Saturday, July 26, 2014

Travel & Entertainment: Maximizing Tax Benefits

VIRTUAL CFO SERVICES
Travel & Entertainment: Maximizing Tax Benefits
Tax law allows you to deduct two types of travel expenses related to your business, local and what the IRS calls "away from home."

First, local travel expenses. You can deduct local transportation expenses incurred for business purposes such as the cost of getting from one location to another via public transportation, rental car, or your own automobile. Meals and incidentals are not deductible as travel expenses, but you can deduct meals as an entertainment expense as long as certain conditions are met (see below).

Second, you can deduct away from home travel expenses-including meals and incidentals, but if your employer reimburses your travel expenses your deductions are limited.

Local Transportation Costs
The cost of local business transportation includes rail fare and bus fare, as well as costs associated with use and maintenance of an automobile used for business purposes. If your main place of business is your personal residence, then business trips from your home office and back are considered deductible transportation and not non-deductible commuting.

You generally cannot deduct lodging and meals unless you stay away from home overnight. Meals may be partially deductible as an entertainment expense.

Away From-Home Travel Expenses
You can deduct one-half of the cost of meals (50 percent) and all of the expenses of lodging incurred while traveling away from home. The IRS also allows you to deduct 100 percent of your transportation expenses--as long as business is the primary reason for your trip.

Here's a list of some deductible away-from-home travel expenses:
·         Meals (limited to 50 percent) and lodging while traveling or once you get to your away-from-home business destination.
·         The cost of having your clothes cleaned and pressed away from home.
·         Costs for telephone, fax or modem usage.
·         Costs for secretarial services away-from-home.
·         The costs of transportation between job sites or to and from hotels and terminals.
·         Airfare, bus fare, rail fare, and charges related to shipping baggage or taking it with you.
·         The cost of bringing or sending samples or displays, and of renting sample display rooms.
·         The costs of keeping and operating a car, including garaging costs.
·         The cost of keeping and operating an airplane, including hangar costs.
·         Transportation costs between "temporary" job sites and hotels and restaurants.
·         Incidentals, including computer rentals, stenographers' fees.
·         Tips related to the above.

If you have any questions, don't hesitate to send us an email or give us a call.
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