Business often requires that we travel. Traveling can be both enriching and stressful—a source of both joy and challenges. One of the challenges of traveling can be the expenses associated with it. Travel expenses don’t end once you’ve purchased airfare, bus tickets, train tickets, or gas. Rather, travelers must ensure that they have adequate lodging, clothing for their trip, food, transportation, and more.
Fortunately, some of these expenses can become tax deductions. The IRS allows travelers to make certain tax deductions for business travel-related expenses. There are specific expenses that are allowed, and business travelers should not only understand what expenses are deductible but also carefully track their expenses and collect records or documentation whenever possible related to these expenses.
The truth is, it can be an excellent practice to carefully track business travel-related expenses and seek tax deductions for valid and eligible business travel expenses. To do so, a little bit of background knowledge can be helpful. To learn more about business travel expenses and unlock tax benefits, read on. We’ll explore how business travel expenses and taxes work, what types of deductions you may be able to make, some tips for unlocking tax benefits, and more. Let’s jump in.
Organization is Key
Importantly, staying organized is key when it comes to ensuring that you’re able to efficiently track your expenses and implement tax-saving strategies. Traveling can be a hectic experience. Aside from the constant and often looming time constraints that you might face, it can always be disorienting to be away from home, in an unfamiliar place, or even in a different time zone.
Keeping track of expenses can become an additional challenge that one must contend with while traveling for business. Importantly, staying organized can help you better contend with this challenge. To that end, here are some tips for keeping organized:
Develop a system beforehand.
Having one place to keep all your receipts and other records of purchases made which represent deductible business expenses can be extremely helpful when it comes to staying organized and optimizing business travel.
It can be helpful to develop a system that works for you before you even leave. Whether you carry a folder with you that you keep receipts in, or you take pictures of them with your phone and keep a digital spreadsheet of your expenses—developing a system that you can consistently adhere to can be a great help.
Utilize Tools That Can Help You.
There is a wide range of tools available that business travelers can use to keep track of their expenses. They might be accounting software that offers features for tracking expenses, or applications developed specifically for maximizing tax benefits. They might offer features such as the ability to scan and import and export receipts, calendar tracking, and even integrate with booking services so that you can keep track of expenses as you make purchases.
Some software, additionally, may be cloud-deployable and enable you to import and export receipts between devices easily and even when you’re on the go, or from different devices—which can be extremely helpful when traveling.
Whatever your preference is when it comes to software, by using a tool that works for you, you may find that you’re better able to stay organized and keep track of important deductible expenses and records of purchase.
Even if you prefer to entirely avoid software, you may find that simple physical tools, such as notebooks, organizers, and folders can help you create a system that helps you stay on top of any possible deductible travel-related business expenses that you run into.
Keep Important Documents
Receipts, itineraries, expense reports, bank statements, travel logs, and more—keep track of and possession of any documents related to business expenses that you plan to deduct later. When it comes time to file your taxes, it can be extremely helpful to have all of these in one place. What’s more, it can help to organize them by what type of expense they are, or when they occurred, so that you can better sort through them should you need to later.
Understanding What Is and Is Not Deductible
While the IRS allows business travelers to make deductions for certain business travel related expenses, it’s important to be aware that not all expenses when traveling are deductible. As compliance with tax laws is crucial, it can be helpful to understand tax implications of business travel. Fortunately, the IRS also provides myriad resources to help business travelers and other taxpayers better understand how tax law works.
The IRS clearly outlines some of the expenses that are deductible as business travel expenses. Some of these include:
- Transportation for business travel—travel by airplane, car, bus, or train from your home to a business location
- Shipping baggage between work locations
- Meals (to a certain extent)
- Laundry and Dry Cleaning
- Other “similar ordinary and necessary” business travel expenses
Remember, all of these must also be business related. Whether it’s laundry, lodging, or baggage, it’s only deductible if it’s necessary for your business.
However, not all expenses are deductible. Expenses that are not deductible might include:
- Travel that is not to a business location
- Lavish expenses
- Expenses incurred related to non-business activity
It’s important to be mindful of what may or may not be deductible. And for more information, or if you’re unsure, you should always consult with a tax professional or legal advisor. You can also check the IRS’ website for handy tax tips, in addition to seeking tax professional guidance. You can also find more information about business travel expenses here.
The Bottom Line
Traveling for business can represent some serious expenses, and those can translate to significant taxes. Fortunately, the IRS allows certain deductions related to business travel. Understanding how certain business-related travel expenses can become tax deductions can be highly important. It can also be important to understand what expenses are considered deductible or non-deductible. Importantly, staying organized and keeping track of relevant documents can be helpful when it comes to filing taxes properly and remaining compliant with tax law.
To learn more, or to get help from a tax professional, be sure to reach out today. At Physician Tax Solutions, we understand that professionals operate in a fast-paced environment, and we can work to help you save on your taxes and remain compliant with tax law. To learn more, contact us today.