Travel Expense

What is a travel expense?

Travel expenses are costs incurred when employees travel away from their regular place of work for business purposes. Deductible travel expenses include transportation, lodging, meals, and incidental costs like tips and dry cleaning. The IRS requires that travel be primarily for business and that expenses be ordinary, necessary, and properly substantiated.

What qualifies as business travel

Travel must take you away from your tax home overnight or long enough to require rest. Day trips are generally not travel expenses but may qualify for transportation deductions. If a trip combines business and personal purposes, only the business portion is deductible. The primary purpose test determines whether transportation costs are fully deductible or must be allocated.

Documenting travel expenses

Record the amount, date, place, and business purpose for each expense. Keep receipts for lodging and any individual expense over $75. Note the business relationship of anyone you entertained. Missing documentation can void deductions on audit. Use expense tracking apps to capture information in real time rather than reconstructing trips later.