In a matter of days, I will be boarding a plane and heading to Chicago for the first annual Financial Blogger Conference. I’d go anyway, because I think it will be great to meet the great folks I “know” from around the blogosphere. However, the trip is even sweeter because I can deduct most of my expenses on my taxes. When you have a home business, and you are traveling for your business, you can deduct some items on your tax return. And I intend to deduct business related expenses incurred by my trip to Chicago.
What Can You Deduct?
The good news is that you can deduct a number of items on your tax return when it comes to travel for you home business:
- Registration fee for conferences, conventions and trade shows
- Hotel stay
- Transportation to and from venues, and to and from the airport
- 50% of meal expenses
- 50% of costs if you entertain customers or clients
- Mileage if you drive a vehicle to complete your business
It is important to realize that you can’t just deduct whatever you feel like. If you are going to a convention or trade show and you have a booth, and are selling, it’s fairly cut and dry. However, if you are just going as an attendee, you need to show that the conference/convention is directly related to your business. Attending the Financial Blogger Conference is fairly obvious; I am primarily a financial blogger. BlogWorld is another conference that, as a professional blogger, is directly related to my business. I can attend sessions to help me enhance my abilities — and I will be able to promote myself and make connections. However, a trip to Comic-Con wouldn’t exactly qualify. Until I actually start being paid to write about cool movies and graphic novels, It’s a leap to say that Comic-Con is related to my business.
You should realize, too, that there are limits to what you can claim if your business trip involves a cruise, no matter how related to your business the cruise is.
As with all tax deductions, it is important that you carefully document your business travel. Keep receipts, and make a note of dates, and what you did. Additionally, if you are claiming a deduction for entertaining a business client or customer, you need to write down who was present, what you did, the reason for the entertainment, and the actual business accomplished. Do the same for meals when you pay for clients and customers and then go to deduct a portion of the expense. Realize, too, that the IRS requires that these types of expenses be “ordinary and necessary,” and you need to be able to show the connection between the expense and the business discussed. Business must be the main reason for the meal, or the entertainment. Keep this documentation with your copy of your tax return, to be used in case of an audit.
Your expenses should be shown in one of three places on your tax return:
- Schedule C for sole proprietors and single-member LLCs
- Deductions section on Form 1065 for multi-member LLCs and partnerships
- Deductions section on Form 1120 for corporations
For more information on deducting travel expenses, you should consult with a knowledgeable tax professional, or check out Topic 511 on the IRS web site.