BUSINESS TRAVEL EXPENSES

For business-oriented people like business owners and employees, traveling is a common phenomenon aimed at promoting business and increasing possibilities to welcome innovations and ideas. For some employees, it is part of their responsibilities being in the company, either to represent the company on official international assignments or gain vast knowledge about a particular field the company would like to invest in.

Over the years, reports have shown that roughly about 15% of distant trips (more than 50 miles) were filled with men being business travelers than women. As a matter of fact, when considering the business tax deductions, the travel expense category is either current or reported on business tax returns so as to reduce business income. Meanwhile, the law and tax code which is used for expensing travel related costs are not so direct.

Below are international travel tips to be considered when calculating a correct tax deduction for travel and expenses.

1. 1. Firstly, every business travel expense calculation must be simple and important.

2. 2. Avoid luxurious or unimportant expenses. Important expenses should be well accounted for and whatever is considered lavish or unreasonable should be eliminated.

3. 3. All expenses should strictly be for business purposes, anything asides that are considered personal and the company wouldn’t be responsible for it. Generally, expenses that fall within the general living necessities of food (only 50% tax deduction), shelter and clothing are tax deductible.

4. 4. Realize that business travel is any trip that entails a stay overnight away from your “tax home.” This is different from a local business trip. These two are different because certain expenses are deductible with an overnight business trip versus a local same-day business excursion. For example, if hypothetical John travels overnight to see a business customer for a meeting, he can deduct his meals. However, if John was traveling across town to a see a customer, he cannot deduct his breakfast.

5. 5. If you work temporarily at different locations, another factor to consider in figuring out your tax home is the duration of time you work at these other locations. For example, if you are a consultant and you have a job-related engagement with a company for 2 months, then the expenses associated with this brief engagement are tax deductible. In fact, as long as the engagement is less than a year, or it was reasonable to expect it to be less than a year, the costs incurred would be tax deductible.

6. 6.Transportation costs related to airlines fares, train fares, subway fares, bus fares, taxis and rental cars. If you are actually using your own vehicle when traveling, the mileage or costs associated with that are tax deductible. Costs associated with housing such as hotels, motels, and so on. Costs associated with clothing such as laundry and dry cleaning are also tax deductible.

7. 7. Other types of business travel expenses that you can deduct include communication costs. This includes, but is not limited to, telephone expenses, cell phone costs, internet usage costs, facsimile costs, computer rental costs, etc.

8. 8. Most importantly, realize just like meals, entertainment is only a 50% deduction. Moreover, the entertainment must be enjoyed in the presence of a customer, potential customer, or potential investor/partner.