domestic travel expenses

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Don't Forget Your Travel W-2 When Doing Your Taxes

Did you do a Personally Procured Move , also known as a PPM or DITY move, in 2020? If so, be sure that you have the special travel W-2 when you complete your 2020 income tax return.

Many military families are eager to file their tax returns when the IRS opens the filing season on Feb. 12, 2021, especially when they are expecting a refund. Having this special W-2 is an important part of having an accurate income tax return filing.

Reimbursements for PPM moves are taxable income to the military service member. As such, the Defense Finance and Accounting Service issues a W-2 for that money. It's found on MyPay, in the tax document section, under Travel/Miscellaneous Tax Statement (W-2).

Thankfully, that money isn't always taxable, or at least not all of it. Active-duty military service members moving on Permanent Change of Station orders are the only group of U.S. taxpayers who are still eligible to deduct moving expenses from their income tax calculations.

You'll use the information on the travel W-2 to calculate your deductible moving expenses on IRS Form 3903, Moving Expenses. The IRS has pretty specific rules on which moving expenses can be deducted. If you're unsure what you can include in your calculations, consider getting free assistance from your installation's Volunteer Income Tax Assistance (VITA) program, or get advice from the Military OneSource MilTax program .

If you've been reimbursed more than your actual expenses, you must include the excess as income on Line 1 of your 1040 tax form. This may increase your tax liability for the year, which means you'll either get a smaller refund or owe a larger payment.

If qualified service members moving on PCS orders have actual moving expenses that exceed their reimbursement, they can deduct the excess costs on Line 13 of the 1040 tax form. This may decrease your tax liability for the year, which means you'll either get a larger refund or owe a smaller payment.

Either way, it's important that you report the income listed on your travel W-2. It has been reported to the IRS, and not showing it on your tax return may cause it to be flagged for review or even audit. Plus, if your expenses exceed your reimbursement, you want to get the benefit of that moving expense deduction.

If you don't know that it exists, it's easy to miss the travel W-2. The first time I saw one, I had no idea what it was or what to do with it. We ended up just adding it to our taxable income and paying full taxes on it. Be smarter than me, and calculate your actual moving expenses so that your tax return will be as accurate as possible, and you won't have to pay taxes on the full amount of your reimbursement.

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Kate Horrell

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You’re our first priority. Every time.

We believe everyone should be able to make financial decisions with confidence. And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free.

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How Travel Insurance for Domestic Vacations Works

Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money .

You’ve probably heard of travel insurance, which promises to cover you if things go awry during your vacation. This perhaps seems obvious when you’re traveling overseas, but unexpected travel disruptions can happen when you travel domestically, too.

Let’s look at travel insurance for domestic vacations, what it covers and credit cards that’ll cover you during your trip.

Types of travel insurance

There’s more than one kind of travel insurance, including health coverage, trip interruption and rental car insurance. Depending on how you’re traveling, you likely won’t need every type of insurance, but here are the kinds you can generally expect to see:

Trip interruption insurance. This insurance will reimburse you for expenses incurred during a delay or interruption while traveling.

Trip cancellation insurance. This type of insurance will refund your costs if your trip is canceled for a covered reason. 

Lost luggage insurance. This insurance will reimburse you for the items you have to repurchase when your bags are lost.

Rental car insurance. This type of insurance protects you while you're using a rental car.

Health insurance. Travel health insurance can differ but may include emergency medical and standard care coverage.

Cancel for Any Reason insurance. As the name suggests, this insurance allows you to cancel for any reason and receive a refund.

Accidental death insurance.

Emergency evacuation insurance.

» Learn more: Common myths about travel insurance and what it covers

Can you buy domestic travel insurance?

So, is it possible to get travel insurance for a domestic U.S. trip? The short answer is: Yes, you can. The longer answer is: Yes, but not all types of coverage may be available to you, and you may need to meet certain requirements to qualify.

For example, the travel insurance offered by the Chase Sapphire Reserve® requires that you be at least 100 miles away from home before its emergency evacuation and transportation benefit kicks in. Your trip must also be at least five days long but no longer than 60 days total.

Meanwhile, some providers of travel health insurance indicate that their coverage doesn’t work within the U.S. Instead, your plan will only work once you’re traveling internationally. This is true for the health plans offered by GeoBlue; those plans are limited to countries outside the U.S. and available only to people who already have a qualifying insurance plan.

» Learn more: How much is travel insurance?

Domestic travel health insurance

It’s possible to get travel insurance within the U.S. whether you’re looking for comprehensive coverage or simply a medical care plan. Companies such as Squaremouth collect quotes from a variety of insurance providers and allow you to compare them.

For example, we put in a search for a 32-year-old from California traveling within the U.S. The total trip cost was $1,999 and took place over two weeks during the summer.

Squaremouth returned results from 54 providers, with the lowest charging $20 total.

However, this plan doesn’t include medical insurance. To find policies that offer this coverage, you’ll want to use the filters next to the search results.

Including filters for domestic travel health insurance limits the total results, but pricing doesn’t change that significantly.

The policies shown will now include primary coverage, coverage for pre-existing conditions, medical evacuation and emergency medical. Even with all those options selected, the cheapest plan comes in at a relatively affordable $34.47.

For those unfamiliar with the terminology, primary insurance acts as the first payer for any claims you have. So if you visit a doctor during your trip, your primary policy will cover costs first. If that plan is exhausted and you also have secondary insurance, the secondary insurance can then pay off the rest.

It’s important to know the difference so you’ll be completely covered during your travels. Note, however, that if you don’t have primary insurance, any secondary insurance becomes primary.

» Learn more: Travel medical insurance: Emergency coverage while you travel internationally

Travel cards with domestic travel insurance

Interested in cheap domestic travel insurance? You won’t find anything cheaper than the complimentary travel insurance offered by many travel cards. We’ve already mentioned that the Chase Sapphire Reserve® has its own travel insurance benefits, but so do many other cards.

Generally, you don’t need to pay anything to be eligible for the travel insurance offered by these types of cards. Instead, you’ll simply need to charge the cost of the trip to your card and the insurance will be automatically activated. This is true whether you’re traveling domestically or internationally.

Here are a few cards that offer complimentary travel insurance:

Chase Sapphire Reserve® .

The Platinum Card® from American Express .

United℠ Explorer Card .

Hilton Honors American Express Aspire Card .

Capital One Venture X Rewards Credit Card .

Terms apply.

» Learn more: The best travel credit cards right now

Travel insurance for domestic vacations recapped

Hopefully we’ve answered the question: “Do I need travel insurance for domestic travel?”

The truth is, whether or not you opt to obtain travel insurance for your trip is going to depend on you. Some travelers have a higher tolerance for risk and are willing to forgo insurance while hoping things go the way they should.

Others may be more interested in being covered for events such as trip delay, emergency medical and rental car insurance.

Whatever you choose, compare quotes from multiple insurance providers to be sure you’re getting a policy that suits your needs. Otherwise, check out the complimentary travel insurance offered by a variety of credit cards to see whether their coverage limits fit your travel budget.

