Business travel expenses are among the more misunderstood types of tax deductions. This is one situation where what you don’t know can indeed hurt you. Individuals who have complex tax issues or who take many deductions would do well to consult with an experienced Massachusetts tax planning attorney.
How the IRS Defines Business Travel
The Internal Revenue Service is very specific in its definitions, and these apply no less to business travel. In order for a person to take a tax deduction, the travel must be “substantially” longer than the hours in a regular work day and must include a period of rest before the person returns home. Thus, a morning flight to New York City followed by a quick return to the office that afternoon would not qualify under these specifications. By the same token, the travel cannot last indefinitely, but must be completed in less than 12 months.
Allowed Deductions:
A Massachusetts tax planning attorney can answer any questions you have about allowed deductions. The following should provide you with the basics:
- Lodging
- Meals
- Baggage handling
- Transportation—including rental car, taxi, or bus transfers from the airport and to the location of the business appointment
In essence, the acid test for allowed deductions is that the expense is “ordinary and necessary” in conducting business. It is very important that you keep receipts for all relevant transactions.
Areas Where Deductions Are in Question
Certain deductions that seem acceptable may in fact be limited. For instance, if your business travel is by cruise ship, you may be restricted as to how much of the cost can be deducted. If your business travel includes a trade show, you will need to prove that it is related to your work.
Contact Us
If you have questions regarding tax deductions or other issues, speak with a Massachusetts tax planning attorney. Call Ionson Law today at (781) 674-2562.
