Travel Expenses

Introduction

The purpose of this post is to further elaborate on the various reporting requirements and deductibility of travel expenses.

Travel Deductibility

Specifically identified Expenses
Similar to meals & entertainment, travel is subject to the same ordinary and necessary standards applied to general business expenses with stricter reporting requirements (as explained below). Travel expenses to the taxpayer's normal place of business are not deductible. The taxpayer's place of business is determined based on the time that they spend at each location, the level of activity at each location, and whether income from each location is significant. If travel is for mixed business/personal purposes, the personal expenses are not deductible.

Standard Mileage Rate
In place of specifically identified vehicle expenses, a taxpayer may decide to take the standard mileage rate. A log should be kept to document the necessary records defined below as well as the beginning/ending mileage of each trip. Mileage for the last 5 years is as follows:

2017 - 53.5 cents per mile;
2016 - 54 cents per mile;
2015 - 57.5 cents per mile;
2014 - 56 cents per mile; and
2013 - 56.5 cents per mile.

Necessary Records
Generally, receipts, canceled checks, or bills are necessary. The IRS also requires additional documentation for travel, meals & entertainment. Not only must the records be produced at or near the time in which the expense was incurred, but must also contain the following elements:

1. Amount;
2. Time;
3. Place or Description; and
4. Business Purpose - Record the purpose for the expense or benefit gained. For entertainment, the nature of the business expense as well as the identities & titles of the parties entertained.

Disclosure
Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.