Imagine you are back in the country from an international business trip, but did you know that you may also be able to significantly reduce your next tax bill, all thanks to your stint abroad! A major portion of travel-related tax deductions is yours for the taking if they fall within the IRS guidelines. The most important rule in the entire deduction process is that all the expenses should be exclusively and necessarily incurred during your job performance, meeting the business objectives. It means that you should not be personally gaining from claiming the expenses.
Eligibility rules for travel deductions -
For both domestic and international trips, you can deduct the 'ordinary and necessary' expenses incurred during your travel which must be 'away from home,' as long as they are related to your job. An ordinary and necessary is a term used by the IRS to designate expenses that are 'ordinary' for any business, given the industry it is in, and 'necessary' for the sake of carrying out the business activities smoothly. You are considered, in the eyes of the IRS, to be traveling 'away from home' if your work duties require you to be outside from the area of your 'tax home', for a significantly long period of time.
If you are 'away from home' for work in a single location nearby tour tax home, that is generally considered an 'indefinite assignment' and therefore doesn't qualify for tax deductibility. If you are commuting to and from your usual office or traveling to international states for private reasons, you are not eligible to claim any deductions.
Travel related costs that are deductible -
The following expenses, when incurred while traveling for work, come under travel deductions:
1. Transportation and baggage cost -
Go by plane, train, or bus; the actual cost of the ticket to ride is deductible, as well as the shipping and baggage fees too. All your work-related costs of transportation are incurred at your destination; for example, costs incurred from the airport to your hotel and then to your meeting destination and then back at the hotel, every penny is deductible. Even if you rent a car for your business trip, it is deductible as long as you are using the car exclusively for business purposes.
2. Staying, including lodging, meals, and even tips -
The IRS allows deducting business-related meals and hotel costs, as long as they are reasonable and not very lavish or extravagant. You get a total of 50% deduction of the meals that you are consuming. In case you don't have any meal expenses to claim, you are entitled, in that case, to deduct the amount of $5 per day for incidental expenses. You can also deduct incidental expenses such as
* Fees and tips are given to hotel staff
* Fees for porters and baggage carriers
Wrapping up:
Every company spends a good amount of money on travel expenses. In order to claim the deductions, you need to keep a record of every small receipt, which at times is not possible, especially when you have other important things to do. Isn't it a better idea if FlyFin handles your entire tax deduction work and you just focus on other important work? They will help you get every dollar that you deserve in the easiest manner. The experienced team will help you claim the travel deduction along with help you with other tax-related problems. For more details, feel free to contact the service provider.
Also Read - MANAGING BUSINESS TRAVEL EXPENSES THE SMART WAY!
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