially if you’re unaware of the tax deductions available to you. If you’ve traveled for work throughout the year, there are a number of deductions for travel expenses that can help reduce your taxable income in 2024 and save you money.

Read on for 10 tax deductions for travel expenses in the 2023 tax year.

Are business travel expenses tax deductible?

Business travel expenses incurred while away from your home and principal place of business are tax deductible. These expenses may include transportation costs, baggage fees, car rentals, taxis, shuttles, lodging, tips, and fees.

It is important to keep receipts and records of the actual expenses for tax purposes and deduct the actual cost.

What kinds of travel expenses are tax deductible?

To deduct business travel expenses, they must meet certain criteria set by the IRS.

The following are the primary requirements that a travel expense must meet in order to be eligible for a tax deduction:

• Ordinary and necessary expenses: The expense must be common and accepted in the trade or business and be helpful and appropriate for the business.
• Directly related to trade or business: The expense must be directly related to the trade or business and not of a personal nature.
• Away from home overnight: The expense must have been incurred while away from both the taxpayer’s home and the location of their main place of business (tax home) overnight.
• Proper documentation: The taxpayer must keep proper documentation, such as receipts and records, of the expenses incurred.

Eligible Business Travel Tax Deductions

Business travel expenses can quickly add up. Fortunately, many of these expenses are tax deductible for businesses and business owners.

Here is an overview of the types of business travel expenses that are eligible for tax deductions in the United States:

Accommodation Expenses

Accommodation expenses can be claimed as tax deductions on business trips. This includes lodging at hotels, rental costs of vacation homes, and other lodgings while traveling.

Meal Expenses

Food and beverage expenses incurred on a business trip may be deducted from taxes. This includes meals while traveling and meals during meetings with clients or contractors.

Transportation Expenses

Deducting business travel expenses incurred while on a business trip may also be claimed.

This includes flights, train tickets, car rentals, gas for personal vehicles used for the business trip, toll fees, parking fees, taxi rides to and from the airport or train station, and more.

Expenses of operating and maintaining a car

Expenses of operating and maintaining a car used for business travel may also be claimed as tax deductions.

This includes fuel, insurance, registration costs, actual costs of repairs, and maintenance fees. Fees paid to hire a chauffeur or driver may also be deducted.

Operating and maintaining house-trailers

Operating and maintaining house trailers for business travel may be eligible for tax deductions, provided that the use of such trailers is considered “ordinary” and “necessary” for your business.

This includes any costs associated with renting or owning a trailer, such as fuel costs, repair and maintenance fees, insurance, and registration charges.

Internet and phone expenses

Internet and phone expenses associated with business travel can also be claimed as tax deductions. This includes the cost of any internet service, such as Wi-Fi or data plans, and phone services, such as roaming charges or international calls.

Any communication devices purchased for business use, such as smartphones and laptops, may also be eligible for tax deductions.

Computer rental fees

Rental fees for computers and other computing devices used during business travel may also be deducted from taxes. This includes any applicable charges for purchasing, leasing, or renting a computer, as well as the related costs of connecting to the Internet and other digital services.

All such expenses must be necessary for the success of the business trip in order to qualify for a tax deduction.

Travel supplies

Travel supplies, such as suitcases and other bags, are also eligible for tax deductions when used for business travel. Any costs associated with keeping the items protected, such as locks and tracking devices, can also be claimed as tax deductions.

Other necessary supplies, such as office equipment or reference materials, may also be eligible for deductions.

Conference fees and events

Conference fees and events related to business travel may also be eligible for tax deductions. This includes fees associated with attending a conference, such as registration, accommodation, and meals.

Any costs related to the organization of business events, such as venue hire and catering, may also be claimed as tax deductions.

Cleaning and laundry expenses

Business travel expenses associated with cleaning and laundry may also be claimed as tax deductions. This includes a portion of the cost of hotel and motel services, such as cleaning fees charged for laundering clothing, as well as any other reasonable expenses related to keeping clean clothes while traveling away from home.

Ineligible Travel Expenses Deductions

When it comes to business expenses and taxes, not all travel expenses are created equal. Some expenses are considered “Ineligible Travel Expenses Deductions” and cannot be claimed as deductions on your income taxes.

Here is a list of common travel expenses that cannot be deducted, with a brief explanation of each:

• Personal Vacations: Expenses incurred during a personal vacation are not deductible, even if you conduct some business while on the trip. In addition, expenses related to personal pleasure or recreation activities are also not eligible for deductions.
• Gifts: Gifts purchased for business reasons during travel are not deductible, even if the gifts are intended to benefit the business in some way.
• Commuting: The cost of commuting between your home and regular place of business is not considered a deductible expense.
• Meals: Meals consumed while traveling on business can only be partially deducted, with certain limits on the amount.
• Lodging: The cost of lodging is a deductible expense, but only if it is deemed reasonable and necessary for the business trip.
• Entertainment: Entertainment expenses, such as tickets to a show or sporting event, are not deductible, even if they are associated with a business trip.

How to Deduct Travel Expenses

To deduct travel expenses from income taxes, the expenses must be considered ordinary and necessary for the operation of the business. This means the expenses must be common and accepted business activities in your industry, and they must be helpful, appropriate, and for business purposes.

In order to claim travel expenses as a deduction, they must be itemized on Form 2106 for employees or Schedule C for self-employed individuals.

How much can you deduct for travel expenses?

While on a business trip, the full cost of transportation to your destination, whether it’s by plane, train, or bus, is eligible for deduction.

Similarly, if you rent a car for transportation to and around your destination, the cost of the rental is also deductible. For food expenses incurred during a business trip, only 50% of the cost is eligible for a write-off.

How do you prove your tax deductions for travel expenses?

To prove your tax deductions for travel expenses, you should maintain accurate records such as receipts, invoices, and any other supporting documentation that shows the amount and purpose of the expenses.

Some of the documentation you may need to provide include receipts for transportation, lodging, and meals, a detailed itinerary or schedule of the trip, an explanation of the bona fide business purpose of the trip, or proof of payment for all expenses.

What are the penalties for deducting a disallowed business expense?

Deducting a disallowed business expense can result in accuracy-related penalties of 20% of the underpayment, interest charges, re-assessment of the tax return, and in severe cases, fines and imprisonment for tax fraud. To avoid these penalties, it’s important to understand expense deduction rules and keep accurate records.

Can you deduct travel expenses when you bring family or friends on a business trip?

It is not usually possible to deduct the expenses of taking family or friends on a business trip. However, if these individuals provided value to the company, it may be possible. It’s advisable to speak with an accountant or financial expert before claiming any deductions related to bringing family and friends on a business trip.

Can you deduct business-related expenses incurred while on vacation?

Expenses incurred while on a personal vacation are not deductible, even if some business is conducted during the trip. To be eligible for a deduction, the primary purpose of the trip must be for business and the expenses must be directly related to conducting that business.

Can you claim a travel expenses tax deduction for employees?

Employers can deduct employee travel expenses if they are ordinary, necessary, and adequately documented. The expenses must also be reported as taxable income on the employee’s W-2.

What are the limits on deducting the cost of meals during business travel?

The IRS permits a 50% deduction of meal and hotel expenses for business travelers that are reasonable and not lavish. If no meal expenses are incurred, $5.00 daily can be deducted for incidental expenses. The federal meals and incidental expense per diem rate is what determines the standard meal allowance.

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Home > Finance > Travel Expenses Definition And Tax Deductible Categories

Travel Expenses Definition And Tax Deductible Categories

Published: February 11, 2024

Learn about travel expenses, their definition, and tax deductible categories in finance. Maximize your tax deductions and save money while traveling.

• Definition starting with T

(Many of the links in this article redirect to a specific reviewed product. Your purchase of these products through affiliate links helps to generate commission for LiveWell, at no extra cost. Learn more )

Maximizing Your Travel Expenses: A Guide to Tax Deductible Categories

Are you a frequent traveler who wants to make the most out of your travel expenses? Or maybe you’re a business owner looking to understand the tax deductible categories related to travel. Either way, you’ve come to the right place! In this article, we will explore the definition of travel expenses and discuss the various categories that may be eligible for tax deductions. So, let’s dive in and discover how you can optimize your finances while enjoying your travels!

Key Takeaways:

• Understanding the definition of travel expenses is crucial for maximizing your tax deductions.
• Know the tax deductible categories to ensure you claim all eligible expenses.

Defining Travel Expenses

Travel expenses, in a broad sense, refer to the costs associated with a trip taken for business, work, or investment purposes. These expenses can include transportation, lodging, meals, entertainment, and other incidental expenses. However, it’s important to note that not all travel-related expenses are tax deductible.

When it comes to tax deductions, the IRS requires that your travel expenses meet certain criteria. Generally, the expenses must be necessary, ordinary, directly related to your business or work, and proper and appropriate in the context of your profession. It’s always a good idea to consult with a tax professional to ensure you meet all the necessary requirements.

Tax Deductible Categories for Travel Expenses

1. Transportation Expenses:

Transportation costs usually comprise a significant portion of travel expenses. These can include airfare, train or bus tickets, rental car fees, taxi fares, and even parking fees. Keep in mind that personal expenses unrelated to your business or work are not considered tax deductible.

2. Lodging Expenses:

When traveling for business, your accommodations can be tax deductible. This includes hotel stays or rental expenses for apartments or houses. However, if you combine business travel with personal vacations, only the expenses directly related to your business activities are eligible for tax deductions.

3. Meal Expenses:

The cost of meals during your business travel can also be tax deductible, but be mindful of the regulations set forth by the IRS. Generally, meals must be directly related to the active conduct of your business, with only 50% of the cost being eligible for deduction. Remember to keep receipts and make note of the business purpose of each meal.

4. Entertainment Expenses:

In certain circumstances, entertainment expenses incurred during your business travel can be tax deductible. These expenses typically include entertaining clients or customers, attending conferences or trade shows, and networking events. As with meals, it’s important to maintain documentation such as receipts and details of the business purpose for each expense.

5. Incidental Expenses:

Incidental expenses refer to smaller costs incurred during your travel, such as tips, baggage fees, and laundry expenses. Though they may seem insignificant, these expenses can add up over time. By keeping track of them and ensuring they are directly related to your business activities, you can potentially claim them as tax deductions.

The Bottom Line

Understanding the categories of tax-deductible travel expenses is crucial for optimizing your finances. By familiarizing yourself with these categories and maintaining proper documentation, you can ensure that you claim all eligible expenses and maximize your tax deductions.

Remember, consulting with a tax professional is always a wise decision to ensure compliance with the ever-changing regulations. So, go ahead and explore the world while making the most of your travel expenses with these tax deductible categories!

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• 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)

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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 ."

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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.

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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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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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Can You Deduct Your Vacation From Your Taxes? Experts Weigh In

Know what’s deductible and what’s not when it comes to submitting travel expenses on your taxes..

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If there’s a certain amount of work involved, you may be able to claim travel costs on your taxes.

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People are traveling like crazy these days. The Sunday after Thanksgiving 2023 was the biggest single travel day in U.S. aviation history, with TSA screening more than 2.9 million passengers on November 26.

If you’re one of those travelers racking up frequent flier miles as quickly as you can fasten your seat belt, you may be looking for ways to recoup some of the cost. Can you legally write off your trip? If you’re self-employed (for example, if you’re an entrepreneur, freelancer, or consultant, or have an online business) and you did some work while on the road, there’s a good chance you can.

Here’s what it takes to get two thumbs up from the IRS.

Pass these four tests

For starters, your trip must have a business purpose, meaning it must include activities such as client meetings, attending a conference, being a guest speaker at a conference, doing research and development for the business, or holding a board meeting or annual shareholders’ meeting. The activity should have the potential to generate revenue.

