How to deduct travel expenses when filing taxes –
Over the past two years, the COVID-19 pandemic has largely put an end to many people’s travel plans. With so many people in the United States now gearing up for a return to “travel normality,” the question of travel expenses and tax deductions is once again at the forefront of the minds of many travelers. Fortunately, there are some proven ways to save on high travel costs.
If you are one of the millions of people who go on business trips often and are looking for ways to recoup some of that hard-earned money, the good news is that you can get a lot of it back. In fact, you may be entitled to a larger share of your travel costs than you might have imagined. Here, we’ll take a look at some of the best ways to deduct travel expenses when preparing to file your annual taxes.
What counts as a business trip?
The first thing to consider is how the IRS will determine your rights. As an example, consider the most popular expenses that people may be looking to recover during tax season: transportation and hotel reservation. Keep in mind that your destination must be at least 100 miles from your workplace in order to qualify for a tax deduction. Additionally, you should be able to prove that you maintained regular working hours throughout the trip, even if you were away from your office or home. Over the past year, remote working has become more popular than ever. In large part due to social distancing guidelines associated with the COVID-19 pandemic, many employees are now choosing to remain functional from a home office. This too can be factored into acceptable business travel. However, you will need to prove that all travel was justified for your job, such as meeting clients or attending distant business meetings and conferences.
When it comes to food and transportation, the rules are the same for freelancers and full-time employees. As long as you keep your receipts and provide proof of necessity, you can deduct airline tickets, train tickets, car rentals, gasoline, and even Uber and Lyft rides. Best of all, you have the right to write off half of all your food expenses, including airport coffee and groceries purchased during your trip!
Tips for tax season
While it’s true that a little finesse is all it takes to make nearly all of your trip tax deductible, there are a few minor write-offs that can really work in your favor. For example, you may need some office supplies and postage during your trip, and so will any additional costs associated with staying in a hotel room or visiting restaurants, your phone calls and your use of the phone. Wi-Fi count as work-related expenses. This is especially true if your job requires you to deal with sensitive information.
When you finally get ready to file your taxes, make sure you have gathered all of your receipts and any additional criteria required by the IRA. You will need to prepare the appropriate tax forms and tax envelopes once you are ready to submit your deductions but having your credit card information handy can be of great help. If you are unsure of what materials could replace a proper receipt, be sure to ask hotel customer service for proof of your stay. Likewise, airline tickets or other methods of transportation should include authentication of the time of departure and arrival. If you have a program like QuickBooks, consolidating your travel expenses should be relatively straightforward. However, creating a record of all receipts accumulated on your next trip can be just as efficient and useful for make better decisions on the road.