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Tax Articles provided By
James Newton of

Kiwi Enterprise Group
1841 Gulf Stream Ave  Suite A
Fort Pierce, FL 34949

  Travel Expenses:

If you temporarily travel away from your tax home, you can use this guide to determine if you have deductible travel expenses. This guide defines "tax home," "temporary assignment," and "travel expenses," including the "standard meal allowance." 

Travel expenses defined.

For tax purposes, travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job. However, you cannot deduct expenses that are lavish or extravagant. See, later, What Travel Expenses Are Deductible? You will find examples of deductible travel expenses in Table 1, later.

Tax Home

To deduct travel expenses, you must first determine the location of your tax home. Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home. It includes the entire city or general area in which your business or work is located. If you have more than one regular place of business, your tax home is your main place of business. If you do not have a regular or a main place of business because of the nature of your work, then your tax home may be the place where you regularly live. See No main place of business or work, later. If you do not have a regular place of business or post of duty and there is no place where you regularly live, you are considered a transient (an itinerant) and your tax home is wherever you work. As a transient, you cannot claim a travel expense deduction because you are never considered away from home.

No main place of business or work. You may have a tax home even if you do not have a regular or main place of work. Your tax home may be the home where you regularly live.

Factors used to determine tax home.

If you do not have a regular or main place of business or work, use the following three factors to see if you have a tax home.

1) You perform part of your business in the area of your main home and use that home for lodging while doing business in the area.

2) You have living expenses at your main home that you duplicate because your business requires you to be away from that home.

3) You have not abandoned the area in which both your traditional place of lodging and your main home are located; you have a member or members of your family living at your main home; or you often use that home for lodging.

If you satisfy all three factors, your tax home is the home where you regularly live, and you may be able to deduct travel expenses. If you satisfy only two factors, you may have a tax home depending on all the facts and circumstances. If you satisfy only one factor, you are a transient; your tax home is wherever you work and you cannot deduct travel expenses.

Temporary Assignment or Job

You may regularly work within the city or general area of your tax home and also work at another location. It may not be practical to return home from this other location at the end of each workday. If your assignment or job away from your main place of work is temporary; your tax home does not change. You are considered to be away from home for the whole period you are away from your main place of work. Your travel expenses are deductible. Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for one year or less.

However, if your assignment or job is indefinite, the location of the assignment or job becomes your new tax home and you cannot deduct your travel expenses while there. An assignment or job in a single location is considered indefinite if it is realistically expected to last for more than one year, whether or not it actually lasts for more than one year. If your assignment is indefinite, you must include in your income any amounts you receive from your employer for living expenses, even if they are called travel allowances and you account to your employer for them. You may be able to deduct the cost of relocating to your new tax home as a moving expense.

What Travel Expenses Are Deductible?

Once you have determined that you are traveling away from your tax home, you can determine what travel expenses are deductible. Deductible travel expenses include those ordinary and necessary expenses you have when you travel away from home on business. The type of expense you can deduct depends on the facts and your circumstances.

Table 1 summarizes travel expenses you may be able to deduct. You may have other deductible travel expenses that are not covered there, depending on the facts and your circumstances.

When you travel away from home on business, you should keep records of all the expenses you have and any advances you receive from your employer. You can use a log, diary, notebook, or any other written record to keep track of your expenses. The types of expenses you need to record, along with supporting documentation, are described in Table 2 .

Table 1

IF you have expenses for:THEN you can deduct the costs of:
Transportation Travel by airplane, train, bus, or car between your home and your business destination.
Taxi, commuter Fares for these and other types of transportation that take you to or from bus, and airport limousine1) The airport or station and your hotel
2) The hotel and the work location of your customers or clients, your business meeting place, or your temporary work location.
Baggage and shipping Sending baggage and sample or display material between your regular and temporary work locations.
Car  Operating and maintaining your car when traveling away from home on business. You can deduct actual expenses or the standard mileage rate, as well as business-related tolls and parking. If you rent a car while away from home on business, you can deduct only the business-use portion of the expenses.
Lodging and meals Your lodging and meals if your business trip is overnight or long enough that you need to stop for sleep or rest to properly perform your duties. Meals include amounts spent for food, beverages, taxes, and related tips. See Meals for additional rules and limits.
Cleaning  Dry cleaning and laundry.
Telephone Business calls while on your business trip. This includes business communication by fax machine or other communication devices. Calls home to keep family apprised of your status.
Tips Tips you pay for any expenses in this chart.
Other Other similar ordinary and necessary expenses related to your business travel. These expenses might include transportation to or from a business meal, public stenographers fees, computer rental fees, and operating and maintaining a house trailer.

Standard Meal Allowance

You generally can deduct a standard amount for your daily meals and incidental expenses (M&IE) while you are traveling away from home on business. In this publication, "standard meal allowance" refers to the federal rate for M&IE (which varies based on where and when you travel).

Incidental expenses. These include, but are not limited to, your costs for the following items.

1) Laundry, cleaning and pressing of clothing.

2) Fees and tips for persons who provide services, such as porters and baggage carriers.

Incidental expenses do not include taxicab fares, lodging taxes, or the costs of telegrams or telephone calls.