“Don’t think you can take a personal trip, talk business for an hour and then try and deduct the whole amount of your trip. The intent of the trip needs to be business,” says Caitlynn Eldridge, founder and CEO of Eldridge CPA .

The second and third requirements deem that the trip must be both “ordinary and necessary,” according to IRS guidelines on business travel expenses . “An ordinary expense means it’s typical in your business, both [in terms of] amount [as well as in] frequency and purpose. Necessary means it actually helps you increase your profits or expand your business,” explains Tom Wheelwright, a certified public accountant and author of the book Tax-Free Wealth (BZK Press, 2018).

Lastly, every expense must be properly documented. To get a deduction for travel, Wheelwright said that you must spend more than half your time during the business day doing business and have everything documented. “So, if you spend four and a half hours a day doing business, it becomes deductible. You also must have documentation, which includes receipts, of what you did, and a log of your expenses,” says Wheelwright.

On receipts, write the name of the client who you had the meal with for further proof. “Save the emailed confirmation and receipt from the hotel reservation or conference ticket payment that show the dates, times, and name of the events as well as the receipts from the travel it took to get there and back [such as for gas or flights],” says Ben Watson, founder of Fiscal Fluency , a personal finance and business coaching company.

Note that for 2024, the IRS mileage reimbursement rate is 67 cents for employees or a self-employed individual traveling for work, up from 65.5 cents in 2023.

Know, too, that you must be away from home overnight—the IRS requires an overnight stay for the trip to qualify as business travel, Wheelwright says.

Domestic travel versus travel abroad

There’s a big difference between how you calculate deductions if the work trip was taken in the United States versus abroad. According to Wheelwright, “It’s an all-or-nothing test in the U.S., so either you spent more than 50 percent of your time on business, and it’s all deductible, or you spent 50 percent or less and none of it’s deductible.”

For international business travel, the deductions work differently. He explained that when you travel to another country, the deduction is proportionate. “For example, if you spent 40 percent of your time doing business in Italy, then 40 percent is deductible,” says Wheelwright.

Stick to the rules

If you normally stay in more modest hotels, trying to deduct a luxe property stay could raise red flags.

Photo by Yokwar/Shutterstock

It has to be a legitimate business trip. “You can’t simply do some work while on the beach and call it a business trip,” says Watson. But if you make it a “bleisure trip” by adding a couple days at the beach onto your preplanned business trip to the coast, you could still write off at least some of your lodging fees, he explained. If you do extend your trip for vacation, you can only deduct the expenses that were directly related to work and took place on the days that you conducted business. If you are traveling to multiple cities, keep in mind that each must have a business purpose.

You do have to work. If you are at a conference, make sure you fully participate, which means not just attending one or two sessions. If you only attend a small number of the business-related events, the entire purpose of the trip would be considered a personal trip with “incidental” business activities, Watson points out. Remember you need a log of what you did, and if it’s thin on details, it could prove problematic. “You don’t want to lose the ability to deduct transportation, lodging, meals, and other expenses,” says Watson.

If it’s a business trip of your own making, be sure it includes meetings with clients or participating in some work-related activity. “To demonstrate evidence of these events, it’s wise to put calendar appointments down in your phone in advance and hold onto receipts when the time comes to file your tax return and claim your deductions. Remember, the primary purpose of this trip is [supposed to be] for work,” says Riley Adams, a CPA and CEO and founder of WealthUp , a financial literacy website.

Don’t try to bend what “ordinary and necessary” means. “If you have the ability to accomplish the same business tasks while staying at a modest hotel as you would at the Four Seasons, you’ll have a hard time justifying the extra cost if you’re ever audited,” Watson cautions.

Stay at a place that is similar to places you normally stay on a business trip, so your expenses are considered “ordinary.” Wheelwright explains that if you usually stay at five-star hotels for your business trips, then the Four Seasons would fall into the same category. However, if you usually stay at hotels like the Comfort Inn, and suddenly switch to a luxury hotel, the high-end venue could raise red flags with the IRS. He says that it doesn’t matter whether you stay at a hotel or a vacation rental, the quality level and price tag should be similar to what is typical for your business trips.

When traveling with non–business companions, such as a spouse or family members, you may only deduct the cost of the lodging you would have paid if you were traveling alone—for example, if a single room costs $150 per night, and you paid $200 for a double room, you could only deduct at the $150 rate.

What can you deduct?

You can deduct 50 percent of the cost of business meals.

Photo by Rawpixel.com/Shutterstock

Personal meals are not deductible, but half the cost of food expenses related to business can be deducted. Expenses for your family’s meals and entertainment cannot be deducted unless they are actively engaged in the business and you can show that their expense is both ordinary and necessary.

Travel expenses are only deductible on the days in which the work-related event occurs. “For example, a taxi ride to the meeting, train to a conference, or plane ride to the event [are deductible],” says Adams. “Lodging, much like travel expenses, is deductible on the days in which business is set to occur.”

Understand too, that if you’re provided with a plane ticket paid for by your company, or you’re riding free because you’re redeeming frequent flier miles, your cost is zero, so you can’t deduct it.

But there are a couple of things you may not be aware of. For example, if you have to ship your baggage, you can deduct that cost; you also can deduct for tips for services, such as a tip to the waiter during a meal with a client.

Be strategic

It’s best to put your “vacation” days in the middle of the business days, advises CPA Greg O’Brien. “For example, if [a] business owner took a seven-day trip to Florida and spent five days meeting with clients or prospects and two days relaxing on the beach, this would still qualify as a deductible business trip. The trick is to stick the ‘vacation’ days in the middle of the business days,” he says.

By placing the vacation days in the middle, the travel days to and from are still considered business related, rather than personal.

Watson offers another tip: “Laundry, dry-cleaning and shoe-shine expenses are perfectly acceptable expenses if incurred shortly after returning home.”

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A List of Business Travel Expenses You Can Write Off In 2023 [+Travel Expense Calculator & Tax Organizer]

Figuring out which business travel expenses you can write off probably registers on the fun-o-meter at the same level as root canals or bathing feral cats.

Travel agents are plagued with tricky questions when it comes to travel expense write-offs. If you have a few business meetings during a family vacation, how much of the trip can be a travel expense write-off? If you specialize in Europe does that mean any and all trips to Europe are tax write-offs?

Don’t worry. Stick with us and we’ll clear up what you can and can’t write off as a travel expense. I learned a thing or two when I chatted with Jay Elstad, a CPA (Certified Public Accountant) with Riley Martin Ltd , and Stephanie Cannon, a former accountant turned Founder of SC Travel Design . Our Friday 15 Episode with Stephanie Cannon in late 2022 is pretty much a movie trailer for this article!

It turns out that figuring out travel expenses is a lot less intimidating when you talk to professionals. So I’m here to share their wisdom with you. Starting with HAR's beauteous tax organizer! Download it now and keep it handy while you go through the article!

Here's how HAR's Tax Organizer looks in action:

To make it your very own, just click on the upper right-hand arrow on the document to download it for yourself! (If you have any issues or you don't have a Gmail account, we won't leave you out! Just drop us a line at [email protected] and we'll send it via email).

This article and the HAR tax organizer will ensure you’re tracking and logging expenses thoroughly and efficiently. Will it make tracking travel expenses fun? Um, no. Sorry. I’m not that good. But I will give you the tools to help you feel more confident when it comes to travel expenses.

⭐️  HAR ARTICLE HIGHLIGHTS:  ⭐️

• PDF: A list of travel expenses you can (and can't) write off
• Business Travel Expenses You Can Write Off
• Business Travel Expenses You Can't Write Off
• Hobbyists (or Travel Dabblers)
• Cruises & Travel Expenses
• The Elephant in the Room: Is a Vacation a Travel Expense?
• Travel Expense Scenarios for Travel Professionals
• Tips on Tracking & Documenting Your Business Travel Expenses
• Travel Expense Tracking Tools

A PDF Summary of Business Travel Expenses You Can (and Can't) Write Off

Our infographic details which business travel expenses you can (and can't) write off at a glance. If you're looking for crib notes, this PDF is it. But I highly recommend reading the rest of the article because business travel expense write-offs are all about nuance and the nitty-gritty.

A List Travel Expenses You Can Write Off

You can write off any travel expenses that are necessary, reasonable, and ordinary to your business operations. Below are examples of travel expenses you can (and cannot write off). Let's start with which write-offs are a green light.

1: Transportation

• By airplane, train, bus, or car between your home and your business destination.
• Fares for taxis or other types of transportation between the airport or train station and your hotel, or the hotel and the work location of your customers or clients, your business meeting place, or your temporary work location.
• Personal car usage or car rental: You can deduct actual expenses or the standard mileage rate (¢65.5 for 2023 travel), as well as business-related tolls and parking fees. If you rent a car, you can deduct only the business-use portion for the expenses.

2. Baggage or Shipping

Checking in your luggage? You can deduct that. Shipping display materials for the trade show? Go ahead and write that off too (so long as it’s between your regular and temporary work location).

You can deduct any of your business-related lodgings as an expense so long as it’s reasonable and necessary to your business (e.g. hotel/resort stay during a travel conference).

If you bring your sweetie/friend/kid you can only deduct lodging expenses that are reasonable for one person, for the nights/days that you worked.

4. Dry cleaning and laundry

If you have laundry or dry cleaning bills during your business travel, keep those receipts for your travel expenses. (I'm told that traveling to your basement to do laundry does not fall under this category.)

5. Communication Expenses (Beyond your work cell phone)

(beyond your cell phone): Your cell phone will already be deducted in a different category. But if you have any peripheral communications like leasing a satellite phone in Antarctica (sweet!) for emergency business calls, you can deduct that.

Tips include any gratuity to pay for the services noted on this list (porter fees, room service/cleaning, cab rides, etc.).

Note on cash: If you take out cash for tips (or other incidentals) from an ATM, the ATM receipt is not enough documentation. You should write down on your ATM receipt the date, location/service, and amount, for which you tipped if you want to take it as a deduction.

This one is super vague, but here it is in IRS speak, "Other similar ordinary and necessary expenses related to your business travel." (e.g. use of a hotel business center, hiring an interpreter, transportation to and from hotel to business event, etc.)

I saved meals for last because it's a little complicated. But here's what you need to know about meals. The IRS recommends using a standard meal allowance rather than engaging in the administrative gymnastic of saving every receipt form every meal. Here's the lowdown.

• You can (generally) deduct 50% of the unreimbursed meal cost. (Meals in 2022 can be deducted at 100% due to IRS' temporary rule, Notice 21-25 )
• Meals must be non-entertainment-related. In 2018, the tax law changed, rendering entertainment expenses 100% nondeductible . So if you go to a dinner theater show with a client and the meal portion is not itemized on your theater ticket, you cannot deduct it.
• There are two ways you can track/deduct meal expenses. You can either use a per diem or track your actual expenses. We’ll explore this soon , so stay tuned

A List of Travel Expenses You Can't Write Off

Now for the less fun part: Here are examples of travel expenses you CAN NOT deduct.

1. Entertainment

Entertainment is not an allowable expense. Going golfing at the resort with a potential client or a BDM (business development manager) while you’re at a business conference? Too bad . . . you’re going to have to do it on your own dime.

2. Family/friends/dependents traveling with you

If you’re traveling with a friend, family member, and/or dependent you cannot deduct any of their travel expenses.

If you feel like you fall under an exception to this rule—e.g. you compensate your family member/friend/dependent to fulfill necessary business activities during the trip and have the 1099 or W-2 to prove they work for you—talk to your CPA.

3. Lavish and extravagant

Lavish and extravagant expenses are not allowed by the IRS. However, they’re a little foggy on what defines lavish or extravagant saying only, “an expense isn’t considered lavish or extravagant if it’s reasonable based on facts or circumstances.”

If you think this may be a concern for you, talk to your CPA.

