Background on Travel Expense Deductions

Please read this page carefully before getting started; it is important that you understand what is deductible and what is not deductible. The Internal Revenue Code allows a deduction for all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business. An employee or self-employed individual may deduct expenses paid or incurred while traveling away from home in pursuit of a trade or business. However, no portion of the travel expenses that is attributable to personal, living, or family expenses is deductible. This means that miles you drive or commuting expenses of going to and from work are not deductible. Work clothes like business casual are also not deductible unless they are protective in nature or a uniform not suitable for wear in public. So, if your job requires you wear a suit, the expense is not deductible because you can also wear the suit when not at work, i.e. the suit is a personal expense and not deductible.

Generally, if you are uncertain whether an expense is deductible or not, you can apply this simple test:

Q: 1. Did I incur this expense for the job, and 2. If I didn’t have the job would I still have incurred the expense?

A: If the answer to both questions is Yes, then the expense is generally deductible with certain specific exceptions.

1. If the expense is personal in nature, it is not deductible. I.e. Contact Lenses, although you may need good vision at work, you
    probably also need them for other personal purposes and they are personal in nature and therefore not deductible.

2. Wrist watch, gym membership, business attire, Polo Shirt with Company logo, generic work uniform like painter’s coveralls, are
    all examples of personal use items that are NOT deductible.

Tips to filling out the Travel Log:

1. Gather up your travel history for the year, some employers may provide travel history summaries.

2. Fill in the Airport code, Zip Code or Use the drop down menu to indicate where you spent midnight, or had a rest period.
    Do not enter any DAY TRIPS, day trips do not qualify for non-taxable Per Diem. Select Terminate Column at the end of each trip.

3. Travel expenses less than $75 do not require a receipt; however make sure you make the appropriate remark to support
    the date, nature and business purpose of the expense. Lodging expenses require a receipt even if they are less than $75.

4. Be honest, don’t make up or inflate expenses, and keep good records.

5. Commuting expenses and associated hotels or “crash-pads” are NOT deductible travel expenses. Temporary assignments
    less than a year, may be deductible, check with your tax advisor.

6. Personal expenses are NOT deductible. A personal expense is anything you would purchase without regard to the job. This
    includes but is not limited to haircuts, wristwatches, soap, toothbrush, toothpaste, socks, underwear, home computer, laptop
    computer, gym memberships, vitamins, overnight clothes. It doesn’t matter what your company policy says about grooming
    or dress code, personal items such as those just listed are not deductible.

7. Travel for days you depart and return. For both the day you depart for and the day you return from a business trip, you must
    prorate the standard meal allowance (figure a reduced amount for each day). You can do so by one of two methods.
        
         • Method 1: You can claim ¾ of the standard meal allowance.
         • Method 2: You can prorate using any method that you consistently apply and that is in accordance with reasonable
            business practice.

        Example: Jen is employed in New Orleans as a convention planner. In March, her employer sent her on a 3-day trip to
        Washington, DC, to attend a planning seminar. She left her home in New Orleans at 10 a.m. on Wednesday and arrived in
        Washington, DC, at 5:30 p.m. After spending two nights there, she flew back to New Orleans on Friday and arrived back home at
        8:00 p.m. Jen's employer gave her a flat amount to cover her expenses and included it with her wages. Under Method 1, Jen can
        claim 2½ days of the standard meal allowance for Washington, DC: ¾ of the daily rate for Wednesday and Friday (the days she
        departed and returned), and the full daily rate for Thursday. Under Method 2, Jen could also use any method that she applies
        consistently and that is in accordance with reasonable business practice. For example, she could claim 3 days of the standard
        meal allowance even though a federal employee would have to use Method 1 and be limited to only 2½ days.

8. Business expenses – are anything that is either ordinary and or necessary for your job. Expenses that you incur for the job, were it
    not for the job, you would not incur, are generally deductible. Things like luggage, logbooks, uniforms, headsets, and small tools and
    equipment used for the job are all legitimate business expenses. Use the expenses tabs to guide you.