travel blogger business expenses

Writing What I Want

The Murky Waters of Tax Deductions for Travel Bloggers

Last week I took a vacation with my wife and her family. During that week, I wondered if I snapped a few photos to sell online or wrote about the experience here on this blog, could I deduct any costs from my taxes?

So I did some Googlin’. And the answer seems to be maybe… But probably not. But it’s very much a gray area.

Travel Bloggers abound. My blog here is more of a technical one, although I’ll write about anything that suits my fancy. After all, my tagline is writing what I want . So it wouldn’t be a stretch to write about my travel experiences.

Or I could snap a few photos and list them on Shutterstock or through them on a tee or some other product.

Such as this photo of the Bodie Island Light Station, available on Redbubble products or available for license on Shutterstock .

Either of these things would be work, right?

Let’s see what my Googling came up with:

Business Insider’s article Can Bloggers, Instagrammers, and Influencers Deduct Travel Expenses emphasizes the fact that, in order to deduct any expenses, your “endeavor” (as they call it) has to be functioning as business. In other words, you need to keep detailed records and at least try to make a profit.

Financial Samurai talks about What Travel Expenses Are Deductible . He talked to his CPA, who told him that “All reasonable related travel expenses required to produce and sell your product” are deductible. Of course, who knows what’s reasonable?

Themeisle has a “listicle” entitled Tax Deductions for Bloggers: 11 Expenses You Can Claim in 2021 that seems to imply you can deduct your heart away. Don’t do that. Be reasonable and accountable.

And, of course, there’s the good ole IRS site. Specifically, three articles:

Publication 463, Travel, Gift, and Car Expenses
Topic No. 511 Business Travel Expenses
How do you distinguish between a business and a hobby?

The first IRS article, Publication 463, mentions that ordinary and necessary business-related expenses are deductible.

So, to deduct the expense, it has at least three criteria:

ordinary - is it common and accepted in your trade or business?
necessary - is it helpful and appropriate for your business?
business-related - is it even for your business?

With these thoughts in mind, let’s look through my trip last week - and, assuming it was a business trip - figure out what was deductible.

Fun fact: I’m not going to deduct any of these expenses from my taxes.

Getting to the Location

To get where we were going, we paid two tolls at four dollars each.

We also drove our van about 600 miles. At the standard mileage rate of 57.5 cents per mile, that means we “spent” $345 to drive down there. Note that if you use the standard mileage rate, you can’t deduct the cost of gas. Gas is computed in the standard mileage rate.

$8.00 in tolls
$110.00 for a hotel stay at Dawson Inn
$25.17 for dinner at Wendy’s
$21.81 for lunch at Chick-Fil-A
$345 to drive down there

I booked my stay at Dawson Inn via the HotelTonight app. Get $25 off your first HotelTonight room if you spend $135 USD+ when you use my referral link: https://www.joehxblog.com/hoteltonight/

Which of these meet the three conditions? Or, rather, which ones don’t?

The two meals don’t count. First off, they were for my whole family. Since my wife and two kids are not employees, I can’t deduct the cost of feeding them.

The tolls, hotel stay, and mileage to get down there would have been the same even if I traveled by myself . Therefore, they were necessary.

Total potential deductibility? $463.

Staying at the Location

My wife and I had dinner at the Basnight’s Lone Cedar Cafe ($116.98) while her parents watched the kids. We also went and checked out The Lost Colony ($49.12 + $7 for popcorn and soda) outdoor play one night after the kids went to bed.

We spent money on the kids, too. We got ice cream at Surfin’ Spoon ($15.56) and pizza at American Pie ($24.84). We had to run to Food Lion ($43.78) a couple of times to get milk to drink diapers for my daughter.

None of the things I mentioned in the last two paragraphs are potentially deductible. Maybe if I wrote a review of one of them - say, The Lost Colony outdoor play - I could then deduct the cost of going there.