4. Travel that is compensated

This may seem obvious, but if your travel is comped, you cannot deduct it as an expense. For example, if you’re presenting at a conference and the event planner comps your entire hotel stay, you cannot deduct lodging.

The same also goes for using points on loyalty programs toward flight/lodging etc.

5. Personal vacations

You cannot deduct personal travel. When it comes to mixing business with leisure (I mean, do travel agents ever really stop working?), we get into a serious gray area. It’s such a doozie that it gets its own section. So read on.

Travel Expenses for Travel Advisor Hobbyists (or Travel Dabblers)

I’m not going to spend too much time talking about hobbyists. Just know that if you sell travel as a hobby, then none of your travel expenses are allowable in the eyes of the IRS.

How do you know if you’re a hobbyist? The IRS has a long list , including items like whether or not “you depend on the income for your livelihood” and other fun determining factors.

The IRS understands it can take a while to become profitable. Typically, you’re approaching hobbyist territory in the eyes of the IRS if you report a loss of three out of five years of business operations. (A loss means you’re claiming business expenses beyond your income.)

As with all things tax-related, there are exceptions as to what expenses are considered a loss, but that's above my pay grade. You’re a psychic now so you know what I’m about to say . . . talk to your accountant or CPA.

Cruises & Business Travel Expenses

Cruises are special snowflakes and are subject to their own rules when it comes to travel expenses. According to the IRS , “You can deduct up to $2,000 per year of your expenses of attending conventions, seminars, or similar meetings held on cruise ships. All ships that sail are considered cruise ships.”

This may not be the happiest news to cruise buffs who spend thousands per year on Seminars at Seas. But remember, I’m just the messenger (not the IRS).

If you want to write off your 2k in cruises, there are all sorts of stringent requirements you need to meet. Below, I am copying and pasting what the IRS has to say on the matter, verbatim (why reinvent the wheel):

You can deduct these [cruise] expenses only if all of the following requirements are met.

• The convention, seminar, or meeting is directly related to the active conduct of your trade or business.
• The cruise ship is a vessel registered in the United States.
• All of the cruise ship's ports of call are in the United States or in possession of the United States.
• You attach to your return a written statement signed by you that includes information about:
• The total days of the trip (not including the days of transportation to and from the cruise ship port),
• The number of hours each day that you devoted to scheduled business activities, and
• A program of the scheduled business activities of the meeting.
• You attach to your return a written statement signed by an officer of the organization or group sponsoring the meeting that includes:
• A schedule of the business activities of each day of the meeting, and
• The number of hours you attended the scheduled business activities.

Again, if you think your cruise trip/business model is an exception, or you have a bone to pick with these rules, don’t call me. [Enter refrain] Talk to your CPA.

The Elephant in the Room: Is Your Vacation a Travel Expense?

I know that CPAs and accountants everywhere are probably going to duck and cover at the merest whisper of deducting trips that have even a whiff of personal travel.

But as a travel agent, it’s confusing since you need to travel to run a successful and profitable business.

Sure, it’s easy enough to justify travel expenses for a conference or an escorted FAM (familiarization trip). But when it comes to deducting travel expenses for any trip that’s in any way attached to personal travel, you’re entering some serious gray area (I like to call this Grayland).

The IRS isn’t super helpful when it comes to navigating Grayland. Their verdict is this, “If your trip was conducted primarily for personal reasons, such as a vacation, the entire cost of the trip is a nondeductible personal expense. However, you can deduct any expenses you have while at your destination that are directly related to your business.”

Not exactly cut and dry. Sigh.

I can’t advise you on your taxes (trust me, everyone loses in this scenario). But here are a few guiding questions that help you determine if your trip is justifiable as a travel expense (and to what extent).

1. What is the primary purpose of your trip? You know in your heart of hearts whether your primary purpose is business or personal. If your primary purpose is to go to Mexico with your family, it’s going to be a tough sell to deduct your travel expenses. (Even if you do sell the resort or region you’re staying at.)

If the primary purpose of your trip is an Oaxaca FAM that’s sponsored by the Mexico tourism board, then that’s a different story. We’ll talk more about mixing business with pleasure later. But here’s the major takeaway: You can deduct only the expenses of your trip that are directly related to business. (Remember: reasonable, ordinary, necessary).

2. How much of your trip is spent on activities directly related to business activities? You can only write off the travel expenses directly related to business activity. So if you spend 10 days in Mexico with your family, but you spend 3 days ditching your family to go on-site inspections you scheduled weeks ago, you can reasonably write off a portion of your trip as a business expense.

Conversely, if you go on your family vacation and decide to pop into the nearest Sandals at the last minute for a self-administered “tour” in the name of business activity, that is a serious foul in the eyes of the IRS. (We’ll get into scenarios later).

3. Will your business derive income from the trip? You can have the most un-fun, jam-packed business trip in the world. But if you don’t make a good-faith effort to do any follow-up (ahem, earn moolah) with all your great meetings and research, then this could raise a red flag to the IRS.

4. Is the business activity necessary to your business/niche? If your niche is Italy, it’s going to be tough to write off a trip to Hawaii if you’ve never booked that destination (and don’t plan on doing it any time soon).

5. Is the trip necessary to the business operations you’re conducting? Working away from your tax home doesn’t automatically qualify as a travel expense. To deduct travel expenses, the business activity must necessitate the trip.

For example, if I go visit a friend in Paris and spend three full days working on this blog post about travel expenses, I may not deduct my trip as a business expense because I could easily conduct these business operations from home. Major bummer (because who isn't inspired to write about travel expenses when they see the Arc de Triomphe?)

The same goes for travel agents. If you’re on a family vacation but you’re still booking trips and supporting your clients from afar, your travel expenses are not deductible as travel expenses 1 because the trip wasn’t required for that particular business activity.

At the end of the day, you need to rely on your common sense (or, better yet, the common sense of your CPA or accountant). Remember the golden rule: travel expenses must be reasonable and necessary to your business.

How do you decide what’s reasonable? The following scenarios will help provide a little perspective.

Business Travel Expense Scenarios for Travel Agents

When it comes to deducting any business travel expenses that are (in any way) attached to personal travel, the CPA/accountants I chatted with agreed to proceed with caution.

If you’re mixing personal and business travel, be clear about what days you spend working and document your meetings and business activity during those days.

As an example, here are a few scenarios by way of example. Please remember that these scenarios are just crib notes. They’re intended to help give you a lay of the land, not to advise you in any way shape, or form:

Scenario 1 (The Conference)

You fly to the annual ASTA conference on Tues. and stay through Fri. The entire time is scheduled with conference activities except for breakfasts, which you purchase every morning at the resort cafe and charge to your room. On Thurs. night after the conference is over, you take an Uber to meet your long-distance college friend for dinner and drinks. You fly out early Friday morning.

Travel expenses are entirely deductible except for the Uber rides (to and from) and dinner and drinks with your friend.

Scenario 2 (The FAM)

You’re invited to an escorted FAM in Hawaii. The FAM is 3 days, but you decide to take your family with you and extend your trip, tacking on a 7-day family vacation after your FAM. You stay at the same resort with your family as you did during the FAM.

Since your business operations necessitated the trip to Hawaii, you can write off 100% of your flight and transportation to and from the airport (so long as it’s reasonable). Why? Because you’d have to fly to and from Hawaii and transfer to and from the airport to conduct your business anyway.

Additionally, you can also deduct other travel expenses incurred while you were working (such as meals and incidentals). If you rented a car, you can prorate your rental fees according to what percentage of the time you used it for work (e.g. 30% for 3 of ten days of total cost may be deductible).

Scenario 3 (working on vacation part I)

You’re on a family vacation to Disney World for 5 days. You take a last-minute lunch meeting to meet a new property manager at a resort you often book. The rest of the time, you enjoy with your family, posting about your time together on your travel agency's social media.

None of this trip is deductible except for your meal with the property manager. Sad face.

Scenario 4 (working on vacation part II)

A baseball fanatic, you decide to go to Japan for the Japan Series. While you’re there, you bring work with you and spend three hours per day booking trips and supporting your traveling clients. The rest of the time, you watch baseball and explore Japan.

None of your travel expenses are deductible because your trip to Japan wasn’t necessary for the business operations you were conducting while there.

These scenarios are merely examples. I know that real-life scenarios are much more complicated. If you’re mixing personal and business travel, be clear about what days you spend working and document your meetings and business activity during those days.

At the end of the day, it’s easiest to document your business activity and track expenses if you keep your personal and business travel separate. And let’s be honest, it’s best for your work-life balance too! Ultimately, you need to ensure you’re doing your due diligence to record and document your trips. Guess what?! We have a few tools to help you do just that.

Pro Tips on Tracking & Documenting Your Business Travel Expenses

Entering your expenses on beautiful sheets is just part of the administrative fun of tracking travel expenses.

Beyond that cursory bookkeeping, you need to have receipts, journals, and other documentation to back up your travel expenses. Why?

If the IRS comes calling with an audit letter, you may need to provide your documentation to prove that your travel expenses were (wait for it) reasonable and necessary. To make things more exciting, the IRS can hit you up for explanations about travel you took years ago.

Get all the info you need: When it comes to big-picture travel expenses, make sure that the receipts have all the details necessary to satisfy the IRS.

Here’s what the IRS considers enough detail:

• Destination Area of Travel
• Date(s) You left for and returned from your trip
• Number of days spent on business
• Amount of expense(s)

Here are a few tips to make this process as painless as possible:

1. Track Your Cash for incidentals: This tip is from Jay: If you take out cash for tips (or other incidentals) from an ATM, the ATM receipt is not enough documentation. You should write down on your ATM receipt the date, location/service, and amount, for which you tipped if you want to take it as a deduction.

2. On meal receipts, write down who attended and what business you discussed: This will help you jog your memory if you ever need to provide further documentation for your expense.

3. For transportation expenses beyond going between the airport and hotel, write down where you’re going: When you’re taking the rideshare to the ASTA gala, write down the destination/event on your receipt.

4. Keep detailed journals/documentation of business you conduct during travel: This is especially important for “Grayland” travel. It’s a benefit for yourself as much as it is for the IRS. But after your trip, write down your actionable items that relate to how you will derive income from your trip.

Are you going to create a new marketing initiative based on the site you toured? Great. Are you going to follow up with future potential clients? Fabulous. Are you growing your list of supplier contacts to expand your book of business? Write down how you plan to follow up on your trip to grow your business.

The truth is that as a good business person, you'll have all this information at your fingertips. Really, it’s just a matter of corralling all that info into one place.

Pro Tips on Developing a Documentation System for your Travel expenses

Stephanie Cannon weighed in on the importance of developing a system to document your expenses. See her tip below:

It's not only crucial to track the various trip expenses but to also develop a documentation system. In this digital age, I use folders on my computer, 1 for the year, and multiple for each trip during that year. Inside each trip folder, I include a summary sheet (Excel) that lists out all of the transaction details for each expense with a note of what it was for. I then upload all of the appropriate receipts for safekeeping (and store any paper copies in a large envelope).

~ Stephanie Cannon (2022)

Want to see this in action? Join Stephanie for her (free) "Travel Advisor's Know Your Numbers Challenge." Her challenge is the runway into a more in-depth Bookkeeping Bootcamp for travel advisors, covering how to set up and complete their bookkeeping process on a routine basis, no matter what “tool” you decide to use.

How Long Do I Keep all this Fun Documentation?

The IRS is allowed to dredge up the past. So you want to hang on to all your tax documents. If you’ve been in the biz for a while, you probably have enough receipts to wallpaper your entire house.

So when exactly can you throw all the stuff away? The rule of thumb is to keep documentation for:

• 3 years from the date you filed your return or
• 7 years if you claim a loss

If alarm bells went off when you read “rule of thumb” in regard to taxes, then you’re really getting the spirit of this article! Don’t take it from me. Read the lengthier recommendation on the IRS site or [enter refrain] talk to your CPA.