How to maximize your rewards

You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2024 , including those best for:

Flexibility, point transfers and a large bonus: Chase Sapphire Preferred® Card

No annual fee: Bank of America® Travel Rewards credit card

Flat-rate travel rewards: Capital One Venture Rewards Credit Card

Bonus travel rewards and high-end perks: Chase Sapphire Reserve®

Luxury perks: The Platinum Card® from American Express

Business travelers: Ink Business Preferred® Credit Card

on Chase's website

1x-10x Earn 5x total points on flights and 10x total points on hotels and car rentals when you purchase travel through Chase Travel℠ immediately after the first $300 is spent on travel purchases annually. Earn 3x points on other travel and dining & 1 point per $1 spent on all other purchases.

60,000 Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $900 toward travel when you redeem through Chase Travel℠.

1x-5x 5x on travel purchased through Chase Travel℠, 3x on dining, select streaming services and online groceries, 2x on all other travel purchases, 1x on all other purchases.

60,000 Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 when you redeem through Chase Travel℠.

1x-2x Earn 2X points on Southwest® purchases. Earn 2X points on local transit and commuting, including rideshare. Earn 2X points on internet, cable, and phone services, and select streaming. Earn 1X points on all other purchases.

50,000 Earn 50,000 bonus points after spending $1,000 on purchases in the first 3 months from account opening.

How to Deduct Travel Expenses (with Examples)

Reviewed by

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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Everything you need to know about travel expenses

Everything You Need to Know About Travel Expenses

Did you know that the average three-day domestic trip costs between $990-$1,293 ? That's a lot of money and can add up quickly if you're not careful. In this article, we're going to look at some of the most common travel expenses and how to save money on them. We'll also discuss some tax deductions that may be available to you. So let's get started!

What counts as a travel expense?

Travel expenses can add up quickly, so it's important to be aware of what does and does not count as business-related travel expenses.

So, what exactly is a business-related travel expense? The IRS defines it as "an expense incurred while away from home on business." This includes things like travel to and from meetings, conferences, and business-related events. It can also include expenses related to lodging, meals, and transportation.

Costs that occur while you're traveling away from home for business purposes, such as airfare or mileage, hotel expenses, and food, can all be considered business-related travel expenses. However, personal expenses, such as new shoes or clothing, do not count as business-related travel expenses, even if you purchase them while traveling. Keep this in mind when budgeting for your next business trip to make sure you include all relevant expenses.

Types of Travel Expenses

There are several different types of travel expenses, and it's important to understand what each one is before you start planning your trip. This way, you can include all relevant costs in your budget.

Accommodations and Lodging

One of the most common travel expenses is accommodations and lodging. This can include anything from a hotel room to an Airbnb rental. If you need to pay for overnight accommodations on a work trip, whether that's a hotel or other type of lodging, it counts as a travel expense. Of course, your lodging costs have to be within reason, so don't expect to be able to deduct a luxurious resort.

Transportation

Another common travel expense is transportation. This includes things like airfare, train tickets, taxis, and rental cars. However, it's important that depending on your mode of transportation, the things you can deduct as travel expenses may vary. For example, if you're renting a car, you can deduct the cost of gas as a travel expense, or if you're using your vehicle, you can deduct your mileage at the standard mileage rate. For 2022, that rate is 62.5 cents per mile.

Airfare Is also considered a travel expense. However, if you pay for your flight with frequent flier miles or other rewards points, or if a client provides your ticket, you cannot write off airfare as a travel expense. 

Food and Meals

One of the common questions people have about travel expenses is whether or not they can deduct food and meals. And the answer is, it depends. If you're on a business trip that lasts longer than a day, you can deduct 50 percent of the cost of your meals as a travel expense. However, if your trip is less than 24 hours, you can't deduct any of your meal expenses.  

Miscellaneous Travel Expenses

There are also a few other miscellaneous travel expenses that you may incur while on a business trip. These can include things like laundry, tips, business-related communication, and shipping and handling of luggage or work-related materials. As with food and meals, these expenses can only be deducted if your trip lasts longer than a day.

Travel Expenses You Can't Write Off

There are many different types of travel expenses that can be written off on your taxes, but there are also some that you cannot. It's important to be aware of both so that you can accurately calculate your tax bill. Here are examples of travel expenses you CAN NOT deduct.

Entertainment

One type of travel expense that you can not deduct is entertainment. This includes things like tickets to a show or a ball game, golf fees, and other recreational activities. Even if you're entertaining a potential client or business associate, you can not deduct the cost as a business expense.

Traveling with family and friends

If you're traveling with family or friends, the IRS doesn't allow any of their travel expenses to be deducted. However, you might be able to deduct some expenses if you can prove that the trip was for business purposes and that your family members or friends were acting as employees or contractors.

Lavish and extravagant expenses

The IRS also does not allow any extravagant expenses to be deducted as travel expenses. This includes things like first-class airfare, luxury hotels, or expensive meals. If you're not sure whether or not an expense is considered lavish or extravagant, the IRS says that it's "an expense isn't considered lavish or extravagant if it's reasonable based on facts or circumstances."

Travel that is compensated

If you're compensated for your travel, whether that's through reimbursement or a per diem, you can not deduct those expenses as business travel expenses. This includes things like airfare, lodging, and meals. The only exception to this rule is if you're an employee of a church or a qualified non-profit organization and you're traveling on behalf of the organization.

Personal vacations

Last but not least, you can not deduct any expenses for personal vacations. Even if you do some work while you're on vacation, like checking your email or attending a business meeting, you can not deduct any of those expenses.

How to manage the travel expenses for your business

Now that you know what types of travel expenses can be deducted, it's time to learn how to manage them. 

Step 1: Decide the payment method

The first step is to decide how the travel expenses will be paid. You can either ask the employee to pay upfront and then be reimbursed, or you can pay the expenses directly from a company bank account or company credit card.  

For many businesses, the simplest way to handle expenses is to ask employees to pay for them out of their own pockets and then submit expense claims for reimbursement. However, this can be a time-consuming process for both administrators and staff because expense reports need to be filled out and submitted, and then the claims need to be reviewed and processed.

However, with Ontheclock Employee App , the employees can submit their r eceipts electronically , and administrators approve the claims quickly. This saves everyone valuable time in managing this process!

Step 2: Set out a clear process for expense submission

The next step is to set out a straightforward process for employees to follow when submitting expenses. This will help to ensure that all the necessary information is included and will make it easier for you to process the claims.

To do this, you can create an expense policy that outlines what types of expenses are eligible for reimbursement and how employees should go about submitting their claims. For example, you might require employees to submit original receipts or to submit their claims within a specific timeframe.

Step 3: Communicate the expense policy

Travel expenses can be a minefield for companies, and many struggle to strike the right balance between keeping costs down and making sure employees are comfortable on business trips. It's well known that many companies have strict rules around expenses and that employees often try to find ways to get around them. This can leave the business in a difficult situation, as they may either have to pay the bill or leave the employee out of pocket. The best way to avoid this is to make sure that you have a clear and concise policy in place and that all employees are familiar with it. By doing so, you can minimize the risk of expenses spiraling out of control and ensure that everyone is happy with the arrangements.