But they weren’t necessary for taking any pictures. Heck, photography was explicitly prohibited at The Lost Colony .

There’s no prohibition on taking photos of the ocean, though.

And diapers… Well, we needed those anyway, even if we never took the trip.

So, while we were there, nothing was potentially deductible.

The Trip Back Home

Back home we passed through two more $4 tolls. We also traveled another 600 miles - or $345 worth of driving. We didn’t stay in a hotel. These might be deductible.

We did eat at McDonald’s ($18.60) for breakfast and Bojangles ($18.62) for lunch. These aren’t deductible, even though we don’t have a Bojangles were we live.

The return home has a potential deductibility of $353.

So How Much? And what would that mean?

The trip there had $463 in potential tax deductions. The trip back had $353. The grand total was $816.

That makes that $816 free, right? Since I could just “deduct it from my taxes”?

No. That means my taxable income would be reduced by $816.

And, assuming I’m in the 25% tax bracket (fun fact: there is no 25% tax bracket as I write this) it means I would save $204 off my taxes.

In other words, a tax deduction is essentially a 25% off coupon.

Oh, and since I just reduced my business expenses by $816, that’s less money I can throw into my solo 401k .

2 comments for The Murky Waters of Tax Deductions for Travel Bloggers

Oh, and since I just reduced my business expenses by $816, that’s less money I can through into my solo 401k.

Thanks for the correction!

I had to read your comment ten times before I understood it though…

Reply to This Thread

Everything you need to know about tax deductions for travel bloggers

The life of a travel blogger is enviable and from an outside perspective, it may seem like they can live an ideal life of exotic vacations and fancy meals. However, the reality of the work is a lot more complicated than just play and luxury!

With the US tax system, you enter sort of a gray zone when it comes to travel blogging. But as a general rule, as long as your blog/website turns a profit within five years, it’ll be classified as a legitimate business.

As freelancers, travel bloggers are required to file quarterly taxes, four times a year. Quarterly taxes for people who do not have their taxes automatically withheld from their earnings. This means they pay their taxes to the IRS four times a year.

But, one of the perks of being self-employed is that you can deduct expenses.

Meet Kelly!

Kelly is a travel and lifestyle blogger who has visited over 30 countries. As a self-employed individual, she has struggled with her taxes since the IRS doesn’t provide a clear set of instructions regarding applicable deductions.

Generally, any expense that is deemed ordinary and necessary for your trade or business is considered a legitimate deduction.

As a travel blogger, Kelly can claim a couple of deductions like-

Start-up costs
Website and hosting expenses
Content-related expenses
A home office
Marketing costs
Payments to outside contractors
Computer equipment
Other equipment
Online product and services

However, aside from these common deductions, there are also many lesser-known deductions that can be claimed by travel and lifestyle bloggers, which is exactly what FlyFin did for Kelly.

FlyFin is the world’s first AI tax engine that is specifically designed for freelancers. It is not only powered by A.I. but also backed by CPAs to provide you with the most accurate tax review. With the help of FlyFin, Kelly was able to write off an entire trip as a business expense!

She went out for a trip to Mexico and was shocked to learn about the number of deductions she could claim. Kelly often creates content from her travel experiences and shares it with her followers on different social media platforms. Since she is often busy with work during her trips, FlyFin and its team of CPAs categorized her entire trip as a business expense.

The following represents some of the tax deductions Kelly claimed:

Lodging/Rental: Aside from her lodging, Kelly had rented a space for her photoshoot. After verifying this deduction with the app’s CPAs, she deducted the full cost of lodging incurred for business purposes.

Conveyance: All her travel expenses that were necessary while working were deductible. So for example, she was able to write off all the Uber rides she took to her shoot locations and business meetings in Mexico.

According to the IRS: flights, hotels, taxis, and food are deductible business expenses as long as they’re for actual, legitimate business purposes.