Travel Expense Calculator & Tracker

We whipped up a few goodies to help you along your voyage of figuring out your travel expenses. Now that you know which of your travel expenses you can deduct, we have a nifty resource you can use to approximate how much of your trip you can write off. It's also a resource to help you document the purpose of your trips as well (in case you need to refresh your memory).

How does it work?

• Enter your total deductible expenses
• Document the purpose of your business travel
• upload receipts

This means that all your travel documentation will be at your fingertips for bookkeeping purposes so if the IRS calls you and asks the purpose of that travel conference and FAM at an all-inclusive in Puerto Vallarta, then you have everything you need at your fingertips.

Here's a quick look at how the travel expense calculator works:

You give the travel expense calculator a gander. But know that, if you decide you want to copy and download the template for yourself or your business, you'll need to create a free Airtable account (essentially it's a spreadsheet on steroids). This tool will help calculate and track your travel expenses and provide the kind of documentation the IRS (or your bookkeeper) wants to see!

HAR's Tax Organizer

2. har tax organizer.

We're so excited about HAR's tax organizer that we're going to put the download in our article a second time! (In case we didn't have you convinced at the beginning of the article.

Now you know your actual travel expenses, and you can enter your tally! Hurray! But where do you put all this delectable information? That’s right, in your HAR Tax Organizer !

Now, if I may say so myself, HAR’s tax organizer is a thing of beauty. It’s a form where you calculate all your business expenses. That’s right, we’re talking waaaay beyond travel expenses here!

So download your form and give it a test run by entering your travel expenses.

Other Travel Expense Tools!

1. tracking apps (har uses expensify ).

The more you travel, the more impossible it will be to remember the Wheres? Whys? and What Fors? of your travel expenses. If you are overwhelmed at the thought of tracking all your expenses, stop everything and download an expense-tracking app.

I’m sure there are a ton of expense apps out there, and we’re not going to dig into different options here. HAR uses Expensify. It’s user-friendly and helps create reports very quickly.

What do you use? Tell us in the comments!

2. Per Diem Rate Calculator:

Per diem rates vary depending on where you're going (and what year it is). This is a nifty way of determining legitimate, standard per diem rates according to your destination. Remember, if you’re self-employed, you can only use the meal and incidental expenses (M&IE) per diem and you must still document all the expenses.

3. Accounting/ Bookkeeping Software

Below is a list of accounting software.

• Quickbooks , Freshbooks , and Xero are great for smaller agencies or if you’re starting out. If you want a free option, you can use a Google Spreadsheet or Excel document. (HAR uses Quickbooks.)
• TRAMS and Globalware are for large travel agencies and are travel-specific (unlike the above programs). For the average agency, these programs are not cost-effective.

If you're a die-hard DIY-er You can also use free resources such as Google spreadsheets or Excel sheets.

Thank Yous!

I can’t emphasize enough how little I knew about taxes before chatting with these amazing people: Stephanie Cannon, thank you for sharing your very rare travel-accounting hybrid knowledge with me, and for reviewing this article to help insure it provides the latest juicy gossip on tax regulations!

Jay Elstad has a ton of experience working with travel professionals. I called Jay during his BUSIEST season (mea culpa)! And you know what, he didn’t even get mad at me. In fact, he really went the extra mile to answer my questions and review this article.

Editor's Note: This article was first published on March 2nd, 2020. We update and republish it annually to include the latest information on travel expense deductions. The most current publish date is listed at the top of the article.

• It’s important to note we’re talking about travel expenses only. You can still write off necessary office expenses you need to conduct business, such as phone calls, wifi, a portion of lodging used for your office, etc. ↩

About the Author

Mary Stein has been working as a writer and editor for Host Agency Reviews since 2016. She loves supporting travel advisors on their entrepreneurial journey and is inspired by their passion, tenacity, and creativity. Mary is also a mom, dog lover, fiction writer, hiker, and a Great British Bake Off superfan.

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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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Meal and vehicle rates used to calculate travel expenses for 2023

The rates for 2024  will be available on our website in 2025 . If you are an employer, go to Automobile and motor vehicle allowances .

Meal and vehicle rates for previous years are also available.

The following applies to the 2023 tax year.

To calculate meal and vehicle expenses, you may choose the detailed or simplified method. Your total travel expenses equal the total of the value of travel assistance provided by your employer and the travel expenses incurred by you. Include any travel expenses paid by your employer.

Detailed method – This method allows you to claim the actual amount that you spent. Keep your receipts in case the CRA asks to see them at a later date.

Simplified method – This method uses a flat rate for meals and vehicle expenses. Although you do not need to keep detailed receipts for actual expenses if you choose to use this method, the CRA may still ask you to provide some documentation to support your claim.

Meal expenses

If you choose the  detailed method  to calculate meal expenses, you must keep your receipts and claim the actual amount that you spent.

If you choose the  simplified method , claim in Canadian or US funds a flat rate of $23 per meal , to a maximum of $69 per day (sales tax included) per person, without receipts. Although you do not need to keep detailed receipts for actual expenses if you choose to use this method, the CRA may still ask you to provide some documentation to support your claim.

Vehicle expenses

If you choose the detailed method to calculate vehicle expenses, you must keep all receipts and records for the vehicle expenses you incurred for moving expenses or for northern residents deductions during the tax year; or during the 12-month period you choose for medical expenses.

Vehicle expenses include:

• operating expenses such as fuel, oil, tires, licence fees, insurance, maintenance, and repairs
• ownership expenses such as depreciation, provincial tax, and finance charges

Keep track of the number of kilometres you drove in that time period, as well as the number of kilometres you drove specifically for the purpose of moving or medical expenses, or for the northern residents deductions. Your claim for vehicle expenses is the percentage of your total vehicle expenses that relate to the kilometres driven for moving or medical expenses, or for northern residents deductions.

For example, if you drove 10,000 km during the year, and half of that was related to your move, you can claim half of the total vehicle expenses on your tax return.

Although you do not need to keep detailed receipts for actual expenses if you choose to use the simplified method , the CRA may still ask you to provide some documentation to support your claim. Keep track of the number of kilometres driven during the tax year for your trips relating to moving expenses and northern residents deductions, or the 12-month period you choose for medical expenses. To determine the amount you can claim for vehicle expenses, multiply the number of kilometres by the cents/km rate from the chart below for the province or territory in which the travel begins.

Table of 2023 kilometre rates for the province or territory

Page details.

What is mileage reimbursement?

Depending on how much you drive for business, mileage deduction or reimbursement can add up to significant savings Learn how self-employed people can deduct business-related miles driven from their taxable income.

Ready to start your business? Plans start at $0 + filing fees.

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Updated on: April 16, 2024 · 17 min read

IRS mileage reimbursement policy

How to calculate your irs mileage deduction, requirements for irs mileage rate reimbursement, use reimbursement to your advantage, mileage reimbursement faqs.

For self-employed professionals, every mile traveled can represent both an expense and an opportunity. You can claim mileage reimbursement or a deduction from the Internal Revenue Service (IRS) for all business miles driven. 

Whether you're a freelance consultant meeting clients across town, a real estate agent scouting properties, or a gig economy worker shuttling passengers, the miles you rack up on your vehicle are more than just a journey—they're potential deductions and reimbursements that can significantly impact your business’ bottom line.

Navigating the complexities of mileage reimbursement as a self-employed individual can be daunting. Unlike traditional employees who often have mileage reimbursement policies set by their employers, self-employed professionals must establish their own reimbursement policy and understand how to leverage IRS tax laws to maximize their deductions and reimbursements.

From understanding which miles are deductible, what forms you need to file, and how to leverage technology for seamless tracking, we'll equip you with the knowledge and tools necessary to navigate this crucial aspect of self-employment with confidence.

Mileage reimbursement, also known as mileage deduction, allows self-employed individuals to deduct the cost of business-related driving from their taxable income. Each mile you drive for business can be deducted from your taxes at the end of the year. 

Typically, a reimbursement or deduction for mileage is calculated based on the number of miles driven for business purposes, using a predetermined rate per mile set by the IRS.

Mileage reimbursement serves as a means to fairly compensate individuals for the expenses incurred while using their personal vehicles for work-related activities, thereby helping to offset the financial burden of business-related travel. For self-employed people, these miles driven are considered one of many business expenses. 

Eligible miles:

• Client visits : Driving to meet clients or potential customers
• Business errands : Picking up supplies, going to the post office, or any other errand for your business
• Travel to a temporary workspace : Driving between one workplace and another or from home to a temporary workplace
• Business events : Travel to conferences, workshops, or any other business-related events

Non-eligible miles:

Commute : Drive from home to your regular workplace and from your workplace back home

Personal : Any miles incurred for non-business activities are not deductible

Key takeaways 

This guide dives deep into the requirements and technical details of receiving reimbursement for business miles. You can expect an understanding of:

• What mileage reimbursement is
• How self-employed people can deduct business-related miles driven from their taxable income
• How you can choose between the standard and actual mileage deduction
• Depending on how much you drive for business, mileage deduction or reimbursement can add up to significant savings
• The 2024 IRS mileage deduction is 67 cents per mile driven

Who is this guide for?

This guide focuses on mileage reimbursement policy for self-employed people.

Self-employed people who are eligible for mileage deduction are:

• Small business owners who report their income on Schedule C
• Freelancers
• Independent contractors
• Delivery and ride-share drivers (independent contractors)
• Real estate agents
• Truck drivers

In brief, we will cover mileage reimbursement for traditional employees, active duty military, and miles incurred for charitable organizations. 

Who is mileage reimbursement for, and why is it important?

Mileage reimbursement is for anyone who uses a vehicle for business purposes. It can be for employed and self-employed people. 

This guide primarily focuses on self-employed individuals and the requirements they must follow to receive mileage reimbursement or deduction from the IRS.

In addition to business mileage reimbursement payments, you can receive mileage reimbursement for some personal miles. Those include:

• Mileage related to medical appointments
• Miles driven while volunteering for a non-profit

The IRS mileage reimbursement policy is that self-employed people can deduct business-related miles driven from their taxable income. The IRS lays out two different methods for calculating how much you can deduct based on eligible miles driven. 

Federal mileage reimbursement guidelines

The IRS offers two different ways to calculate the amount of deduction you’re eligible for. You can choose between the standard and actual mileage rate deductions. 

How you use your car will determine which reimbursement method you’ll want to use. If you’re eligible for either method, you may want to calculate which will allow you to deduct more and choose that method.

The IRS updates the mileage rate each year . In 2024, the deduction rate for self-employed and business miles is 67 cents per mile driven. 

This rate is intended to take into account depreciation or wear and tear on the vehicle, the cost of gas, and the expense of regular maintenance.

Who’s eligible for mileage reimbursement?

If you are self-employed and sometimes use your vehicle for business purposes, you’re eligible for federal mileage reimbursement. 

There are a few stipulations on who is eligible:

• You must own or lease your vehicle
• You must be self-employed. This includes small business owners, delivery and ride-share drivers, independent contractors, sales representatives, real estate agents, and truck drivers
• Only business-related miles are eligible for mileage deduction. Personal travel and travel from home to work (your commute) are not eligible for deduction.

Those who are not eligible for business mileage reimbursement include:

• People who are not self-employed
• People who use more than four cars at the same time can’t use the standard deduction (If you have five employees, all of whom will be driving at 9 a.m. on Monday, then you’ll need to use the actual deduction method.)

An employer can offer mileage reimbursement to employees who drive as part of their job duties. If an employees uses their personal vehicles for business purposes, you can reimburse employees 67 cents per mile on the employee’s paycheck. 

