What are business travel expenses?

Question

Hi. I heard if you travel on business, you can deduct expenses like 50 percent meals, 100 percent lodging, 100 percent laundry, etc. I know it has to be a legitimate business purpose to get those deductions.

My question is what are other examples of travel expenses you can deduct and their percentages? Thanks.

(NOTE: YA does not allow you to use the actual percentage sign)

Answer 1

You can use the % sign!

Anyway, all expenses are 100% deductible except for meals and entertainment which are limited to 50% of the actual costs.  Legitimate costs include airfare, taxis, rental cars, lodging, laundry, tips, use of your own car (actual costs or mileage rate) etc.  And 50% of meals as noted above.

That said, you are MUCH better off if your employer operates an accountable reimbursement plan.  If they do, the costs and reimbursements are a wash and you don't have to report anything on your tax return.  If they don't, things get very messy since all reimbursements are treated as taxable income and are shown on your Form W-2.  You have to claim your expenses on Form 2106 which then flows to to Schedule A as a miscellaneous itemized deduction subject to a 2% AGI limitation.  When that happens, you WILL be paying some taxes on the reimbursements and if you don't have enough to get any benefit from itemizing, all of the reimbursements are technically taxable.

Answer 2

If your employer sends you out of town on company business and does not pay for or reimburse your expenses.