Deductions for Business Travel
Millions of employees travel every year for business purposes. Many employers are very good about reimbursing 100% of their employee’s expenses; others may leave employees covering some of the tab. If an employer reimburses you for all out-of-pocket travel related expenses, you usually have nothing to deduct. However, if your employer only reimburses some of your expenses or none at all, you can often deduct the unreimbursed costs when you file your taxes. So if you’re traveling to another city for business purposes, you can deduct expenses like gas, tolls, and meals. You can also deduct airline, bus, or train tickets, cab fare, hotel bills, and even dry cleaning and laundry if you stay overnight. Other expenses you can deduct include tips, computer and other equipment rental, and the cost of shipping your baggage.
Keep in mind that commuting to and from your job, no matter the distance, doesn’t count as business travel. No matter the cost, such expenses aren’t deductible. The business travel expenses you can claim must be from your tax home, where your job is located, to an out-of-area location. Your tax home is the locality where you work. So, if you normally work in downtown Atlanta and you need to travel to Savannah to meet a client, for example, you can deduct your travel expenses. But if you live in Savannah and choose to commute to downtown Atlanta for work, the expenses you incur wouldn’t be tax deductible.
You may claim travel expenses if you have to take a temporary assignment out of town, but you must know at the outset that the job will last less than a year to claim travel expenses associated with taking the assignment. If you take a temporary job that’s supposed to last more than a year but ends abruptly within a few months, the IRS says that your travel expenses aren’t deductible. You can also claim travel expenses if you’re established in your profession and travel out of town to look for a new job. However, first-time job seekers can’t deduct business travel expenses even if they travel far away from their homes to find work.
Normally, you calculate your business travel expenses on Form 2106 or Form 2106-EZ and carry the figures to Form 1040, Schedule A, the form on which you itemize your deductions. As a benefit, U.S. National Guard and military reservists can figure their ordinary business travel expenses on Form 2106 or Form 2106-EZ and carry them to Form 1040 to get a tax deduction, without itemizing the expenses on Schedule A.