To pay employees, it’s as simple as asking employees to track their mileage and then provide mileage reimbursement.

Charity, medical, and armed forces

In addition to the above mileage reimbursements, some people are eligible for reimbursement for medical or moving purposes. 

Members of the armed forces are eligible for reimbursement for expenses incurred while moving. This deduction is only for qualified active duty members. 

The mileage reimbursement rate for medical and moving purposes is 22 cents per mile driven.

Mileage reimbursement requirements: What’s covered and what’s not

In short, most miles driven for business use are eligible for reimbursement or deduction under federal law. There are a few exceptions to this rule.

In addition to receiving a reimbursement for business mileage, you can also deduct other vehicle-related expenses. This applies to people who choose the actual reimbursement rate. If you choose the standard rate deduction, that has built in the assumed cost of maintenance, gas, and vehicle depreciation to the deduction rate.

For example, if you use your car for a mix of business and personal and your business use is approximately 40 percent of all use, you can deduct 40 percent of your other vehicle-related expenses. This includes gas, car loan interest, and maintenance. You should maintain receipts for all vehicle expenses in case of an IRS audit.

Eligible miles :

• Business errands : Picking up supplies, going to the post office, or any other errand for business purposes
• Travel to temporary workspace : Driving between one workplace and another or from home to a temporary workplace

Non-eligible miles :

Mileage deduction if you work from home

Many self-employed people choose to work from home. If you work from home, the deduction rules change slightly. Generally, mileage from your commute when driving from home to work is not deductible. This changes when your home is also your primary place of business.

If your home is the primary place where you work, you can deduct mileage when driving to and from home for business-related purposes. This is no longer considered a commute.

How much can you deduct from your taxes for mileage reimbursement?

The IRS has no upper limit. You can deduct as many business miles as possible; there’s no cap.

If you are deducting a high amount of miles, be sure to keep clear records as the IRS may want to review those records to ensure all claimed miles were actually eligible for a deduction.

How much, on average, do people claim on their taxes for mileage reimbursements?

The amount of IRS mileage deduction claimed varies greatly from person to person. There is no upper limit to how many miles you can claim for deduction or reimbursement.

A freelancer who primarily works from home and meets with clients virtually will have only a few business miles a year to deduct. On the other hand, an independent contractor who works as a ride-share or delivery driver could have thousands of eligible business miles to deduct in a year. Mileage reimbursement policy can offer a significant tax break for someone who drives a lot for work. 

Are there other vehicle-related deductions?

But, you’re only eligible for other vehicle-related deductions if you choose the actual mileage deduction method. If you choose the standard deduction, your additional deductions are built in. As well, you must own or lease your vehicle to be eligible.

If you’re using the actual mileage reimbursement, you can deduct the actual costs of depreciation, lease payments, maintenance and repairs, gas, oil, insurance, and vehicle registration fees.

According to the IRS mileage reimbursement policy, if you’re using the actual reimbursement method, you can deduct the percentage of expenses of your car that’s equal to your use. 

You can also deduct the depreciation value of your car. To calculate depreciation, you’d use the Modified Accelerated Cost Recovery System (MACRS) method. This method is used to depreciate any car placed in service post-1986. This applies only to individuals who have always used the actual reimbursement method.

If you have used the standard mileage rate for deduction in previous years, then you must use a straight-line depreciation method to calculate your depreciation deduction.

You can also deduct the cost of parking fees and tolls. These costs are deductible, but won’t be calculated in the actual mileage reimbursement. Fees and tolls are a separate deduction. As well, the fee to park at your place of work is non-deductible.

If you’re self-employed and use your vehicle for business purposes at least some of the time, you’re eligible to deduct the mileage rates from your year-end taxes.

There are two ways to calculate the mileage tax deduction for self-employed people. 

• Actual mileage reimbursement
• Standard mileage reimbursement

Your eligibility for these deductions depends upon:

• If you’re self-employed
• If you use your vehicle for business purposes
• If you own or lease your car
• Which method you used the previous year

If you are eligible for both methods, it’s recommended that you calculate the deduction both ways to figure out which method will give you a larger deduction. 

Methods of mileage reimbursement calculation

There are two methods of reimbursement offered by the IRS to people who are self-employed and use their owned or leased vehicle for business purposes.

The two different ways to calculate your reimbursement are actual mileage reimbursement and standard mileage reimbursement.

Standard mileage reimbursement rate

The IRS standard mileage rate is a set rate that’s defined each year by the IRS. Self-employed people receive a mileage deduction of a set number of cents per business mile driven. 

The standard mileage reimbursement rate accounts for the depreciation and maintenance costs of operating your vehicle in the calculation. This means that those additional expenses are no longer deductible.

The standard mileage reimbursement rate in 2024 is 67 cents per mile driven.

Self-employed people who use their vehicle for some business-related purposes will receive a deduction of 67 cents for every mile they drive for business on their year-end taxes.

The standard IRS mileage rate is for self-employed people who own or lease their vehicles. Generally, this deduction is chosen by those who use their vehicle sporadically for business. 

If you meet the below criteria, you cannot use the standard rate mileage reimbursement:

• Operate five or more cars at the same time
• Have claimed a depreciation deduction other than straight-line
• Have claimed a Section 179 deduction on your car 
• Have claimed actual expenses in previous years

An important note: If you’re planning to use the optional standard mileage rate deduction, you must opt for this from the first year your car is used for business. If you lease your vehicle, you must use the standard mile rate reimbursement for the entire lease period, including renewals.

You cannot choose the actual expenses option and then switch to the standard option the next year. Though, the reverse is allowed. 

Actual expenses mileage reimbursement method

As an alternative to the standard, you can choose the actual expense mileage reimbursement rate.

The actual expense mileage reimbursement method allows you to deduct the actual cost of operating and owning the car. 

If you use your car solely for business purposes, this means you can receive tax deductions for expenses. If you use your car for a mix of personal and business use, then you can deduct a percentage of expenses proportional to your business use of the car. 

For example, if you drive your car for business 25 percent of the time, you can deduct 25 percent of all expenses. 

Expenses included for deduction in the actual expenses mileage reimbursement method:

• Lease payments or depreciation
• Maintenance
• Registration fees
• Garage space rental fee
• Trailer rental cost (if hauling tools)

If you’ve used the actual expense method in previous years, you may not be able to switch to the standard mileage rate deduction. Using any of these three types of depreciation will disqualify you from switching:

• Section 179 deduction
• Depreciation deduction
• Special depreciation allowance

Tips to choose the right reimbursement method for you

Choosing the right IRS mileage reimbursement method might not be an obvious choice

Here are a few tips to help you decide which method is right for you and your business:

• Calculate your deduction using both methods. Choose the method that will offer a higher deduction.
• If your car is more costly to operate and maintain than average, consider the actual expense method.
• If you own a new or expensive car, the actual expense method is likely to offer a higher deduction for you.
• If you don’t drive often or much for business, the standard deduction requires keeping track of fewer receipts and takes less time to calculate.
• If you drive a fuel-efficient or hybrid vehicle with low maintenance cost, you may receive more in reimbursement from the standard deduction than the actual deduction.
• Ask for advice from a tax professional.

Switching between actual and standard mileage reimbursement

It’s very important to note that you may not be eligible to switch between the two types of mileage reimbursement, depending on which type of reimbursement you chose in the past. Which reimbursement you’re eligible for also depends upon whether you lease or own your vehicle.

If you own your vehicle

If you chose the actual expense method the first year it was available to you, then you will not be eligible to switch to using the standard mileage rate in any following year for that vehicle.

If you chose the standard mileage rate method in the first year, you may choose between the two methods in the following tax years.

If you think you might want to switch how you calculate mileage reimbursement in future years, be aware of which depreciation calculation you choose. This may disqualify you from the standard mileage rate method. 

If you choose any of these three depreciation calculations, you’re no longer eligible for the standard rate reimbursement method:

If you lease your vehicle

If you want to use the standard rate mileage deduction for a leased car, you must do so throughout the entire lease period. This includes all lease extensions.

There are several requirements for mileage reimbursement documentation. The IRS needs to see certain things in order to grant your deduction.

Mileage deduction documentation

According to the IRS , “the law requires that you substantiate your expenses by adequate records or by sufficient evidence to support your own statement.”

You might need different records depending on the reimbursement method you choose. The actual method requires more documentation as it allows you to deduct more business-related expenses.

Records you might need to keep:

• Receipts for all car maintenance
• Proof of purchase
• Proof of lease or ownership
• Log of miles driven 

What’s required on mileage reimbursement documentation logs?

A mileage reimbursement log tracks the miles you drive for your business. These records should be kept as they happen or soon after. The IRS considers the log to be timely if it’s updated at least weekly.

The log should include:

• Destination

Your log should also include your mileage at the beginning and the end of the year to show your total mileage.

How to track mileage

There are a number of different methods you might use to track your mileage. Whichever method you choose, your records should be timely and accurate.

First, you must log your mileage at the beginning and end of the year. This shows the total mileage that was driven.

Next, you’ll want to keep a log of all personal trips and business mileage driven. You can keep your log in a notebook, a spreadsheet, or use a tracking app.

There are a number of apps on the market for tracking business miles. You can find standalone mile-tracking apps or use one that’s built into your accounting software. 

If you didn’t track your miles this year but want to deduct them, you may be able to go back through your timeline on your phone’s map app, which may automatically track your location. 

Receipts and records

If you’re using the actual method for mileage reimbursements, you will also need to keep receipts for all expenses related to your vehicle. You will be able to deduct all or a portion of those expenses on your year-end taxes.

Mileage reimbursement tax procedures

If you’re preparing your own taxes as a business, it’s important to know where to file for your mileage reimbursement.

Sole proprietors will deduct car expenses on Schedule C, Form 1040.

In addition to reimbursement for business mileage, you can also receive a deduction for other miles driven. You might claim a deduction for:

• Miles driven for charity: 14 cents per mile, 2024
• Miles driven for medical reasons: 22 cents per mile, 2024

Understanding reimbursement policy is paramount for self-employed professionals seeking to optimize their finances and accurately account for the costs associated with business-related travel. 

With careful attention to detail and proactive planning, self-employed professionals can harness the benefits of mileage reimbursement to enhance their financial well-being and drive success in their entrepreneurial endeavors.

Is gas included in mileage reimbursement/tax deductions?

If you use the standard mileage rate for reimbursements or deductions, you cannot deduct expenses for gas. That being said, the cost of maintaining a vehicle (including gas) is built into the calculation for how the IRS sets the per-mile deduction.

In 2024, the per-mile deduction rate for self-employed professionals is 67 cents.

If you choose to use the actual rate, you can deduct the price of gas (among other expenses) used for business driving.

How does the IRS calculate mileage reimbursement?

The IRS calculates the rate for the standard mileage reimbursement by looking at the fixed and variable automobile operating costs.

The IRS reevaluates the standard mileage reimbursement rate each year and new rates are issued as the costs of maintaining and owning a vehicle rise or fall. 

The standard mileage deduction rate applies to gasoline and diesel-powered vehicles, as well as electric and hybrid vehicles.

What would I do if I didn’t track my mileage this year?

The IRS requires timely and accurate records to be kept in order to file for a mileage deduction. Timely is considered weekly.

If you forgot to track your mileage this year, you may be able to prove a claim with:

• A statement that includes specific information about the untracked miles
• Provide sufficient supporting evidence through other sources

If you regularly travel with your phone and have location tracking on, you may be able to recreate the business miles you drove through a map timeline. 

Can I deduct miles to and from work as an independent contractor?

You cannot deduct your commuting miles, which is defined as your drive from home to work and back. 

But, if your home is your primary workplace, you can deduct miles from your home (place of work) to temporary work sites, meetings, or other business-related purposes.  

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Medical mileage rate 2024: everything you need to know.