Some ways to ensure that employees know and understand the expense policy are to:

• Send out the policy in a company-wide email every quarter
• Talk about it at all-hands meetings
• Post it on the company intranet
• Provide training on the policy when new employees join the company

How to calculate and track business travel expenses

When it comes to business travel, Admins and those in expense management are always looking for ways to make the process more efficient and cost-effective. Fortunately, there are a few simple steps that can make a big difference when it comes time to report on quarterly or yearly travel spending.

Keep track of all travel expenses

The first step is to make sure that all travel expenses are being tracked. This can be done using a variety of methods, such as expense reports, credit card statements, or receipts.

Classify expenses by type

Once all of the expenses have been collected, they can then be classified by type. This will make it easier to see where the majority of the spending is taking place and will help to identify any areas where costs could be reduced.

Calculate the total cost of travel

The next step is to calculate the total cost of travel. This can be done by adding up all of the expenses for each trip or by using a software program that will automatically calculate the total cost based on the information that is entered.

Track spending over time

Once the total cost of travel has been calculated, it is then possible to track spending over time. This can be done by creating a spreadsheet or using software that will allow you to track spending on a monthly or quarterly basis.

Compare spending to budget

The final step is to compare the total travel spending to the budget that was set at the beginning of the year. This will help to identify any areas where spending is exceeding the budget and will allow for corrective action to be taken.

By following these steps, Admins and those in expense management will be able to track and report on business travel expenses more effectively. This will ultimately lead to a better understanding of where the company's money is being spent and will help to identify areas where costs can be reduced.

How to reduce travel expenses for small businesses

• Use public transportation

When possible, use public transportation instead of renting a car. This can be a great way to save money, as well as avoiding the hassle of dealing with parking and traffic.

• Book in advance

Another way to save money on business travel is to book your flights and hotel rooms in advance. This will allow you to take advantage of early-bird discounts and will ensure that you get the best possible rates.

• Stay in budget hotels

There is no need to stay in a luxury hotel when traveling for business. There are many budget-friendly options that will still provide a comfortable place to stay.

• Save on entertainment expenses

When it comes to entertainment, there are many free or low-cost options available. Instead of going to a fancy restaurant or bar, consider going for a walk or exploring the local area.

By taking a few simple steps, it is possible to save money on business travel without compromising the quality of the trip. By using public transportation, booking in advance, and staying in budget hotels, small businesses can save money on travel expenses. Additionally, bringing your own food and saving on entertainment expenses can help to further reduce the cost of business travel. Finally, don't forget to recover the tax on your business travel expenses!

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Accounting | How To

Determining Tax Deductions for Travel Expenses + List of Deductions

Published August 15, 2023

Published Aug 15, 2023

WRITTEN BY: Tim Yoder, Ph.D., CPA

This article is part of a larger series on Accounting Software .

• 1. Determine Your Trip Meets the Requirements of a Business Trip
• 2. Check the List of Business Expenses That Qualify for Deductions
• 3. (For Those Mixing Business & Personal Travel): Allocate Expenses

Bottom Line

The IRS considers deductible travel expenses to be any ordinary and necessary expenses you incur while traveling away from home on business. To get tax deductions for travel expenses, the trip must have a business purpose and be temporary (less than one year) and you must be away from your tax home for a length of time that exceeds your usual work day or be away overnight to get sleep to fulfill the demands of your job while away.

Key Takeaways

• A qualifying business trip must take you away from home overnight long enough to require rest.
• Most expenses incurred during a qualifying business trip are deductible, including meals on days off.
• Partnerships, limited liability companies (LLCs), and corporations can directly pay or reimburse employees for business travel expenses and deduct them from their business returns.
• Self-employed business owners will deduct their travel expenses on Schedule C, while farmers will use Schedule F.
• Purely personal expenses on business trips, such as sightseeing, are nondeductible.

Step 1: Determine Your Trip Meets the Requirements of a Business Trip

A business trip for tax purposes is one that meets the following criteria:

• There must be a business purposes for the travel
• You are required to be away from your tax home
• The trip lasts overnight or a period long enough to require rest
• The trip is temporary

Business Purpose

Your trip must be an ordinary and necessary part of conducting your business for your expenses to be deductible. Below are some reasons you may decide to travel for business:

• Meeting with clients or customers: If you travel overnight to meet with clients or customers for business purposes, such as negotiating contracts, discussing projects, or providing consultations.
• Attending business conferences or seminars: If you travel to attend conferences, seminars, or trade shows that are relevant to your business activities, including acquiring new industry knowledge or networking with other professionals.
• Training or professional developmen t : If you travel to attend training programs, workshops, or courses directly related to your business or profession.
• Conducting in-person meetings or negotiations: If you need to travel to have face-to-face meetings or negotiations with business partners, suppliers, or other stakeholders.

Your tax home is not your residence but rather your principal place of business activity including the entire city or general location of your business. So, your business trip cannot be in the general vicinity of your principal place of business for you to be away from home.

• Amount of time you spend at each location
• Degree of business activity in each area
• Relative significance of the financial return from each area
• No regular place of business: If, by the nature of the work, there is no regular or principal place of business, then your tax home will be the place where you regularly live and where you travel to different job sites to perform your service.

For example, a self-employed repair person may not have a regular place of business because they spend each workday at a different customer’s location.

Overnight Stay

Overnight stays for travel purposes do not specifically mean staying from evening to the next morning. Instead, overnight means that the trip is longer than a typical day’s work and long enough for you to require rest. Resting in your car is generally not enough, but if you have to get a hotel room, then the trip will qualify as overnight regardless of when you sleep.

Transportation vs travel expenses: Local transportation at your tax home can be deductible without an overnight stay—if there is a business reason for the transportation, such as driving from your office to visit a client. On a tangent, when you travel overnight, your transportation is deductible, and so are things like lodging, meals, and incidental expenses.

Temporary Travel

For purposes of business travel, a temporary stay is one that is expected to last for less than one year. Open-ended trips are not temporary.

However, say you initially anticipate that your trip will last less than one year, but it later becomes apparent that it will last more than one year. The trip is a deductible business trip up until the point in time it becomes apparent it will last more than one year.

The IRS will also consider a series of assignments to the same location, all for short periods, that together cover a long period to be an indefinite assignment. Any expenses you incur from this type of trip will not be deductible.

Step 2: Check the List of Business Expenses That Qualify for Deductions

Your travel expenses must be business-related—unless an exception applies—to qualify for a deduction. However, if you incur expenses that are purely for personal pleasure, they are nondeductible.

Here is a list of business travel expenses that can be deducted.

Round-trip Transportation To-and-From the Destination

Transportation for a round trip to and from your temporary work location is deductible—and it could be anything that gets you to the location, including via your personal car. If you use your personal car, your costs are calculated using either the actual expenses or the standard mileage rate .

In addition, you can deduct additional round trips to return to home when you are not working.

However, the deduction for the additional round trips is limited to the cost you would have incurred if you stayed at the temporary location. Those costs could include meals and lodging.

• The business purpose of the meals is your business trip and are thus deductible—even if you eat alone.
• Meals on days off qualify.
• Travel to and from meals is deductible—even on your days off.
• The meals do not have to have a specific business purpose, such as meeting with a client.
• For longer trips, lodging can include monthly rentals.
• If you return home on your days off but keep the lodging at your travel location, then the lodging is still deductible if it is ordinary and necessary. For instance, the monthly rent of an apartment at your travel location would be deductible even if you return home on the weekends.

