What Counts As a Business Trip Deduction?

25 Oct What Counts As a Business Trip Deduction?

As a business owner, it can be difficult to determine what counts as an expense and what doesn’t. This often comes up when talking about a business trip deduction. Many business owners go on trips and want to take a deduction if possible. To avoid any trouble with the IRS, it’s important to know when you can take the deduction and when you can’t.

Know the Difference Between Personal and Business

One of the most common tax mistakes is that people will go on a trip, claim it as a business trip, only to find out that it didn’t qualify for the deduction. If you plan on taking the business trip deduction, you need to know what counts as a personal trip and what counts as a business trip.

The rule is fairly simple: if the majority of time on your trip is for conducting business, then it counts as a business trip. If the converse is true, then it counts as a personal trip.

Trips are segmented into days. If more than half of one day is spent conducting business, then it counts as a business day, qualifying your trip for the deduction. If not, then it counts as a personal day, regardless of how close you are to “more than half of the day.” It might be tempting to count it anyway, but the IRS can catch on to those sorts of things quickly. You can read more on the IRS website.

How Much Can You Claim on a Business Trip Deduction?

Even if you have a business trip, there are some rules to keep in mind when deducting money. Regarding transportation, it’s similar to the personal vs business rule. If your trip qualifies as a business trip, and you’re traveling in the US, then you can deduct ALL of the transportation costs. If it’s a personal trip, then you can’t deduct a cent of transportation costs.

When traveling outside of the US, the rules are a bit different. If your trip lasts no more than seven days, then you can deduct all transportation expenses even if you work for just ONE DAY. That’s huge! If the trip is longer, then 75% of your days must be business days for a full deduction. However, if your total business days are less, then you can deduct a percentage depending on how much of your trip was used for business.

If you’re planning a business trip and want some more advice on business trip deductions, then call us today at 614-524-4888!

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