A mileage deduction is a type of reimbursement US citizens can claim on their federal income tax returns, based on how much driving they have done under specific conditions, like for medical or moving purposes. Taxpayers cannot claim a deduction for moving expenses unless they are members of the Armed Forces on active duty moving under orders to a permanent change of station. 

In 2024, the IRS medical mileage rate is 21 cents per mile, offering taxpayers a small break when they drive their vehicle to receive essential medical care.

Unexpected or long-term health issues can quickly drain your bank account, but using the medical deduction can help you recoup some of the expenses associated with traveling to and from doctor’s appointments, going to the hospital, parking fees, and other costs associated with travel for medical reasons, reducing the overall medical expenses you pay over the year and helping you stay financially stable, even during challenging times. 

Key Takeaways

• The medical mileage rate in the US for 2024 is 21 cents for each mile driven.
• Standard medical mileage rates, parking fees, tolls, and other qualified transportation amounts can be deducted when filing your taxes.
• Medical mileage deductions must be directly related to the diagnosis, treatments, prevention, cure, or mitigation of health problems.  
• Travel expenses paid by HSAs, FSAs, and HRAs cannot be deducted from your taxes.
• Itemized medical deductions can be claimed by filing Schedule A (Form 1040) during tax time. 

Table of Contents

• Medical Mileage Rate in 2024
• What Is the IRS Standard Mileage Rate for 2024
• What Is the IRS Medical Mileage Rate for 2024?
• What Is Included in the Medical Mileage Rate
• How To Calculate Medical Mileage With the IRS Medical Mileage Rate
• How To Calculate Your Medical Deductions
• Can HSAs, FSAs, or HRAs Be Used to Pay for Medical Travel?
• How To Claim Tax Deductions Using IRS Mileage Rates
• Effortless Mileage Tracking with FreshBooks
• Frequently Asked Questions

Medical Mileage Rate in 2024 

The IRS medical mileage rate for 2024 is important when determining tax deductions for your medical travel expenses, as it allows you to calculate the approximate dollar amount you can write off using simple math. These types of deductions can relieve some financial strain, especially if you’ve put wear and tear on your vehicle and spent money on fuel and tolls to get to and from medical appointments. 

What Is the IRS Standard Mileage Rate for 2024? 

The standard mileage rate for business use and self-employed individuals is not the same as the rates offered for medical and moving purposes for Armed Forces members. The 2024 standard IRS mileage rates are as follows:

• 67 cents per mile when driving for business use
• 21 cents for each mile when driving for medical reasons
• 21 cents for each mile when qualified active duty members use their vehicle to move
• 14 cents per mile when driving in service of charitable organizations 

These rates apply to cars, hybrid electric automobiles, diesel-powered vehicles, vans, pickup trucks, or panel trucks. 

For claiming medical mileage in 2024, taxpayers may choose to use the standard deduction rate for mileage, tolls, and parking fees, or instead, deduct the cost of gas, oil, and other out-of-pocket expenses. Unlike business deductions, you may not deduct fixed and variable costs like insurance, general repair, or maintenance expenses. 

What Is the IRS Medical Mileage Rate for 2024? 

The IRS medical mileage rate for 2024 is 21 cents per mile. 1 IRS. “ Standard mileage rates ” Accessed March 26, 2024. It has changed from 22 cents per mile to 21 cents, a decrease of 1 cent from 2023. This means that when you take a trip related specifically to medical reasons, 21 cents for each mile driven may be written off from your taxes at the end of the year. You can write medical mileage off provided you have accurately tracked your mileage, and you have supporting documents. You must also keep detailed travel records to prove that the miles driven qualify under IRS rules.

Individuals seeking tax deductions for medical travel expenses benefit as the deduction can help recoup some of their vehicle wear and tear and fuel costs associated with traveling due to medical conditions beyond their control. You can also deduct parking fees, tolls, and other qualified transportation costs related to health diagnosis, treatment, prevention, cure, and mitigation as long as they haven’t been covered by health insurance. This can help relieve some of the financial stress caused by seeking medical care. Deducting some of the costs of traveling for treatment, may allow you to be better able to receive higher-quality care than if you had to receive treatment locally.

If you’re claiming medical mileage on your taxes, you must only count qualified miles for medically related travel, and it’s best to include documentation when possible. If you’re multitasking and make several stops while driving, you may only count the qualified portion of the trip that was medically related, subtracting the miles from the rest of the journey.

By adding up the accumulated miles for the year, you’ll get your qualified mileage which can be claimed on your taxes. A mileage-tracking app is handy in these cases. 

What’s Included in the Medical Mileage Rate 

The IRS website specifies that “you can include only the medical and dental expenses you paid this year, but generally not medical or dental care you will receive in a future year.” 2 IRS. “ Publication 502, Medical and Dental Expenses ” Accessed March 26, 2024. These are the most commonly included expenses included in the IRS medical mileage rates. 

Mileage Expenses 

The IRS standard mileage rate is 21 cents per mile in 2024. To calculate your total annual mileage expenses, tally the number of miles driven for approved medical reasons and multiply that number by 0.21. It’s important to accurately calculate your approved mileage with documentation in case of an audit. 

Parking Fees 

Along with the mileage rate, the IRS will allow you to include certain medically-related parking fees in your deductions. This includes hospital parking, paid parking at your doctor’s office or dentist, and parking meter fees incurred while picking up prescriptions or parking at other medical facilities.

Toll Charges 

You can also include any toll charges incurred during necessary medical travel. Deductible expenses have a wide breadth but must be directly related to medical treatment. If you drive through a toll booth while traveling to another city to visit a relative and then pick up a prescription, this is not deductible, but incurring a toll on the way from your home to the hospital is. 

Transportation Services 

Along with mileage costs, you may be able to write off certain medically related transportation costs, including:

• Ambulance 

Certain eligible transportation expenses for a parent who must accompany a child requiring medical care are also deductible. All travel must be directly related to and essential for medical care. 

Special Circumstances 

Some additional medical travel expenses you may be able to deduct include the following:

• Trips to another city, if the trip is primarily for and essential to receiving medical services. The rate is $50 per night per person and you may include a person traveling with the individual receiving medical care for a total of $100 per night. 
• Any deductible costs of regular visits to see a mentally ill dependent, if these visits are recommended as part of treatment. 
• Transportation expenses of a nurse, or another person who can give medication or treatment if the patient cannot travel alone. 

How To Calculate Medical Mileage With the IRS Medical Mileage Rate 

Calculating your mileage rate is simple. Use these steps to report your standard mileage rate deduction accurately.

Gather Your Records 

To claim medical mileage, you must accurately track the dates, times, and purpose of each medical trip throughout the year, including the total miles driven. Gathering and organizing this information will legitimize your claim to the IRS. 

Use the Current Rate 

Ensure you’re using the current mileage rate when calculating your total as it can change from year to year. For example, the 2023 rate was 22 cents per mile, but the 2024 rate is 21 cents per mile. A small calculation error such as using the wrong rate may trigger an audit.  

Multiply Miles by the Rate 

Multiply your total miles driven for medical purposes by the current 21-cent rate to get the deductible amount. To calculate, multiply the total miles by 0.21 to find the deductible dollar amount.

Add Trip Calculations Together 

To find your deduction amount, you can either add up all miles driven for each qualified medical trip first then multiply that sum by 0.21 to get the rate, or calculate each trip’s rate separately and then add the sums together for the total amount. 

For example, if you drove in this scenario:

• Doctor’s appointment (there and back): 3.2 miles
• Home to hospital: 1.1 miles
• Hospital to specialist: 0.3 miles
• Specialist to pharmacy: 1.5 miles

You can first add all travel up then multiply the amount by 21 cents: 

3.2 + 1.1 + 0.3 + 1.5 = 6.1 miles 

6.1 miles x $0.21 = $1.28 

Or you can choose to calculate each dollar amount first, then add them together:

3.2 x $0.21 = $0.67

1.1 x $0.21 = $0.23

0.3 x $0.21 = $0.06

1.5 x $0.21 = $0.32

Total = $1.28

How To Calculate Your Medical Deductions 

When you itemize your deductions, you may be able to deduct medical and dental expenses you’ve paid for yourself, your spouse, and your dependents, so long as they exceed the Adjusted Gross Income (AGI) threshold. Here’s how to calculate these deductions:

Gather Medical Expense Receipts 

A variety of expenses qualify for medical deductions, including doctor visits, prescriptions, treatments, inpatient care, substance use disorder treatment, mental health care, dental treatments, and more. Gather all documentation, receipts, bills, and paperwork related to your deductions to back up your deduction claims with the IRS.

Separate Mileage from Other Expenses 

Those who have done a lot of traveling for medical reasons may want to claim the standard medical mileage deduction instead of itemizing each driving expense. In this case, separate your mileage from other out-of-pocket medical expenses like medication costs. 

Total Your Medical Expenses 

All of your qualified medical expenses that are not compensated by insurance will be totaled on Form 1040, Schedule A. 3 IRS. “ Topic no. 502, Medical and dental expenses ” Accessed March 26, 2024. This includes adding your calculated mileage deductions from each medical trip into the total sum. 

Check the Threshold 

When inputting the itemized medical and dental expenses on your Schedule A Form 1040 paperwork, you must remember that you can only deduct medical expenses that exceed 7.5% of your Adjusted Gross Income (AGI) for the year. 

Calculate the Deductible Amount 

The IRS defines AGI as “the total gross income from all sources, minus certain adjustments…” You may find your AGI automatically entered on line 11 of your Form 1040 if you use software to prepare your return. 4 IRS. “ Adjusted gross income ” Accessed March 26, 2024.

Subtract 7.5% of your AGI from your total medical expenses to determine your deductible amount. For example, if your AGI is $76,000, and your total medical expenses totaled $12,750, you would find 7.5% of $76,000, then subtract that number from $12,750.

$76,000 x .075 = $5,700

$12,750 – $5,700 = $7,050

In this case, the total amount you may deduct from your taxes would be $7,050. 

Can HSAs, FSAs, or HRAs Be Used to Pay for Medical Travel? 

The IRS iterates that medical travel expenses are only tax deductible if they are not compensated by insurance or otherwise. If you pay for medical travel using money from a health savings account (HSA), a flexible spending account (FSA), or a health reimbursement arrangement (HRA), those costs cannot be deducted from your taxes. 

While you may use HSAs, FSA, and HRAs to pay for travel costs, these funds are already tax-free so do not include them on your Schedule A Form 1040.  

How To Claim Tax Deductions Using IRS Mileage Rates 

Claiming tax deductions using IRS rates is fairly straightforward as long as you’ve stayed organized throughout the year. Follow the simple steps below to claim the standard rates on your federal income tax return.

File Schedule A 

Schedule A Form 1040 is an IRS tax form that allows the itemization of deductions. 5 IRS. “ About Schedule A (Form 1040), Itemized Deductions ” Accessed March 26, 2024. Using this form, you can list each deduction cost for the calendar year in detail, including part of your medical expenses and other expenses. File Schedule A to deduct medical mileage.

Recordkeeping Requirements 

Detailed records are required to be able to deduct medical travel costs. The stronger your evidence is toward the necessity of travel for medical reasons, the better. In the best-case scenario, your records will include:

• The dates of each medical trip
• The purpose of each trip (for example: doctor’s visit, prescription pick-up, etc.)
• The total, accurate number of miles driven for each trip 
• Receipts, bills, and other relevant paperwork

Mileage Log 

Keeping a mileage log in your vehicle is a good way to accurately track the number of miles driven for medical reasons. A written log is an acceptable record-keeping method, as is a mileage-tracking app. Only mark down the travel that’s directly related to accepted medical reasons.

Separate Documentation 

Keeping your medical expense receipts separate from your mileage records will help keep your records tidy. The better organized your documents are, the easier tax time will be. 