Transportation at the Destination

Once you arrive at your destination, you may need additional transportation to get around town—and these costs are deductible. The only exception would be if you travel to the destination for a purely personal reason like sightseeing on your day off.

Incidentals

Incidental expenses are minor expenditures associated with business travel. You can deduct the actual cost of any one of the following expenses:

• Shipping of baggage and sample or display material between your regular and temporary work locations
• Business seminar and registration fees
• Dry cleaning and laundry
• Business calls include business communications by fax machine and other communication devices
• Tips you pay for services related to any of these expenses
• Parking, tolls, and fees
• Any other similar ordinary and necessary expenses related to your business travel

Step 3 (For Those Mixing Business & Personal Travel): Allocate Expenses

When trips are both business and personal, the allocation of expenses varies based on the primary purpose of the trip. Determining the primary purpose of your journey requires you to evaluate the time spent on business vs personal activities.

Primarily Business Domestic Trips

If your trip is primarily for business purposes, then the round-trip transportation is 100% deductible and does not need to be allocated to the personal portion of your trip. However, all other expenses, like lodging and meals, must be allocated to personal expenses for days where there was no business reason for staying.

For example, if your seminar ends on Friday and you stay until Sunday, then the lodging and meals for Saturday and Sunday are nondeductible.

Primarily Personal Domestic Trips

If the primary purpose of your trip is personal, then none of the round-trip expenses are deductible. However, you can deduct the business portion of meals, lodging, and local transportation that was incurred for a business purpose.

Let’s say you stay a couple of days after your family vacation to meet with a client. The lodging and meals for those extra days are deductible.

Business Foreign Trips

The allocation of travel expenses on foreign trips is slightly different from the rules above. Round-trip transportation for foreign trips must be allocated to business and personal based on the number of business vs personal days on the trip. This is different from the “all or nothing” rule for the cost of domestic round-trip travel.

If your spouse joins you on a business trip, you usually cannot deduct any of their expenses. However, if your spouse’s trip satisfies a business purpose, then expenses must be otherwise deductible by the spouse.

Generally, for the travel costs of a spouse, dependent, or any other person to be tax-deductible, they must work for the business or be a co-owner.

Frequently Asked Questions (FAQs)

Are travel expenses tax deductible for business.

Yes, roundtrip travel is 100% tax deductible as long as the primary purpose of the trip is business. Once at your destination, expenses must be allocated between business and personal. However, all meals are deductible as long as the reason for your continued stay is business.

Can I deduct travel expenses for my employees?

Yes, you can generally deduct travel expenses for your employees as long as the expenses are ordinary and necessary, directly related to your business, and properly substantiated.

Is there a limit to the amount of travel expenses I can deduct?

Yes, there are some such as business travel on a cruise ship, where the expense is limited to $2,000 per year. Also, your expenses are limited to the non-lavish or extravagant cost of the trip, so you may want to be careful before booking a 5-star hotel.

Travel expenses are ordinary and necessary expenses you incur while you are temporarily away from home, so these expenses cannot be lavish in nature. To determine if a travel expense is deductible, it must be directly related to your trade or business.

When it comes to travel expenses, having well-organized records makes it much simpler to complete your tax return. Keep track of any records that may be used to substantiate a deduction, such as receipts, canceled checks, and other documentation.

About the Author

Find Timothy On LinkedIn

Tim Yoder, Ph.D., CPA

Tim worked as a tax professional for BKD, LLP before returning to school and receiving his Ph.D. from Penn State. He then taught tax and accounting to undergraduate and graduate students as an assistant professor at both the University of Nebraska-Omaha and Mississippi State University. Tim is a Certified QuickBooks ProAdvisor as well as a CPA with 28 years of experience. He spent two years as the accountant at a commercial roofing company utilizing QuickBooks Desktop to compile financials, job cost, and run payroll. Tim has spent the past 4 years writing and reviewing content for Fit Small Business on accounting software, taxation, and bookkeeping.

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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

Subscribe to IRS Tax Tips

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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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In Part One of our Travel Deduction series, we discussed the four tests travel must pass to be deductible by a sole proprietor. Part Two: Maximizing Business Days shared the IRS definition of a business day and the importance of making sure over half of your destination days meet this definition. In this article, we’ll discuss when and what travel costs are deductible. Although written with real estate agents in mind, the same rules apply to all sole proprietors.

Note Before We Begin: Tax rules are complex and filled with hair-splitting nuance. The information shared in our travel series is my experienced & common-sense interpretation of the IRS phrase, Facts and Circumstances . My goal is to help you maximize your travel deduction while steering clear of IRS scrutiny. This content comes from our Real Estate Agent Tax-Cut Library .

Deducting Travel Costs

Deducting travel expenses is relatively easy when you travel alone to and from your business destination, conduct business, and immediately return. Things become much more complicated when non-business travel companions, personal activities, or side-trips get added to the trip. Here are some travel-deduction guidelines:

More than Half Days for Business: Greater than 50% of the days at one’s destination must be business days to deduct travel. If half or more are personal days, it is unlikely the trip was primarily for business, meaning it was personal. Travel, lodging, and meals are not deductible - none - zero. A traveler in this predicament can only deduct expenses directly related to business activities such as a seminar or conference fee. For more info, see Maximizing Business Travel Days .

Traveler’s Costs Deducted: Only the expenses of the business traveler get deducted. Costs incurred by non-business companions, such as your spouse, significant other, children, or friends, are not deductible.

Expenses of an employee or business associate with you for the same business purpose are deductible. The travel companion must have a bona fide business reason for the trip – it must also be their primary reason for the voyage.

Traveling with Non-Business Folks: When traveling with non-business companions, segregating your cost from theirs is imperative. Paying your fees separately with a business check or business credit card may be a headache, but is an effective way to isolate costs. Handling smaller expenses like meals in such a business-like manner may also steer an auditor away from a more in-depth investigation.

Costs that would be the same regardless of the number of travelers, such as fuel or vehicle mileage, are generally fully deductible. Other outlays may prove problematic, especially those that naturally increase as additional travelers or vacation-perks get added.

For example, Kim takes her husband and four children with her to attend a training conference near Lake Lure in North Carolina. The cost of renting a four-bedroom, lake-front home is $325 per night. Is this a reasonable business expense when a four-star hotel next to the conference center is $145 per night? Probably not. What about the additional cost of renting a three-row SUV versus a mid-sized sedan? If Kim lacks a good business reason for the upgrades, it doesn’t mean she can’t purchase them. But, she’ll be on a lot firmer footing if she only deducts $145 per day for the lake house and the cost of the sedan instead of the SUV.

Costs Must Be Reasonable: As discussed in Part One of our travel series, deductible travel must be reasonable for your business or industry. First-class and luxury hotels are still allowed. Just don’t make accommodations so extravagant or over the top, you can’t justify them with a plausible business argument (the Smell Test, is discussed in Maximizing Business Days ).

Only Business Days Count: Only costs incurred on business days are deductible. Business days are discussed extensively in our Tax-Cut Library and our article, Maximizing Business Days . Expenses paid on personal days do not get deducted, even if the trip is primarily for business.

