Can I Claim Business Travel as a Business Expense in United States?
Yes, ordinary and necessary business travel away from your tax home is fully deductible (transport, lodging, dry cleaning, etc.) plus 50% of meals. The trip must be primarily for business: personal vacation days mixed in get apportioned.
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What Internal Revenue Service (IRS) says
IRS Section 162(a)(2) allows ordinary and necessary expenses while traveling away from home in the pursuit of trade or business. 'Away from home' generally means overnight or long enough to require sleep/rest. Lavish or personal expenses are excluded. A tax home is generally the regular or main place of business, not the family home. A work assignment that is realistically expected to last one year or less is temporary and the travel costs are deductible. An assignment expected to last longer than one year is indefinite and the new location becomes the tax home, so those costs stop being deductible. Records must show the amount, dates, place and business purpose of each expense. A log, diary or notebook is acceptable.
When you can claim
- Airfare, train, taxi/Uber, rental car for business trips
- Hotel and lodging while away from tax home
- Conference fees and registration
- Dry cleaning while traveling
- Tips and incidental expenses
- Baggage fees, hotel internet and business calls made from the road
When you cannot claim
- Personal vacation days mixed into a business trip (apportion)
- Spouse's travel costs (unless spouse is a bona fide employee with business reason)
- Travel to a 'temporary' location that becomes permanent (>1 year)
- Cruises (special rules limit deductibility heavily)
- Meals when the trip is a day trip with no need for substantial sleep or rest
Good to know
Pro tip: Book the personal days at the end of a trip and keep the travel itinerary showing the days of business activity. The airfare stays fully deductible when the trip is primarily for business, while hotel and meals on personal days are not.
Important: Employees who are reimbursed under an accountable plan do not report the amounts on a W-2. A reimbursement without substantiation is treated as wages. Foreign travel and cruises have their own limits, so read IRS Publication 463 before claiming them.
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