Formulas Not Required 

You won’t need to do any calculations on Form 1040 yourself. All the IRS needs from you is the total mileage claimed. This reduces the risk of error due to a miscalculation.

Effortless Mileage Tracking with FreshBooks 

Keeping track of miles driven may feel like a chore when you’re dealing with a health issue, but it’s important to take advantage of all available tax deductions to stay on top of your financial health. Using a convenient mileage-tracking app is the simplest way to separate your everyday driving from medical travel and track how much you’ve driven over the year. 

The FreshBooks mileage tracking app is automated, logging your trips efficiently so you can concentrate on getting where you’re going. In just a few clicks, you can classify your trip as personal or medical, send a mileage report to yourself, or download a full report. The app even saves your travel history in case you need it. 

Find out how FreshBooks can streamline your record-keeping process and make tax time easier. Try FreshBooks for free today.

FAQs About Medical Mileage Rate in 2024 

Learn more with these answers to the most frequently asked questions about medical mileage tax deductions in the US. 

Does medical mileage include picking up prescriptions?

Yes, medical mileage includes picking up prescriptions, along with other trips to doctor’s offices, medical appointments, certain dental procedures, and other health-related activities.

What is the mileage rate for medical vs. business?

The 2024 IRS mileage rate for medical travel is 21 cents while the business mileage rate is 67 cents per mile. 

Can you deduct mileage for medical trips?

Yes, you can deduct mileage for medical trips if the travel is necessary and directly related to a medical issue. The standard deduction rate is 21 cents for each mile driven. 

How much can you deduct for mileage to doctor appointments?

In 2024, you can deduct 21 cents per mile when you drive your personal vehicle to doctor’s appointments. You can also deduct expenses like parking and road tolls related to these medical trips.

What is the IRS rule for deducting medical expenses?

Medical expenses must be directly related to and necessary for diagnosing, mitigating, treating, preventing, or curing a health condition. You must have paid for them yourself, with no compensation by insurance or other entity to qualify for an IRS tax deduction.

Article Sources:

• IRS. “ Standard mileage rates ” Accessed March 26, 2024.
• IRS. “ Publication 502, Medical and Dental Expenses ” Accessed March 26, 2024.
• IRS. “ Topic no. 502, Medical and dental expenses ” Accessed March 26, 2024. 
• IRS. “ Adjusted gross income ” Accessed March 26, 2024.
• IRS. “ About Schedule A (Form 1040), Itemized Deductions ” Accessed March 26, 2024.

Sandra Habiger, CPA

About the author

Sandra Habiger is a Chartered Professional Accountant with a Bachelor’s Degree in Business Administration from the University of Washington. Sandra’s areas of focus include advising real estate agents, brokers, and investors. She supports small businesses in growing to their first six figures and beyond. Alongside her accounting practice, Sandra is a Money and Life Coach for women in business.

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Lower Your Tax Bill: 7 Essential Tax Write-Offs for Rental Property Owners

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Maximizing Rental Property Tax Deductions for Landlords: Learn 7 Essential Tax Write-Offs 

Antonio Del Cueto, CPA

April 22, 2024

Do you own rental property? According to the National Association of Realtors, rental properties make up nearly a third of all homes sold in the US . That's a lot of landlords! But owning rental property isn't just about collecting rent. It's about managing finances, too.

Understanding the tax rules and taking advantage of available deductions can significantly lower your taxable income and keep more of your hard-earned rental income . This article explores seven essential tax write-offs to help you navigate deductions and turn your rental property into a tax-saving machine.

What are the 7 Essential Tax Write-Offs?

1. mortgage interest.

The IRS allows you to deduct mortgage interest on your rental property throughout the year, reducing your taxable income. Unlike some deductions, you don't have to depreciate the property first. It applies to residential rental properties only, and the interest must be on a loan secured by the property.

Rental income counts as gross income . So, maximizing deductions lowers your tax bill. You can't deduct personal use of the property, but most repairs and property taxes are fair game.

2. Property Taxes

Property taxes paid on rental property are another sweet tax perk for landlords in rental real estate. The IRS allows you to deduct them on your tax return. This benefit applies to all rental properties, not just residential. Unlike personal property taxes, property taxes are considered an ordinary and necessary business expense.

3. Repairs and Maintenance

Repairs that keep your rental property running smoothly qualify as tax-deductible expenses for landlords. The IRS considers them ordinary and necessary business expenses. This applies to repairs that fix wear and tear, not improvements that increase value.

Don't confuse repairs with capital expenditures like a new roof that you depreciate over time. Tracking repair costs meticulously helps maximize your deductions and minimize your tax bill.

4. Depreciation

As outlined in IRS Publication 527, landlords can deduct depreciation expenses for property used in their rental business. This includes assets expected to last more than a year, such as buildings or furnishings. The IRS allows actual expenses or standard deductions, providing flexibility to landlords.

5. Management Fees

Management fees are payments to a company that handles tasks like finding tenants, collecting rent, and repairing your rental property. The IRS considers them a qualified tax write-off . They're seen as a necessary expense to generate rental income. Deducting these fees reduces your taxable rental income, potentially lowering your overall tax bill at tax time.

6. Insurance

Owning rental property comes with risks. Insurance premiums protect against those risks, like fire, theft, or tenant lawsuits. The IRS views these premiums as necessary business expenses since they safeguard your income source.

7. Travel and Other Expenses

Travel expenses related to managing rental properties are eligible tax write-offs according to the Internal Revenue Service (IRS). Travel expenses, such as mileage for property visits or trips to purchase supplies, count as rental expenses.

These expenses are deductible as they apply to business activities related to your rental property. Whether you deduct actual expenses or use the standard mileage rate, the IRS allows these deductions to offset taxable rental income.

Further Reading: Calculating and Understanding Rental Property Depreciation: A Comprehensive Guide

How to navigate tax deductions for landlords effectively, utilizing irs publications for rental property taxes.

Navigating rental property taxes can be easier with IRS publications. These free resources, like Publication 527, explain how to handle property taxes as a landlord deduction.

Since property taxes are considered an ordinary and necessary expense, the IRS allows you to deduct them in full from your rental income. This lowers your taxable income, potentially reducing your overall tax bill.

Understanding Schedule E for Reporting Rental Income and Expenses

Schedule E is an IRS form that reports income and expenses from rental properties. It helps you declare all the money you count as rental income, such as rent payments, security deposits, and the costs of maintaining the property.

Think of it as a way to show the IRS your net income after accounting for deductible expenses like property taxes, mortgage interest, repairs, depreciation, and the wear and tear on the property. This is a key form for landlords to report rental activity accurately.

Consulting with Tax Professionals for Maximizing Deductions

Consulting with a tax professional is a smart move to maximize your deductions. They can help you identify opportunities you might miss, like depreciation strategies or specific expenses you can claim. Tax professionals stay up-to-date on the latest tax rules and can ensure you claim everything the IRS allows, potentially leading to a lower tax bill come filing time.

Further Reading: What is Rental Income Tax? Understand What Tax on Rental Income for Rental Real Estate Owners

Several key strategies can maximize your deductions in tax write-offs for rental property. You can depreciate property over time, allowing you to deduct a portion of its value annually. Also, property taxes and state taxes paid to the government can be deducted, providing further relief.

It's crucial to report rental income on your tax return, but you can also deduct expenses incurred in the process, such as maintenance, repairs, and insurance premiums. IRS says rental property deductions include mortgage interest, utilities, and property management fees.

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At Taxfyle , we connect small businesses with licensed, experienced CPAs or EAs in the US. We handle the hard part of finding the right tax professional by matching you with a Pro who has the right experience to meet your unique needs and will manage your bookkeeping and file taxes for you.

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Traveling? 7 Refunds You Didn’t Realize You Could Get

T raveling can be one of the most memorable experiences , but the expense of the adventure can quickly add up. Flights, accommodations, car rentals, dining and entertaining activities are among the most expensive aspects. 

Vacation Season: 10 Essentials You Should Buy at Dollar Tree for Your Next Trip

Here: How To Get Cash Back on Your Everyday Purchases

Fortunately, there are some ways to save money on your travels by getting refunds, credits or vouchers for parts of the journey. However, many travelers need to be aware of the numerous opportunities available. This guide of seven traveling-related refunds explores some lesser-known ways to get your hard-earned cash back when you travel. Once you know what’s available, you can plan to take advantage of the opportunities (or inconveniences) as they arise.

1. International Tax Refunds on Purchases

Many countries charge a relatively high tax on purchases. For example, European countries have a value-added tax (VAT) of 21%. Sweden and parts of Brazil charge 25%. Purchasing $100 worth of souvenirs could cost you as much as $125 after taxes. 

Fortunately, you can get a tax refund on overseas purchases. However, you’ll need to know how the process works to ensure you take every step to receive the tax refund. Keep in mind that most tax refund programs require that you are a non-resident of the country you are visiting and have made purchases above a certain amount. Here are five steps:

Identify Participating Retailers

Stores typically display the tax-free shopping logo or ask the salesperson for assistance. Ask about any requirements, such as a minimum purchase amount, to be eligible for a refund. Ensure that your purchases meet this threshold to claim your money back.

Carry Your Passport When Shopping

While the common advice is to store your passport at the hotel safely, you’ll need to carry and present your passport at participating retailers to get started. Once you request the tax refund and present your passport, the retailer will print out the necessary proof of purchase to present at the airport before you leave the country, which includes your name and passport number. 

Get to the Airport a Few Minutes Early

You’ll need to visit a couple of offices for your refund before your flight, so be sure to allow yourself enough time to process the refund. Review the receipts you were given — in many cases, you may need to fill out a short form on each receipt with your name, address and signature.

Get the Forms Stamped 

Your first stop at the airport is at the customs desk. Besides showing the receipt and tax refund form, you may be asked to present your purchased goods for review, so wait to check your bags. The customs officer will stamp the forms, verifying your eligibility for a refund.

Visit the Refund Office

After customs stamp your forms, visit the tax refund office within the airport. Present your form and passport to complete the refund process. In some cases, you may be offered a cash refund on the spot, while others might provide the refund as a credit to your credit card or through another method.

2. Hotel Price Guarantees 

Hotels often promise you’ll get the best available rate when booking directly with them. If you reserve a room directly with the hotel and then find a lower rate for the same room on another website, many hotels will refund you the difference or greater.

Keep in mind that the lower rate must be for the same room type, dates and conditions. Hotel price guarantees are a straightforward way to save money and ensure you’re getting the best deal on your accommodations but they could take time and effort to achieve. Fortunately, you don’t have to waste valuable time checking on your hotel’s rates — there are apps and websites such as Rebookey that will alert you of price drops.

3. Airfare Price Drops 

Similar to hotel bookings, airline ticket prices tend to be unpredictable. Policies vary between airlines, but some carriers may refund the difference in fare or provide travel vouchers if the price of your ticket drops after you’ve purchased it. When booking, it’s worth checking with the airline to see if they have a price-drop policy, especially if you’re booking well in advance. You may be eligible for a refund or voucher.

As with hotel-rate-tracking apps, there are airfare-tracking websites and apps that do the work for you, including:

• Airfarewatchdog
• Google Flights

4. Foreign Transaction Fees

When using your credit card abroad, you may incur foreign transaction fees, which can add up to an extra 3% to overseas purchases. One way to get a refund (with no work required) is to use the right credit card when traveling internationally. To save money, consider using a travel-friendly credit card that offers foreign transaction fee reimbursements as a perk.

5. Denied Boarding Compensation 

If you’ve been bumped from a flight due to overbooking or other reasons, airlines may offer you a travel voucher as compensation. These vouchers can often be used on future flights with the same airline. While they may not be as flexible as cash refunds, they can help you save on future travel expenses. 