Transportation: Travel to and from your business destination are deductible as long as the trip meets the guidelines outlined in our article on the Four Business Travel Tests . Transportation includes can be by plane, bus or railway as well as your vehicle (using the actual cost or standard mileage rate ). Renting a car for the trip is also acceptable. The key, as with anything tax, is that the mode and cost of transportation be reasonable considering the distance and nature of the trip.

Transportation to business-related activities (including meals on business days) after arriving at your business destination is also deductible. Conveyance can take many forms, including a rental, taxi, public transportation, or ride-sharing programs such as Uber or Lyft.

Transportation on personal days is not deductible, including the cost of a rental vehicle. Neither is travel for non-business purposes, such as a theme park or shopping outlet.

Lodging: Lodging is deducible for business days but not for personal days. A night spent at a hotel during a flight layover or before an early flight is generally acceptable (if reasonable). Overnight stays while traveling by vehicle can also be expensed if you drive far enough to require rest.

Meals: Business-day meals (including sandwich days) for business travelers are deductible.  Meals for non-business travelers are never deductible.  Generally, the deduction gets reduced by 50% of the total amount.  For 2021 and 2022, business meals are 100% deductible.  Travelers have a choice.  They can use the actual costs or a standard allowance for meals and incidentals.

If using the standard allowance, you must apply it to all business trips taken during the year.  For 2022, the daily meals and incidental allowance starts at $59 per day but increases for many metropolitan areas.  The rates also change regularly.  For 2021 and 2022, 100% of the meal portion of the allowance is deductible.  Basically, the meal portion of the allowance is the entire amount minus $5 for incidentals.  For 2021 and 2022, 50% of the $5 incidental portion ($2.50) gets deducted.   The daily meals and incidental allowance is lower for the first and last travel days – the thought being that those are the days your going from and to your home.   Fopr the first and last days of travel, the rate is equal to 75% of the full per diem.

Here's an example of utilizing the meals and incidental per diem:

You travel to no-where special for business, meaning you use the per diem rate above.   You arrive on Monday and leave on Friday.  Every day qualifies as a business day.  Here’s your per diem meals and incidental deduction for 2022.

Monday: $44.25 (75% of fill amount) less $3.75 for incidental (75% of $5) = $40.50 meals + $1.88 (50% of $3.75) = $42.38

Tuesday to Thursday: Each day is $59 less $5 incidentals = $54 for meals + $2.50 for incidentals = $56.50.  $56.50 for 3 days = $169.50

Friday: Same as Monday, $42.38.

Total Deduction : $42.38 + $169.50 + $42.38 = $254.26

As mentioned above, the allowance increases for many cities and metropolitian areas.  To find the meals and incidental allowance for a specific location, search for the  GSA's Per Diem Rate Tool .  On GSA’s website, you will also find per diem rates for lodging and other costs.  The lodging rates are generally used to reimburse employees.  Self-employed individuals cannot use the lodging rates; only actual lodging costs can be deducted.

Here are a few final notes before we move on.

• Business-Travel meals get deducted as Meals on Schedule C, not as a Travel Expense.
• If your trip does not rise to the level of a business trip, business meals (such as a meeting-meal with a prospect) remain deductible.
• To learn even more about deductible meals, check out the Real Estate Agent Tax Cut Library or our article on deducting business meals.

Entertainment Costs: Just because travel qualifies as a business trip doesn’t mean movie outings or jet ski rentals are deductible. They are not, even when business associates participate. The Tax Cuts and Jobs Act of 2017 repealed the deduction for business-related entertainment entirely (at least until 2024).

Here are a few scenarios revealing what’s deductible based on the number of business & personal days. As mentioned earlier, if you need a business-day review, check out the article Maximizing Business Travel Days .

Scenario One: Monday Travel Day, Tuesday Personal Day, Wednesday and Thursday Business Days, Friday Travel Day.

Because two of your three destination days were business days, the cost of your travel is deductible. Your lodging, meals, and rental vehicle (if purchased) are deductible on Monday, Wednesday and Thursday but NOT Tuesday, because it was a personal day.

Scenario Two: Friday is a travel day, Saturday and Sunday are personal days, Monday and Tuesday are business days, and Wednesday is a travel day.

Only 50% of the destination days are for business, not greater than 50% as required. None of your travel costs, meals, or lodging get deducted. Only costs directly related to business, such as conference or seminar fees, get expensed. Pro Tip: Plan Better!

Scenario Three: Thursday is a travel day, and Friday’s a Business Day. Saturday and Sunday are sightseeing days. Monday’s a business day, and on Tuesday, you go back home.

Weekends and holidays falling between two business days get counted as business days (see Maximize Business Days for details). In this scenario, all destination days are business days. All travel, lodging, and meals are deductible, even Saturday and Sunday.

Scenario Four: Monday is Travel Day. Tuesday’s a Business Day. Wednesday is a beach day. Thursday’s all about Business, and Friday is Travel.

Because Wednesday falls between two business days, it is called a sandwich day (see Maximize Business Days ). It’s a business day as well. All destination days are business days. All of the business traveler’s costs are deductible.

This is part 3 of our four-part article series on Deducting Domestic Travel. Continue reading part four, Deducting Domestic Travel Part Four: Substantiating Business Travel Deduction .

Summary and Invite: We hope this article answers some of your questions about when and what business travel expenses are deductible. If you’d like some assistance in cutting a Real Estate Agent’s highest cost - taxes, please download our Real Estate Agent Tax Organizer . We also invite you will review and purchase our Real Estate Agent Tax-Cut Library - over eight hours of tax-cut training broken into twenty-nine searchable volumes. It covers every possible deduction a Real Estate Agent can take on their business tax return. Our Broker Version helps entire agencies cut their taxes! And don’t forget to browse our courses . You might find something you like!

All courses and articles are for informational purposes only and do not constitute tax advice. Taxes are complicated - do not act on course information without consulting a professional. Always refer to treasury regulation before making any tax decision. Read the full disclaimer.

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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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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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Statistics on " Domestic tourism in the U.S. "

• Number of domestic tourists and visitors in the U.S. 2010-2021
• Share of domestic travelers in the U.S. 2022-2023
• U.S. adults that plan to travel domestically in the next year 2023
• Most visited states in the U.S. 2022
• Amount of states visited by U.S. citizens 2022
• Yearly growth of domestic leisure trips in the U.S. 2019-2026
• Growth rate of domestic business trips in the U.S. 2017-2026
• U.S. household expenditure on owned vacation homes 2007-2021
• U.S. domestic business travel spending 2019-2026
• Independence Day travelers in the U.S. 2015-2023, by mode of transport
• Number of Memorial Day travelers in the U.S. 2019-2023, by transportation
• Leading Mardi Gras cities in the U.S. 2023
• Campground and RV park industry market size in the U.S. 2011-2022
• Campground and RV park industry business count in the U.S. 2013-2023
• U.S. public interest in visiting national parks 2022
• Motivations for visiting national parks in the U.S. 2022

Other statistics that may interest you Domestic tourism in the U.S.

