 Internal Revenue Service, R.S. Tax News, understanding business travel deductions, understanding business. You know, with business travel, the first thing to understand is not to stand under the bus. Otherwise, your head may be deducted from your body, which is not the kind of deduction we're looking for here. And it can be confusing because when attempting to understand travel, it's natural to conclude that we would be standing under something travel-related, you know, would it not? But ironically, understanding business travel has more to do with moving than standing still the meaning of the term seeming to emphasize the travel part more than the standing part. And honestly, like, if you really comprehend something, wouldn't you feel more like you climbed up a mountain or something like that? So the term should really be overstand because like you've conquered it, you know, so like you're overstanding it now rather than understand. I mean, the term understand sounds like the thing's gonna fall on your head like at any moment, which is usually true when trying to understand taxes. But that's not the point. That's not the point. The point is that understanding something should be good. So I feel like the phrase should be overstand, overstanding it. But anyways, I guess maybe it is depressing when you understand the hard truths of life, like nothing is certain but death and taxes, and that we're all just like dust in the wind, dude. All we are is dust in the wind, dude. You know, I don't know about you, but when I'm traveling, I usually quickly deduct that I'm lost. How do you know about them? And I mentioned, my dear Watson, this man has been dead for at least two hours. Completely dependent on that GPS thing. And I don't trust that GPS lady. I swear she's out to confuse me just like those modern AI chat GPT computer things. You know, you ask the thing a simple question like where babies come from and the thing spits out a story starting with some dude at a drag show. I mean, I think we've taken a wrong turn somewhere along the way here. AI, dang AI. I trusted you and you lied to me. I turned into paper saying that babies come from drag shows to my school. No, no. I don't want to hear the rest of the story about how some dude's beer belly miraculously turned into a kid. I don't care if it is a top critically reviewed series on Netflix. People are a bunch of lying hacks, lying, whatever, on whatever onto the news. Just win, dude. Internal Revenue Service IRS tax tip 2023-15, February 7, 2023. Whether someone travels for work once a year or once a month, figuring out travel expense tax write offs might seem confusing. That's because they are confusing. Don't let the IRS be like, hey, it's just because you're a little stupid in terms of the subject here. No, it's a confusing, complicated subject with a lot of gray area to it. It's confusing by nature. So the IRS has information to help all business travelers properly claim these valuable deductions. So let's take a step back and just to get a general idea of the travel types of deductions. We're typically talking a business type of deduction, a deduction for a business or possibly like a sole proprietor categorizing a business type of deduction. And then the question is what is a deduction for businesses? Remember, we have an income tax type of system. And so you would expect then the things that are ordinary and necessary to generate revenue would be deductible. In other words, we don't typically tax on gross income. You would expect an income tax system to tax on net income because it's possible for basically two businesses to have very different gross incomes, but still have similar net incomes because they have different things that they need to be purchasing or consuming in order to generate that revenue. So just a natural deduction for an income tax system, you would expect to be an ordinary, necessary business type of deduction. That gets a little bit lost oftentimes because if you're not dealing with businesses and the tax code, you're dealing with individual taxes, you're often dealing with people that just have W2 types of income and you don't have these kind of deductions because the idea would be that the employer is the one that's taking care of those kind of expenses for an employee and it's further confused by the fact that we have all these other deductions that aren't really natural to an income tax, they have different incentives for them, such as we want to deduct for charity, for example, or something like that, has nothing to do with what you would think would be a normal deduction for income taxes, which would be those things that you needed to consume in order to generate the revenue, but we might want to incentivize that. That's why they put it in there. Same with most of the stuff on the Schedule A, like charitable deductions, like the mortgage interest and stuff like that. That's a personal deduction. So you would think why would it be something that's been deductible on an income tax system because they wanted to incentivize housing or whatever they felt like doing at that particular time. But the natural deduction would be those that are used in order to generate revenue. That makes sense from an income tax perspective. Then the question is, well, what is a travel deduction? It categorizes as a travel type of deduction. For that, we might need some terms like a business place of business or home so we can distinguish what is travel versus a commute because there's a difference being a queen commuting and travel oftentimes in the tax code. And then what kind of things constitute travel that I can deduct, and then if there's gray area with regards to personal versus business, that's also a confusing component. So where are some tax details all business travels should know? So business travel deductions are available when employees must travel away from their tax home. There's a link to that home here or main place of work for business reasons. So a lot of ambiguous kind of terms we've got to define what our tax home is. You can get more detail here or main place of business and then for business reasons. So again, what does that exactly mean? So a taxpayer is traveling away from home if they are away for longer than an ordinary day's work. So there's a definition of sorts and they need to sleep to meet the demands of their work while away. So if you're traveling somewhere and you're staying in a hotel and it's business related, then you would think that would be a qualifying characteristic and not just a commuting kind of situation. Travel expenses, there's a link to that here, must be ordinary and necessary. Now ordinary and necessary is kind of like the standard for most deductions that are business deductions. You needed to consume those expenses, which are the business deductions in order to generate revenue. And that's why you get the deduction because the government is like your silent partner. They get part of the net income, not part of the gross income. It wouldn't be fair to get the gross income because that would incentivize certain businesses over other businesses. So they can be a lavish extravagant for the personal purpose. They can't be lavish extravagant or for personal purposes. So employers can deduct travel expenses paid or incurred during temporary work assignment. There's a link to that here. If the assignment length does not exceed one year, travel expenses for conventions, there's a link to that here, are deductible if attendance benefits the business. There are special rules for conventions held outside North America. And there's a link to that. Deductible travel expenses include travel by airplane, train, bus or car between your home and your business destination. Fairs for taxis and other types of transportation between an airport or train station and a hotel or from a hotel to a work location. So obviously the moving around kind of costs and what not, shipping of baggage and sample or display material between regular and temporary work locations, using a personally owned car for business, lodging and meals, dry cleaning and laundry, and business calls and communication tips paid for services related to any of these expenses, other similar ordinary and necessary expenses related to the business travel. Self-employed individuals or farmers with travel deductions. Those who are self-employed can deduct travel expenses on schedule C form 1040 profit or loss from business. Obviously the schedule C is where you might want to dig down and look at the instructions for the schedule C's for more guidance that can kind of lead you to where you need to go from there. If you're a sole proprietor looking into travel, farmers can use the schedule F similar kind of thing. You can start there to kind of check out the rules. Rules are a little bit different for farming often times. So although the general concept is the same of ordinary and necessary business deductions. Travel deductions for the National Guard or military reserves. National Guard or military reserve service members can claim a deduction for unreimbursed travel expenses paid during the performance of their duty. And then we've got the record keeping well organized records. There's a link to that here. Make it easier to prepare a tax return. Clearly so whatever your documentation on the travel, especially obviously if you're in an industry where an IRS auditor is going to look at it and be jealous of your business travel being more exciting than what they're doing as work. So they're likely to say that doesn't sound like work. And then it might be is just that you have fun or work or something. And so you have to make sure that you're ready for them to come and question you about whether or not that is in alignment with the goal of an ordinary and necessary expense and not just you gallivanting around the world hobnobbing with people and then writing it off. Anyways, keep records such as receipts, cancel checks and other documents that support a deduction. There's links to that stuff here. There'll be a link to this in the description.