This section briefly explains the kinds of travel and entertainment
expenses you can deduct on Schedule C or C-EZ.
Table 8-1
Travel expenses.
These are the ordinary and necessary expenses of traveling away
from home for your business. You are traveling away from home if both
the following conditions are met.
- Your duties require you to be away from the general area of
your tax home (defined later) substantially longer than an ordinary
day's work.
- You need to get sleep or rest to meet the demands of your
work while away from home.
Generally, your tax home is your regular place of
business, regardless of where you maintain your family home. It
includes the entire city or general area in which your business is
located.
The following is a brief summary of the expenses you can deduct.
Transportation.
You can deduct the cost of travel by airplane, train, bus, or car
between your home and your business destination.
Taxi, commuter bus, and limousine.
You can deduct fares for these and other types of transportation
between the airport or station and your hotel, or between the hotel
and your work location away from home.
Baggage and shipping.
You can deduct the cost of sending baggage and sample or display
material between your regular and temporary work locations.
Car or truck.
You can deduct the costs of operating and maintaining your vehicle
when traveling away from home on business. You can deduct actual
expenses or the standard mileage rate (discussed earlier under
Car and Truck Expenses), 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.
Meals and lodging.
You can deduct the cost of meals and lodging if your business trip
is overnight or long enough that you need to stop for sleep or rest to
properly perform your duties. In most cases, you can deduct only 50%
of meal expenses.
Cleaning.
You can deduct the costs of dry cleaning and laundry while on your
business trip.
Telephone.
You can deduct the cost of business calls while on your business
trip, including business communication by fax machine or other
communication devices.
Tips.
You can deduct the tips you pay for any expenses listed above.
More information.
For more information about travel expenses, see Publication 463,
Travel, Entertainment, Gift, and Car Expenses.
Entertainment expenses.
You may be able to deduct business-related entertainment expenses
for entertaining a client, customer, or employee. In most cases, you
can deduct only 50% of these expenses.
Examples of entertainment expenses are those for the following.
- Entertaining guests at nightclubs, athletic clubs, theaters,
or sporting events.
- Providing meals, a hotel suite, or a car to business
customers or their families.
To be deductible, the expenses must meet the rules listed in
Table 8-1. For details about these rules, see
Publication 463.
Reimbursing your employees for expenses.
You generally can deduct the amount you reimburse your employees
for travel and entertainment expenses. The reimbursement you deduct
and the manner in which you deduct it depend in part on whether you
reimburse the expenses under an accountable plan or a nonaccountable
plan. For details, see chapter 13 in Publication 535.
That chapter explains accountable and nonaccountable plans and tells you whether to
report the reimbursement on your employee's Form W-2, Wage
and Tax Statement.
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