• Premium Statistic Number of domestic tourists and visitors in the U.S. 2010-2021
• Premium Statistic Share of domestic travelers in the U.S. 2022-2023
• Premium Statistic U.S. adults that plan to travel domestically in the next year 2023
• Premium Statistic Most visited states in the U.S. 2022
• Premium Statistic Amount of states visited by U.S. citizens 2022

Trips & spending

• Premium Statistic Number of domestic leisure and business trips in the U.S. 2019-2026
• Premium Statistic Annual growth of domestic trips in the U.S. 2019-2026
• Premium Statistic Yearly growth of domestic leisure trips in the U.S. 2019-2026
• Premium Statistic Growth rate of domestic business trips in the U.S. 2017-2026
• Premium Statistic Domestic travel spending in the U.S. 2019-2022
• Premium Statistic U.S. household expenditure on owned vacation homes 2007-2021
• Premium Statistic U.S. domestic business travel spending 2019-2026
• Basic Statistic Thanksgiving holiday travelers in the U.S. 2013-2023, by transport method
• Premium Statistic Independence Day travelers in the U.S. 2015-2023, by mode of transport
• Basic Statistic Number of Memorial Day travelers in the U.S. 2019-2023, by transportation
• Basic Statistic Leading Mardi Gras cities in the U.S. 2023

Outdoor recreation

• Premium Statistic Campground and RV park industry market size in the U.S. 2011-2022
• Premium Statistic Campground and RV park industry business count in the U.S. 2013-2023
• Premium Statistic U.S. public interest in visiting national parks 2022
• Premium Statistic Motivations for visiting national parks in the U.S. 2022
• Premium Statistic Most visited National Park Service sites in the U.S. 2023

Further related statistics

• Premium Statistic Average domestic travel spending intentions during Golden Week in Japan 2009-2019
• Premium Statistic Forecast travel expenditures in the U.S. 2023-2026
• Premium Statistic Annual growth of travel expenditure in the U.S. 2019-2026
• Premium Statistic Summer travel spending in the U.S. 2016-2017
• Premium Statistic International travel spending in South Korea 1970-2015
• Basic Statistic Domestic travel spending in Turkey 2012-2028
• Basic Statistic Domestic tourism spending in Belgium 2019-2022
• Premium Statistic Most popular domestic destinations for U.S. travelers 2015
• Basic Statistic Most expensive passports worldwide 2023
• Premium Statistic Average international travel spending intentions during Golden Week Japan 2009-2019
• Basic Statistic Travel & tourism GDP direct contribution in South Korea 2017, by visitor origin
• Premium Statistic Total travel spending intentions during Golden Week Japan 2009-2019
• Premium Statistic Adventure travel spending per trip in selected regions worldwide in 2012

Further Content: You might find this interesting as well

• Average domestic travel spending intentions during Golden Week in Japan 2009-2019
• Forecast travel expenditures in the U.S. 2023-2026
• Annual growth of travel expenditure in the U.S. 2019-2026
• Summer travel spending in the U.S. 2016-2017
• International travel spending in South Korea 1970-2015
• Domestic travel spending in Turkey 2012-2028
• Domestic tourism spending in Belgium 2019-2022
• Most popular domestic destinations for U.S. travelers 2015
• Most expensive passports worldwide 2023
• Average international travel spending intentions during Golden Week Japan 2009-2019
• Travel & tourism GDP direct contribution in South Korea 2017, by visitor origin
• Total travel spending intentions during Golden Week Japan 2009-2019
• Adventure travel spending per trip in selected regions worldwide in 2012

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4Thought Blog

Work or Pleasure: The Tax Rules for Hybrid Travel in 2022

Posted by Concannon Miller on Tue, May 31, 2022

A quick refresher on the IRS rules related to deducting business vs. personal travel costs can help you reduce your tax bill next year.

General Requirements

Business expenses must be "ordinary and necessary" to be deductible for federal income tax purposes. When it comes to business travel, that means you can deduct the ordinary and necessary expenses of traveling away from your home for business for more than one day.

"Home" refers to the city or general area where you work, regardless of where you live. If you have more than one place of business, your tax home is your main place of business.

Domestic Travel

When traveling within the United States, you can generally deduct 100% of your travel expenses to get to and from the destination (for example, airplane tickets and cab fares) if the trip is primarily for business. The determination of whether travel is primarily for business turns on how much time you spend on business purposes vs. personal purposes. For example, if you travel for 10 days and spend seven days visiting clients and three sightseeing, the trip is primarily for business.

If you spend more of the trip on personal than business purposes, you can't deduct any of your travel expenses to and from the destination. You can, however, deduct expenses you incur while at your destination that would otherwise qualify as business expenses.

When your trip is primarily for business, you also can deduct the cost of your lodging and under temporary rules, you can deduct 100% of meal costs for 2021 and 2022. (This deduction is scheduled to revert to 50% of meal costs in 2023.) You may also deduct other qualified business expenses incurred on the days you spend on business. But you generally can't deduct expenses incurred by a companion unless that person is an employee.

So, if you're traveling with your spouse and pay more for double occupancy lodging than you would pay for single, you can deduct only the single rate. You can, however, deduct 100% of a car rental because the cost would be the same if you were alone.

READ MORE: Business Meals: How to Use the Reinstated Tax Deduction for 2021

Saturday Night Rule

You'll want to keep in mind the special rule regarding Saturday night stayovers, which often can result in lower airfare. This rule applies when staying over will reduce the overall cost of the trip.

Specifically, the sum of the airfare with a Saturday night stay and the additional meal and lodging expenses must be less than the lowest available airfare without a Saturday night stay at the time of booking. In these circumstances, you can deduct your lodging, meals (subject to the applicable limit) and other business-related expenses for the extra time.

READ MORE: Tax Reform & Business Travel Deductions: Learn What’s Changed, What’s Stayed the Same

Foreign Travel

For foreign travel, you'll need to allocate your travel expenses on a day-to-day basis between business and personal days, deducting only the portion allocable to business days. Business days include:

• Transportation days,
• Days your presence is required (even if you spend most of the day on personal activities),
• Days you spend on business, and
• Weekends and holidays that fall between business days.

The IRS recognizes four exceptions to this general rule. You don't have to allocate any of your travel expenses to and from a foreign destination if:

• You're out of the country for seven consecutive days or less (counting the day you return to the country but not the day you leave). For example, if you travel to London for a four-day meeting and spend two more days on personal activities, that's considered seven days out of the country.
• You're out of the country for more than one week but spend less than 25% of that time on personal activities (counting both the day you leave and the day you return). For example, you fly to Japan and spend 14 days on business and five on personal activities, with one day traveling each way. That's a total of 21 days, but you've spent less than 25% (5/21) of the time on personal activities.
• You don't have substantial control over your travel arrangements. This exception generally doesn't apply to business owners, executives or the self-employed.
• Vacation isn't a major consideration for the trip.

In each of these cases, your travel is considered "entirely for business." You can deduct 100% of your travel expenses to and from the destination, plus your lodging and meal expenses (subject to the applicable limit) for the business days.

Additional rules apply for foreign conventions. For example, you must show that it's as reasonable to hold the convention outside of the North American area as in it. The tax code defines "North America" broadly — for example, including Costa Rica and the Bahamas — for this purpose.

Build a Record

The rules for deducting business travel can be complicated, but the tax savings can be significant. Contact your CPA with any questions about which costs are deductible and how to ensure you have proper documentation.