The standard meal allowance method is an alternative to the actual cost method. It allows you to deduct a set amount, depending on where and when you travel, instead of keeping records of your actual costs. If you use the standard meal allowance, you still must keep records to prove the time, place, and business purpose of your travel. 

Car Expenses

If you use your car for business purposes, you may be able to deduct car expenses. You generally can use one of two methods to figure your expenses: actual expenses or the standard mileage rate. In this publication, "car" includes a van, pickup, or panel truck.

Standard Mileage Rate

You may be able to use the standard mileage rate to figure the deductible costs of operating your car for business purposes. For 2000, the standard mileage rate is 32 1 /2 cents a mile for all business miles. This rate is adjusted periodically.

You generally can use the standard mileage rate whether or not you are reimbursed and whether or not any reimbursement is more or less than the amount figured using the standard mileage rate. 

Choosing the standard mileage rate. If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Then in later years, you can choose to use either the standard mileage rate or actual expenses. If you want to use the standard mileage rate for a car you lease, you must use it for the entire lease period. For leases that began on or before December 31, 1997, the standard mileage rate must be used for the entire portion of the lease period (including renewals) that is after that date.

If you choose to use the standard mileage rate, you are considered to have chosen not to use the depreciation methods discussed later. This is because the standard mileage rate includes an allowance for depreciation that is not expressed in terms of years. If you change to the actual expenses method in a later year, but before your car is fully depreciated, you have to estimate the remaining useful life of the car and use straight-line depreciation.

Actual Car Expenses

If you do not choose to use the standard mileage rate, you may be able to deduct your actual car expenses. Actual car expenses include the costs of:

  • Depreciation Lease payments
  • Registration fees Licenses
  • Insurance Repairs
  • Gas Oil
  • Tires Garage rent
  • Parking fees Tolls

Depreciation Deduction

If you use a car you own in your business, you can claim a depreciation deduction: that is, you can deduct a certain amount each year as a recovery of your cost or other basis in the car. You cannot use the standard mileage rate if you decide to take a depreciation deduction in the year you first place the car in service.

You generally need to know the following three things about the car you intend to depreciate.

1) Your basis in the car.

2) The date you place the car in service.

3) The method of depreciation, recovery period, and convention you will use.

Record Keeping

If you deduct travel, entertainment, business gift, or local transportation expenses, you must be able to prove (substantiate) certain elements of expense. This guide discusses the records you need to keep to prove these expenses.

If you keep timely and accurate records, you will have support to show the IRS if your tax return is ever examined. You will also have proof of expenses that your employer may require if you are reimbursed under an accountable plan.

How To Prove Expenses

Table is a summary of records you need to prove each expense discussed in this publication. You must be able to prove the elements listed across the top portion of the chart. You prove them by having the information and receipts (where needed) for the expenses listed in the first column.

You should keep adequate records to prove your expenses or have sufficient evidence that will support your own statement. You must generally prepare a written record for it to be considered adequate. This is because written evidence is more reliable than oral evidence alone. However, if you prepare a record in a computer memory device with the aid of a logging program, it is considered an adequate record.

Table 2

How To Prove Certain Business Expenses

IF you have expenses for:

THEN you must keep records that show details of the following elements.




Place or Description

Business Purpose & Business Relationship

Cost of each separate expense for travel, lodging and meals.

Dates you left and returned for each trip.

Destination or area of your travel

Purpose: Business purpose for the expense or the Business benefit gained or expected to be gained.

Totaled in reasonable categories


Transportation (Car)

Cost of each separate expense.

Date of the expense


For car expenses, the cost of the car and any improvements.


The date you started using it for business.


The mileage for each business use and the total miles for the year.


Adequate Records

You should keep the proof you need in an account book, diary, statement of expense, or similar record. You should also keep documentary evidence that, together with your record, will support each element of an expense.

Documentary evidence. You generally must have documentary evidence, such as receipts, canceled checks, or bills, to support your expenses.

Exception. Documentary evidence is not needed if any of the following conditions apply.

1) You have meals or lodging expenses while traveling away from home for which you account to your employer under an accountable plan, and you use a per diem allowance method that includes meals and/or lodging.

2) Your expense, other than lodging, is less than $75.

3) You have a transportation expense for which a receipt is not readily available.

Adequate evidence. Documentary evidence ordinarily will be considered adequate if it shows the amount, date, place, and essential character of the expense. For example, a hotel receipt is enough to support expenses for business travel if it has all of the following information.

1) The name and location of the hotel.

2) The dates you stayed there.

3) Separate amounts for charges such as lodging, meals, and telephone calls.

A restaurant receipt is enough to prove an expense for a business meal if it has all of the following information.

1) The name and location of the restaurant.

2) The number of people served.

3) The date and amount of the expense.

If a charge is made for items other than food and beverages, the receipt must show that this is the case.

How Long To Keep Records and Receipts

You must keep records as long as they may be needed for the administration of any provision of the Internal Revenue Code. Generally, this means you must keep records that support your deduction (or an item of income) for 3 years from the date you file the income tax return on which the deduction is claimed. A return filed early is considered filed on the due date. You must keep records of the business use of your car for each year of the recovery period.


This web page was last updated on Thursday, August 23, 2007 By Michael D. Rennhack.
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