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A Short Self-Employed Guide to Deducting Travel Expenses

Business Finance Self-Employment Credits & Deductions Self-Employment Tax Planning
Self-employed man tracking his travel expenses while on a business trip.

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If you have to travel as part of being self-employed, you know traveling costs can add up fast. Fortunately, there are a few tax breaks available for deducting travel expenses.

Follow this quick guide to learn how to lower your tax bill by deducting your business travel expenses.

Business mileage vs. business travel expenses

As a business owner, you are considered “traveling” for tax purposes when you are away from home long enough to require sleep – generally overnight. In that instance, not only can you deduct your mileage, but you can also deduct the cost of meals and lodging.

If you travel to see a client during the day but return home in the evening, you can only deduct the miles you drove to the meeting.

Vehicle expense deduction

Being self-employed allows you to deduct vehicle expenses when you drive your personal car for business purposes. That includes instances like driving to see a client, to a store to pick up supplies for your business, or to a conference in another state. And when it comes to deducting those travel expenses, you must choose to deduct either the standard mileage allowance or the actual cost of your gas, oil, and other expenses. The standard mileage allowance for 2020 is 57.5 cents per mile.

Whichever method you choose, you must maintain good records. For each trip, make sure to diligently record the date, the number of miles, and the purpose of the trip. Calculate your deductible miles using TaxAct’s mileage reimbursement calculator.

Remember to deduct the cost of parking and tolls. Those costs are deductible in addition to other vehicle expenses or the standard mileage rate.

Travel expenses

Here’s a list of common self-employed business travel expenses you can deduct:

  • Meals (50 percent deductible)
  • Lodging
  • Airfare, train, or bus fares
  • Taxis and limousines
  • The cost of transporting supplies, such as display materials
  • Dry cleaning and laundry while you travel
  • Business expenses while traveling, such as Internet and phone charges

Combining business and pleasure

It’s tempting to combine business and pleasure on trips when you are self-employed. If you must go to Las Vegas, why not spend a couple more days seeing the sights – and take someone along with you, perhaps?

There’s nothing wrong with enjoying business travel, but make sure you only deduct the portion of your trip that is actually for business. For example, if you stay in Las Vegas two extra nights for fun, you can’t deduct the hotel room and other expenses for those two days.

Unless your spouse or other companion is your employee, you generally can’t deduct his or her travel expenses. That means you can’t deduct the second airline ticket. However, you can still deduct the amount your hotel room would have cost for one person, which is often the same or not much different than it is for the two of you.

More to explore:

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