©  2022

Topics: Business tax planning , Individual tax planning

Concannon Miller’s unique, holistic and intimate approach to financial health sets us apart from smaller CPA firms with more limited resources as well as mega firms where mid-sized clients struggle for attention. Contact us here to talk about improving your business.

This communication is designed to provide accurate and authoritative information in regard to the subject matter covered at the time it was published. However, the general information herein is not intended to be nor should it be treated as tax, legal, or accounting advice. Additional issues could exist that would affect the tax treatment of a specific transaction and, therefore, taxpayers should seek advice from an independent tax advisor based on their particular circumstances before acting on any information presented. This information is not intended to be nor can it be used by any taxpayer for the purposes of avoiding tax penalties.

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Domestic Travel Insurance: What Does It Cover?

D omestic vacations are generally less expensive than international ones, and your health insurance policy may already cover medical emergencies you experience, even across state lines. So, do you need one of the best travel insurance policies while vacationing in the U.S.? And what would a policy cover during a domestic trip?

In this article, we explain what domestic travel insurance covers to help you determine whether purchasing one of these policies is right for you. Keep reading to find out more.

Table of contents

What does domestic travel insurance cover, domestic travel insurance exclusions, do you need travel insurance for domestic trips, how much is domestic travel insurance, when to buy domestic travel insurance, domestic travel insurance faqs, summary of money’s guide to domestic travel insurance.

While travel insurance is mainly associated with international travel, you can also purchase this type of policy for domestic trips. Coverage options vary by insurance company and plan, yet most travel insurance policies afford the following types of coverage.

• Emergency medical coverage: Reimburses you — up to the policy limit — for medical treatment related to accidents or illnesses you experience during a trip. Coverage generally excludes pre-existing conditions and may be primary or secondary to any existing medical insurance you have that’s in effect at your destination. (Check with your insurer to confirm that coverage.)
• Emergency medical evacuation and repatriation coverage: Covers emergency transportation to the nearest medical facility or back to a hospital close to your home, if medically necessary and recommended by your doctor. It also covers expenses related to transporting your remains to your return destination if you die during the trip.
• Trip cancellation coverage: Refunds you a percentage of pre-paid, non-refundable travel costs — up to a limit — if you cancel or interrupt your trip for eligible reasons. Valid reasons for canceling include natural disasters and the illness or injury of a traveler or their family member.
• Trip interruption coverage: If you must interrupt a trip for a covered reason, travel insurance can reimburse you for the unused portion of the trip and any expenses you incur returning home. Reimbursement is usually capped at 150% of the trip’s cost.
• Travel delay coverage: Trip delay coverage reimburses you up to your policy limits if you experience flight delays and incur additional expenses like meals or lodging. It may also cover airport delays and flight change fees.
• Baggage loss and baggage delay coverage: Refunds you the cost of replacement items (up to a per-item limit) if your luggage is lost or delayed during your trip. You usually have to wait a specified number of hours before filing a claim and provide purchase receipts or a list of items in your luggage. Coverage may also be subject to a deductible.
• 24-hour emergency and travel assistance: Most travel insurers offer worldwide travel assistance services. These include help with replacing lost documents, luggage, prescriptions or medical devices and arranging hotel accommodations and medical transport services.

For more information about these and other coverage options, read our article on what travel insurance covers .

Travel insurance add-ons and benefits for domestic trips

Again, while options vary by company, insurers generally offer add-ons and other benefits that can enhance a base travel insurance policy. These include:

• Rental car collision coverage: Also called collision damage waiver (CDW), this add-on waives policyholders’ financial responsibility (up to a limit) if their rental vehicle is damaged in an accident or collision. When available, this option generally costs extra.
• Cancel for any reason (CFAR) coverage: While standard cancellation coverage reimburses policyholders for cancellations related to specific covered events, cancel for any reason coverage reimburses policyholders for a portion of their trip cost (50% to 75%) if they cancel for any reason whatsoever. This option can increase the policy’s price by as much as 50%.
• Waiver of pre-existing conditions: Travel insurance policies commonly exclude coverage for pre-existing medical conditions. Unless you qualify for a pre-existing conditions waiver at the time of purchase, you won’t be reimbursed for medical expenses related to a condition diagnosed before — even shortly before — your policy’s effective date. Qualifying for this waiver often requires meeting specific criteria, such as being medically fit to travel and insuring the entire trip cost.
• Accidental death and dismemberment (AD&D): This coverage pays out a sum of money if you die, lose a limb or experience vision loss during your trip due to an accident. Depending on the policy, coverage may apply at specific times (while boarding or traveling by plane) or throughout the trip. Some, but not all, policies automatically include this benefit.

Before researching travel insurance for your next trip, keep in mind that some insurers define domestic travel as any trip that takes you over 100 miles from home but is still within the U.S. That means shorter trips may not be eligible for coverage.

Additionally, you may not be covered in all states. Read your policy information thoroughly to understand the coverage exclusions.

According to the NAIC, other common travel insurance exclusions include:

• Pandemics (although some companies cover certain losses related to COVID-19)
• Pre-existing medical conditions (unless you qualify for a pre-existing condition waiver)
• Civil or political unrest at the destination
• Pregnancy and childbirth
• Coverage for high-risk activities (think snowboarding or parasailing)

You don’t necessarily need to purchase a travel insurance plan for a trip within the U.S., especially if your health insurance plan already offers out-of-state or out-of-network coverage.

Additionally, your auto insurance policy generally extends the same coverage and limits to rental vehicles as to the cars you own, so you may not need additional protection. (And rental car companies may not accept a collision damage waiver from a travel insurer as a valid form of coverage.)

Furthermore, some of the best travel credit cards offer benefits that can duplicate or supplement travel insurance coverage. For example, many top-tier credit cards include trip cancellation and interruption coverage and collision damage waivers for rental cars.

Not all credit cards provide these benefits, however, so review your credit card’s benefits guide or contact the issuer for details. You should also verify whether your credit card’s coverage is primary or secondary to other forms of insurance you’re already carrying.

What you’ll pay for a domestic travel insurance policy will depend on factors such as your age (and the age of your travel companions), the insurance company, the plan and coverage options you choose and the total cost of your trip.

Here are some price examples from various insurers for a $4,500 (total) domestic trip for two travelers.

Read our guide to the best travel insurance companies for more information on these and other insurers. And if you’re planning a cruise, check out our top picks for cruise travel insurance .

Generally, it’s best to buy travel insurance soon after making your initial trip payment. That will ensure you qualify for optional benefits such as CFAR coverage and pre-existing condition waivers.

If you don’t know whether to purchase travel insurance coverage in the first place, consider your risks. Travel insurance may make sense if you’re planning an expensive trip and your airfare or hotel bookings are non-refundable. A policy could reimburse you for some of those expenses if you have to cancel or postpone your travel plans at the “last minute.”

That can be especially true when traveling to a destination where weather-related risks are common. For example, if you’re visiting California during peak wildfire season or Florida during hurricane season, travel insurance could offer peace of mind and financial protection against travel disruptions caused by a natural disaster.

Does travel insurance cover domestic flights?

How much is travel insurance, is travel insurance worth it.

