Now that the weather is warming up and summer breaks are around the corner, people may be planning their next trip. For business owners, vacations and trips are often coupled with industry conferences, business meetings, and client dinners. While this can seem like a great way to enjoy some sun and relaxation while writing off business expenses, it is very important to correctly track and report these transactions.
Here’s a refresher on what qualifies as a business trip, what expenses of those business trips can be deducted, and best practices for recording deductible expenses, so that the only hot water you find yourself in this summer is the pool!
Business Trips
The IRS allows business owners and employees to deduct certain travel expenses on business trips. The primary purpose of the trip must be related to your business.
We have created a checklist below to help you ensure that your travel qualifies as a business trip and your expenses can be deducted.1
Does my trip qualify as a business trip?
Must check at least ONE:
The majority of your tip is spent conducting business
You set up an appointment for business before leaving
You register for a conference or training before leaving
AND
Must check BOTH:
You leave your normal place of business
You travel for longer than one day/ overnight
Business owners can deduct an employee or business associate’s travel expenses as well when that person is traveling for legitimate business purposes and meets the qualifications above too. Their business purposes must be real and require the individual’s presence. The IRS does not consider traveling for taking notes or assisting in entertaining customers or clients a bona fide business purpose.
Common Deductible Business Expenses
When it comes to business travel, the IRS allows for the deduction of ordinary and necessary expenses incurred while travelling. These may include costs such as event registration, transportation, lodging, meals, and other travel-related business expenses. However, personal, entertainment, or family-related costs are not deductible and must be kept separate to avoid issues during an audit.
According to the IRS: “For tax purposes, travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job.”2
- An ordinary expense is one that is common and accepted in your trade or business.
- A necessary expense is one that is helpful and appropriate for your business.3
Below is a list of common business expenses that are considered deductible.
Expense
Details & Examples of Deductible Items
Event Registration
If you are attending conference, workshops, or other business-related events, then the registration fees are deductible.
Transportation
Travel expenses between home and business location via:
- Airfare
- Train
- Bus
- Car
- Subway
Taxis, Uber/Lyft, Ride Share, Airport Limousine, Commuter Bus, etc.
Fares for these and other types of transportation are deducible as long as they are between work and travel related places, such as between the airport and hotel, or the hotel and work location.
Cars (Personal or Rental)
If taking a personal vehicle, you can deduct the expenses of:
- Gas or Standard Mileage Rate
- Tolls
- Parking Fees
If using a rental vehicle, you can deduct the expenses listed above and the charges for the rental car.
Lodging
On business trips, you are able to deduct the cost of hotel rooms, motel rooms, bed and breakfasts, or any other reasonable lodging arrangement.
Meals
Can deduct 50% of the total cost of business travel related meals. This includes amount spent on food, beverages, taxes, and tips. You can NOT deduct lavish or extravagant meals, or meals for entertainment.
Telephone & Internet Expenses
Can deduct business calls while on trip and any cost for wifi or internet that is needed for work.
Equipment & Rentals
If you need to rent equipment such for the trip such as a computer, projector, or other tools, these rental costs are deductible.
Cleaning
Dry cleaning and laundry fees for business clothes are deductible.
Tips
You can deduct any tips related to the services used on business trips, such as tips for transportation, baggage, lodging, meals, cleaning, etc.
Other
Other similar ordinary and necessary expenses related to your business travel can also be deducted. These expenses might include transportation to or from a business meal, public stenographer’s fees, other profession specific services, etc.
*Note: Items above are for business trips located within the US. The IRS has additional rules for international business travel. 4
It is also important to know what travel expenses are not deductible. These include:
- Family & Friend Travel Costs: If a spouse, dependent, or other individual (aside from an employee or business associate) goes with you on a business trip or to a business convention, you generally can not deduct their expenses.
- Calculate lodging for a single room when deducting expenses. Any upgrades in rooms to double beds, etc can not to be included.
- Meals for family or friends can not be deducted.
- Travel fares of any type for friends and family can not be deducted.
- Entertainment: Expenses for entertainment, such as sporting events, concerts, attractions, or tourist activities etc. are not deductible, even if they are related to the business’s activities.
- Unnecessary or Unreasonable Expenses: Any expenses that are considered lavish, extravagant, or not typical for your industry are not deductible.
Deducting any of these expenses can land a business in hot water during an audit. While combining business travel and vacations is not uncommon, it is important to be very clear with which expenses are related to the business and which are for vacation purposes.
Best Practices for Business Travel Deductions
Ensure Your Travel and Expenses are Eligible
The IRS uses the rigid criteria above to review business travel expenses, so be sure that your write-offs meet the standards. Use our checklist and tables above to review that your expenses meet the guidelines and review IRS Publication 463 for more information on eligible expenses.
Save All Receipts
Keeping the original documentation of business travel expenses is important for proving that the costs deducted are legitimate. Should the travel expenses be audited (or any audit occurs), it is important to be able to prove that the expenses reported were correct and eligible for deduction. These receipts can be saved on paper or electronically, and should show the date, amount, payee, and description of items or services purchased.
Itemize Travel Expenses in Bookkeeping
In your company’s bookkeeping files, there should be a separate expense account for travel. Make sure all travel expenses are correctly categorized to this expense account.
Further itemize travel expenses into lodging, transportation, meals, and entertainment, so that deducting expenses on your tax return becomes easier. Remember that travel meals and entertainment need to be broken out, since meals are deducted at 50% and travel entertainment can not be deducted at all. Breaking these out as soon and as clearly as possible reduces the likelihood of a non-deductible charge accidentally being included.
While there are many rules to be aware of when it comes to traveling for business, the opportunities and benefits that come with it are worth the effort of ensuring proper reporting and dedication of expenses. If you have any questions about your business travel or need help with bookkeeping to record travel expenses correctly, please contact our office.
- Marshall Hargrave. Intuit QuickBooks. (2025, Jan 31). How to Write Off Travel Expenses: A complete guide on business travel expenses. Retrieved from https://quickbooks.intuit.com/r/taxes/what-you-can-and-cant-write-off-with-business-travel/ ↩︎
- Internal Revenue Service. (2025, Feb 27). Publication 463. Retrieved from https://www.irs.gov/pub/irs-pdf/p463.pdf ↩︎
- Internal Revenue Service. (2025, Feb 27). Publication 463. Retrieved from https://www.irs.gov/pub/irs-pdf/p463.pdf ↩︎
- Internal Revenue Service. (2025, Feb 27). Publication 463. Retrieved from https://www.irs.gov/pub/irs-pdf/p463.pdf ↩︎
