As a general rule, travel expenses are deductible as a business expense as long as the expense is considered by the IRS to be an ordinary and necessary business expense under (IRC section 162). But when you incur a travel expense outside the United States, that is when the rules begin to change. Do not assume that 100% of your foreign travel expenses are tax deductible. And better yet, consult with your CPA tourconsultancy.com the planning phase of your foreign travel in order to maximize your opportunity for a tax deduction.
General Rules Regarding Travel Expenses:
Travel expenses traditionally includes the following categories of expenses associated with at least one overnight stay (i.e. where sleep is required while away from home):
1. Transportation Costs – Transportation includes airplane, train, bus, car, or ship between your home and business destination. It also includes commuter bus, taxi and limousine transportation.
2. Baggage and Shipping Costs- This category includes the cost of sending baggage, samples, display materials between regular and temporary work locations.
3. Lodging Costs – Such costs include overnight hotel stays and temporary housing costs.
4. Meals – Allowable meals expenses include food, beverage, tips and tax. If the meals qualify for a tax deduction they may be 50% or 100% deductible. Meals between employees/employers are generally not deductible unless a business purpose can be substantiated. In cases in which there is a business purpose, the meal is eligible for a 50% tax deduction. Meals also include customer-related meals in which business is discussed (50% deduction).
Also allowed are meals related to business-related travel that includes an overnight stay (50% deductible. If the overnight travel is related to an employer-sponsored social or recreational event the meals are 100% deductible. If the meal is related to promotional activities that are made available by the business to the public such costs are 100% deductible.