If you’re a U.S. resident traveling to other states, domestic travel insurance may be an option worth considering. A comprehensive travel insurance policy for domestic vacations can cost between 3% and 14% of the total cost of your trip, depending on the coverage options you select.

If you’ve booked expensive, non-refundable accommodations, are traveling to a state where natural disasters are common or don’t have health insurance coverage that extends out of state, travel insurance could offer you a measure of financial protection against common travel mishaps — all for a fraction of the cost of your trip.

© Copyright 2024 Money Group, LLC . All Rights Reserved.

This article originally appeared on Money.com and may contain affiliate links for which Money receives compensation. Opinions expressed in this article are the author's alone, not those of a third-party entity, and have not been reviewed, approved, or otherwise endorsed. Offers may be subject to change without notice. For more information, read Money’s full disclaimer .

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Domestic Travel

Preferred Travel Agencies, Airline Frequent Flyer Programs, Cancellation of Travel Plans, Electronic Ticketing Reimbursement Guidelines, Travel by Noncommercial Aircraft...

Ground Transportation

Rental Cars, Vehicle Rental Policy, Vehicle Insurance, Employee Use of Personal Vehicle, Automobile Usage, Automobile Mileage, Mileage Log, Current Mileage Reimbursement Rate

Meals for Overnight, Out of Town Travel, or One-Day Trips (not involving overnight travel)

Duke reimburses travelers for single occupancy and expects everyone to use moderately priced hotel accommodations. A price exception will be allowed if the hotel is the location of the conference or symposium attended...

Travel Reimbursement Procedure

Using the Corporate Card, Completing the Travel Expense Form, Receipts and Documentation, Relocation Expenses, Travel Policy...

Travel Insurance

Duke offers business related travel insurance for employees through Corporate Risk Management...

Domestic Travel

Domestic travel consists of travel within the U.S. states and territories. Official travel begins when the traveler departs the office or home, whichever occurs last, and ends when the traveler returns to the home or office, whichever occurs first.

All official travel must be approved by your program sponsor and ORISE through a Travel Request before the trip begins and before any expenses are incurred. If you lodge overnight or are in travel status more than 12 hours, a Travel Request must be completed. The Travel Request is required to determine whether adequate funds are available to cover the estimated cost of the trip, prevent problems with unallowable travel costs, and to ensure all travel requests remain in compliance with ORISE participant travel guidance.

It is very important that you discuss your Travel Request with your program point of contact and let them know the Request will be forthcoming via Concur.

To ensure sufficient processing time, we ask you submit the Travel Request to Travel Central at least two weeks before the trip departure date. Travel Requests submitted less than two weeks in advance may not be approved. However, depending on the purpose of the trip and other agency restrictions, you may be required to submit travel requests more than two weeks in advance. A best practice is to complete a Travel Request as soon as you know you are traveling.

If you are attending a conference also refer to Conferences for more information related to conference travel.

Per Diem - Meals and Incidental Expenses (M&IE)

Per Diem rates cover costs for lodging, meals, and incidental expenses (M&IE) and are based on the city of lodging according to the U.S. General Service Administration (GSA). Travelers are paid 75% of the M&IE rate for the first and last day of travel and are paid the full amount for all other business days. Meals that are provided, such as meals included in a conference registration fee, paid by a third party, or furnished by the government, must be deducted on the Expense Report.

Domestic travel M&IE rates and meal breakdowns are located on the GSA website links below:

• Domestic M&IE Rates
• Domestic M&IE Breakdown

The actual cost of lodging up to the U.S. General Service Administration (GSA) ceiling for the city in which lodging occurred is reimbursed.

Domestic per diem rates are located on the GSA Website .

Note: The domestic lodging ceiling does not include applicable taxes .

Conferencesbutton>

Conference Approval (For DOE-Sponsored Participants Only)

Additional approvals are required for participants sponsored by the U.S. Department of Energy (DOE) and DOE facilities.

Conferences subject to DOE conference management guidance are also often referred to by names other than “conference.” Other common terms used include conventions, expositions, symposiums, seminars, workshops, or exhibitions. Indicia of a formal conference often include but are not limited to registration, registration fees, a published substantive agenda, and scheduled speakers or discussion panels. Individual events may qualify as conferences without meeting all the indicia listed above but will generally meet some of them.

Local events within the local duty location that do not require advance travel authorization may also qualify as a conference if the event exhibits other key indicia of a conference, especially the payment of a registration, exhibitor, sponsor, or conference fee.

All conference attendance requests, including virtual conferences, will be entered by ORISE into the DOE Conference Management System on your behalf once you have submitted a Travel Request. You will be notified by Travel Central when your attendance request has been approved.

When traveling to a conference or requesting approval to attend a conference, you must submit the Travel Request no less than 60 days in advance from the conference start date or as soon as you are aware you may attend a conference. Note that some conferences may be “locked out” well in advance of the 60-day deadline; an advance submission does not necessarily guarantee your conference attendance will be approved. You should not book your travel or incur any travel or conference-related expenses prior to receiving notification from Travel Central that DOE has approved your conference attendance.

All requests for conference attendance approval should be made through Travel Central. Do not ask the DOE hosting office to approve your conference attendance. You will not be reimbursed for expenses if the conference was not pre-approved by Travel Central.

If you are attending a local conference (within 50-miles) and no expenses will be claimed, DOE approval is not required. However, mentor approval is still required.

Conference Approval (For Other Sponsored Participants Only)

Conferences are subject to DOE conference management guidance. Other common conference terms include conventions, expositions, symposiums, seminars, workshops, or exhibitions. Indicia of a formal conference often include but are not limited to registration, registration fees, a published substantive agenda, and scheduled speakers or discussion panels. Individual events may qualify as conferences without meeting all the indicia listed above but will generally meet some of them.

Travel Requests must be submitted in Concur for virtual conferences, local conferences if there are cost associated with attendance, and in-person conferences requiring travel. The Travel Request should include all anticipated cost, such as registration fee, mileage, parking, tolls, etc .

Personal Travel

There may be times you may have the opportunity to add personal travel to appointment-related travel.

Here are a few things to keep in mind when considering adding personal travel:

• The primary purpose of the travel must be appointment-related, and personal travel must be incidental. Expenses for lodging, meals and incidental expenses and other associated travel costs are not reimbursed for locations other than the city of business.
• When personal travel is combined with appointment-related travel, an airfare cost comparison of business travel only vs. combined business and personal travel is required and must be completed by ORISE’s contracted travel agency, Travel Leaders Corporate (TLC). The traveler is responsible for any increase in airfare and other expenses due to the addition of personal travel and the increase in costs are deducted on the Expense Report.
• If an airfare cost comparison is not completed and approved prior to travel, the traveler is responsible for a proportionate part of their airfare cost equal to the number of days on personal travel as determined by Travel Central.

Example: Total number of travel days 10 | Business days 7 | Personal days 3

The program would pay/reimburse 70% of the airfare cost and the participant would pay for the remaining 30%.

Travel Certificates

Travel Certificates for reimbursement of Inbound/Outbound Expenses must be submitted as directed in the form provided by your ORISE Program. If you have questions regarding Travel Certificates, please contact your ORISE program point of contact for further information.