April 15 is quickly approaching, but how do you know which travel expenses you can write off on your tax return? Don't miss out on a hefty deduction due to poor record keeping. There are a number of legitimate deductions that you can take if you travel for business. Keep all of your receipts. Frank Degen, an agent licensed by the IRS, advises making notes of the four "P's" and a "D": person, place, purpose, price and date.
You don't need to submit receipts with your tax return, but they are proof of everything that you deduct. If you get audited, you will need to show your records, or you could lose those items as deductions.
Meals and entertainment can factor into the majority of travel expenses. According to USA Today:
"Business owners can write off 50% of business meals — including the tax and tip — and entertainment. Or, when they're away from home overnight on business, they can claim a daily meal allowance. From Jan. 1, 2009, through Sept. 30, that amount was $39. It increased to $46 from Oct. 1 through the end of last year. The allowance may be higher in some cities."
Methods of transportation during travel are other expenses to keep in mind. Public transportation, such as cabs or buses, airfare, and parking fees count as write offs. You may end up paying more taxes than you are required if you don't count these business items. Business mileage in your car while you are at home can be deducted as well, but be careful not to confuse business mileage with personal mileage. Also, your daily commute does not count as a business expense.
As a general rule, stay vigilant of how much money you spend on business during travel, but don't go overboard. Use common sense. While it's perfectly appropriate to deduct a meal in which you discussed business, super luxurious meals that are not business related should not be deducted. You'll need to keep these ideas in mind all year long, even though reflecting on travel expenses becomes more relevant during tax season.