When faced with involuntary bumping, it’s a good idea to know your rights and negotiate compensation to maximize the amount you receive. According to the U.S. Department of Transportation (DOT), “Passengers who are denied boarding involuntarily due to over sales are entitled to compensation that is based on the price of their ticket, the length of time that they are delayed in getting to their destination because of being denied boarding and whether their flight is a domestic flight or an international flight leaving from the United States.”  

The amount depends on the delay. Short delays are eligible for “compensation equal to double the one-way price of the flight they were bumped from, but airlines may limit this amount to up to $775.” Passengers dealing with longer delays are entitled to four times the one-way value of the flight they were bumped from, with some airlines limiting the amount to a maximum of $1,550.

6. Baggage Delay or Loss Compensation

Air travel can be stressful, especially if your baggage is delayed or lost. While airlines work hard to reunite you with your luggage, they may provide compensation for the inconvenience and expenses incurred while you wait for your bags. Airlines will make good on the compensation, even if the airline eventually finds and delivers your baggage.

The amount and conditions for baggage delay compensation vary by airline, but the DOT provides guidelines. Domestic passengers can receive as much as $3,800, while international flyers are eligible for up to $1,700.

To receive reimbursement for your expenses, file a claim with the airline’s lost baggage desk when the issue arises. Keep receipts for essential items you purchase during the delay, like clothing and toiletries, to submit and get money back. 

In addition, many of the best travel credit cards offer free baggage delay compensation, which may be an additional source of cash back for the inconvenience of lost or delayed bags.

7. Free Checked Bags or Travel Allowances

As mentioned, some credit cards are designed to provide perks and benefits for frequent travelers. Select cards offer free checked bags, airport lounge access at no charge or a refund for up to a certain amount in-flight purchases such as onboard Wi-Fi or meals and drinks. Cards providing travel-related refunds or credits include:

• Alaska Airlines Visa Signature: Free checked bag or a companion ticket for just the cost of taxes
• American Express Platinum: $200 annual airline fee credit with the airline of your choice
• Chase Sapphire Reserve: Premium car rental insurance included for free
• Capital One Venture Rewards: Free access to Capital One airport lounges

Sponsored: New Chase checking customers enjoy a $200 bonus when you open a Chase Total Checking® account and set up direct deposit.

Traveling is often a memorable experience and knowing how to navigate the refund landscape can make it more affordable. While travel expenses can accumulate quickly, there are numerous refund opportunities available to savvy travelers that can help reduce the financial impact of your journey. The key is to know about them before you travel so you know what to do when the moment arises.

Baggage delay and flight disruption refunds or vouchers, hotel price guarantees or value-added tax refunds are a few ways to get part of your money back, especially in cases you’ve been inconvenienced. Take some time to review the terms and conditions of your bookings in advance to know the steps you would need to take. In many cases, communication with service providers and documenting your experiences can lead to the compensation you’re looking for. You have the right to get reimbursed or compensated for unforeseen inconveniences and unmet promises, so don’t be afraid to speak up.

By staying informed and taking advantage of these lesser-known refund opportunities, you can enhance your travel experience while keeping your wanderlust on a budget. And don’t underestimate the power of a credit card with plenty of travel perks. Some come with no annual fee or enough benefits to offset the yearly cost.

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This article originally appeared on GOBankingRates.com : Traveling? 7 Refunds You Didn’t Realize You Could Get

• iPropertyManagement
• Real Estate Investing
• Rental Tax Deductions

14 Most Common Rental Property Tax Deductions for Landlords

Last Updated: April 19, 2024 by Cameron Smith

Learn about the most common rental property tax deductions, as well as some costs that owners aren’t legally allowed deduct.

What Are Rental Property Tax Deductions?

One significant advantage of owning a rental property is the plethora of tax deductions available. These deductions allow you to reduce your taxable income, resulting in lower tax payments. The potential savings can be substantial, potentially amounting to thousands of dollars per year.

While business owners can always deduct expenses from their income, rental property owners are allowed a broader range of deductions. These tax deductions have to be relevant to your business. They should be costs that are generally expected when running a rental property business.

Fixing a broken dishwasher is a relevant expense, but stopping at a gas station to buy a snack on your drive to the property isn’t.

14 Common Rental Property Tax Deductions

Rental property owners can generally claim these deductions:

• Property Depreciation
• Mortgage Interest
• Property Taxes
• Maintenance and Repairs
• Travel and Transportation Expenses
• Insurance Premiums
• Office Space
• Advertising and Marketing Costs
• Landscaping
• Employees and Contractors
• Property Upgrades

1. Property Depreciation

You are allowed to depreciate the value of the property over time. According to tax law, your property has a useful life of 27.5 years .

This means that if your property (not the land, just the building) is worth approximately $275,000, you can deduct $10,000 per year! That’s an   incredible   tax savings bonus.

This deduction often seems strange to new property owners because property values increase over time! However, as properties get older, they fall into disrepair. Foundations crack, roofs break, and fences crumble. If you look at it from that perspective, then it makes a bit more sense that you can write it off as a business expense.

2. Mortgage Interest

Mortgage interest is another sizeable tax deduction, especially in the early years of your rental property.

In the early days of your mortgage, interest can make up   80% of your payment ! Of course, that varies based on interest rates and down payment.

So, imagine that your mortgage payment is $2,000 per month in year one of your mortgage. At the end of the year, you could be paying $19,000 in mortgage interest.

You can often write off a good chunk of your rental income between mortgage interest and property depreciation.

3. Property Taxes

Your property taxes are also considered a business expense that comes with owning a rental property.

Each state sets its own property tax, so the amount will vary for you. Hawaii has the   lowest property tax   at just 0.32% while New Jersey charges 2.23%.

If you’re in New Jersey and your property is valued at $400,000, you’ll pay a hefty $9,200 in property taxes. At least it’s all tax deductible!

4. Maintenance and Repairs

One of the most common tax deductions rental property owners take is for the maintenance and repairs of the property. If there’s a leaky pipe and you call in a handyman to fix it, those costs are tax deductible because it’s an expense directly related to your business. Don’t forget that you can deduct the costs of tools, cleaning supplies, and other items you purchase for ongoing maintenance.

5. Appliances

Purchasing new appliances is a bit trickier, as they often must be depreciated over a 5-year period. In other words, if you pay $2,000 for a fridge, you can write off $400 per year. The   IRS allows the following appliance purchases   to be depreciated:

• Washers and dryers
• Refrigerators
• Dishwashers

There are a few different ways to do the accounting on these (such as straight-line, bonus, and accelerated depreciation), so you’ll likely want to talk to an accountant and settle on how you want to handle the tax deductions here.

6. Travel and Transportation Expenses

If you’re traveling for business, you can deduct your costs! The IRS establishes that you can   deduct 67 cents per mile   or your actual costs.

Traveling from your house to your property is considered a commute and isn’t tax deductible. However, if you travel from your office to a property, or from one property to another, you can deduct those miles.

7. Utilities

Any utilities that you pay are tax deductible. Many property owners who make the tenants pay often have to charge less rent anyway. It might make sense to keep rent a bit higher and pay utilities yourself since you can write it off.

8. Insurance Premiums

Your mortgage lender likely requires that you pay monthly insurance premiums along with your mortgage. This cost is tax deductible, as well as other types of insurance like landlord or liability insurance.

If you have employees, any contribution to their health insurance and premiums you pay for workers’ compensation insurance is tax deductible as well.

9. Office Space

If you rent out an office to run your rental property business, you can deduct that cost and everything associated with it (e.g., internet, heating, A/C).

If you work from home, the costs become much harder to estimate. You are allowed to deduct costs associated with your business, but it’s usually taken as a percentage of your home.

For example, let’s say you have a home office that’s 150 square feet. Your entire house is 3,000 square feet. This means that you can write off about 5% of certain overall costs of your home as a business expense, such as your internet bill.

Similarly, if you buy a laptop but use it 50% for business and 50% for personal use, you can deduct half the cost.

10. Advertising and Marketing Costs

Anything you spend to attract tenants to your properties is considered a normal expense for a rental property owner. This could include printing signs, running ads, or paying for listings.

This can also include referrals you pay out for someone helping you find a tenant.

11. Landscaping

Similar to repairs and maintenance, keeping the property looking nice is essential to your business, meaning you can deduct the cost! This could involve hiring people to handle it or including the cost of a lawnmower, shears, herbicide, and other items.

12. Employees and Contractors

A few have already been mentioned, but anyone you pay is a deductible expense. This could include:

• Property Manager (either a 3rd party company or an individual you hire yourself)
• Cleaning crew
• Labor for renovations

13. Property Upgrades

Any additions or improvements you make to the property are usually tax deductible. This could include adding a bedroom, bathroom, deck, porch, or more. Because these are big costs, they usually must be depreciated over time.

14. Software

The cost of any software you use to run your business is tax deductible. For example, you might purchase QuickBooks to handle your accounting or an online portal for collecting and tracking rent payments.

Which Rental Expenses Are Not Tax Deductible?

Not every cost a rental property owner incurs can be a tax deduction.

Unpaid Rent

Unpaid rent is   not   tax deductible because it’s not considered an expense. Rent is considered part of your income, and having a lower-than-expected income does not result in a tax deduction for you.

Like unpaid rent, you can’t deduct the cost of paying the mortgage yourself while the property is vacant. You have to pay your mortgage whether your tenant pays or not, and mortgage payments are not tax deductible. Not collecting rent means you have a lower income, which doesn’t count as an expense.

Any fines or penalties you incur cannot be tax deductible. Some of these could result from noncompliance with a city ordinance, breaking HOA rules, or breaking a law. A tax deduction would benefit you, which isn’t the intent behind a fine or penalty.

Personal Expenses

It’s easy to blur the lines between a business and a personal expense. The easiest way to think about it is if you had to defend your choice to the IRS, do you think they’d be okay with it? Is this expense actually necessary to running your business?

If it’s a big expense, it’s certainly worth discussing with a CPA. However, in many cases, the answer (if you’re not sure) is likely that it’s a personal expense.

More Property Management Resources

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Here’s what taxpayers need to know about business related travel deductions

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IRS Tax Tip 2022-104, July 11, 2022

Business travel can be costly. Hotel bills, airfare or train tickets, cab fare, public transportation – it can all add up fast. The good news is business travelers may be able to off-set some of those costs by claiming business travel deductions when they file their taxes.

Here are some details about these valuable deductions that all business travelers should know.

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 lavish, extravagant or for personal purposes.

Employers can deduct travel expenses paid or incurred during a temporary work assignment if the assignment length does not exceed one year.

Travel expenses for conventions are deductible if attendance benefits the business and there are special rules for conventions held outside North America .

Deductible travel expenses while away from home include the costs of:

• Travel by airplane, train, bus or car between your home and your business destination.
• Fares for taxis or other types of transportation between an airport or train station to a hotel, from a hotel to a work location.
• Shipping of baggage and sample or display material between regular and temporary work locations.
• Using a personally owned car for business which can include an increase in mileage rates .
• Lodging and non-entertainment-related meals .
• Dry cleaning and laundry.
• Business calls and communication.
• Tips paid for services related to any of these expenses.
• Other similar ordinary and necessary expenses related to the business travel.

Self-employed or farmers with travel deductions

• Those who are self-employed can deduct travel expenses on  Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship) .
• Farmers can use  Schedule F (Form 1040), Profit or Loss From Farming .

Travel deductions for the National Guard or military reserves

National Guard or military reserve servicemembers can claim a deduction for unreimbursed travel expenses paid during the performance of their duty .

Recordkeeping

Well-organized records make it easier to prepare a tax return. Keep records, such as receipts, canceled checks, and other documents that support a deduction.

More information:

• Publication 463, Travel, Gift, and Car Expenses
• IRS updates per diem guidance for business travelers and their employers

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