Food & Beverages: Usually, you can deduct up to 50% of the cost of a business meal. However, as of 2021, you can now deduct 100% of business meal costs, which is exactly what Kelly did. She was able to deduct 100% of certain meals (which included dine-in, takeout, delivery), under specific conditions that CPAs helped her understand.

The CPA s told her that all the food & beverages were deductible if she consumed them while on the job, as long as they weren’t extravagant or for entertainment purposes.

Photography: All her business expenses like paying for a photographer, and editing, were tax-deductible.

With FlyFin, she was able to automate and streamline all her tax deductions along with the help of CPAs, whom she could consult directly without paying any additional costs.

If you are a freelancer too and happen to be confused about deductions, download the FlyFin app now and find out what you can write off.

Interesting Related Article: “ 6 Jobs For Those Who Love to Travel “

The Tax Details Travel Bloggers Need to Know

By: Author Yossy Akinsanya

Posted on Last updated: June 13, 2022

Who wouldn't want to make a living from traveling the world and writing about their experiences?

Nowadays, as long as you have a serious case of wanderlust, a laptop, and an internet connection, potentially anyone can make this dream a reality.

However, there's more to it than this. Travel blogging may sound pretty straightforward, but there are many things you'll need to consider before you take the plunge and set up your website.

Working in the hills of Himachal Pradesh, India (photo: Dessidre Fleming)

You'll need to consider travel-related expenses, equipment expenses, your travel writing skills, brand sponsorships, affiliate programs, and everyone's least favorite pastime – filing taxes.

Thanks to the helpful advice in this guide, you'll learn how to file taxes as a travel blogger and tax deductions you can take advantage of.

By learning all this information before you start blogging, you can save money and avoid getting into trouble with the IRS.

Table of Contents

Blogging as a Hobby

Blogging as a side hustle, blogging as a full-time career, estimated taxes, paying taxes in the u.s., paying taxes overseas, best tax-free places, ‘ordinary and necessary', don't forget…, accounting software, hiring an accountant, setting money aside, growing your travel blog, filing taxes as a blogger.

If you're earning money as a blogger , even if you treat blogging as a hobby rather than a career, you need to pay taxes on this income. Failure to do so could lead to issues with the IRS.

However, filing your taxes will differ depending on whether you're blogging as a hobby, side hustle, or full-time career. Here's a quick explanation for each category.

If you run a travel blog purely for pleasure rather than money, you could still find yourself making an income from this hobby through affiliate links and adverts. This means you must declare this income on your annual income tax return.

Since you won't be treating your blog as a separate business, it's relatively easy to add your income from your blog to your income tax return. You won't have to worry about setting up a business and paying corporate tax.

Differentiating between a business and a hobby can be difficult, especially if your hobby grows into a business. If you're unsure, check out this page on the IRS website .

Generally, if you're keeping accurate financial records and putting effort into making your blog profitable, then your travel blog can be considered a business.

Blogging as a side hustle means using your blog to earn extra money to supplement your primary career. Therefore, this side hustle counts as a business in its own right.

By owning a travel blog as a side hustle, you become the sole proprietor of this business. You must attach a Schedule C to the standard Form 1040 for your income tax.

You won't need to file a separate business tax return since your blog only generates a small proportion of your annual income.

Once your travel blog becomes more successful, you may have the option to pursue this career full-time and devote all your time and energy to it.

If you're a full-time travel blogger, you could still choose a sole proprietorship as the structure for your business. A sole proprietorship is easy to set up, gives you complete control, and makes taxation more straightforward.

However, as your business grows, you may benefit from setting up an LLC (limited liability company).

This is because you won't be personally liable if your business experiences legal or financial problems, and you also won't fall into the trap of double taxation that can come with setting up a C corporation (this business structure would require you to pay corporate tax and income tax).

In addition to income taxes, you'll also need to pay self-employment taxes (SE taxes) as a travel blogger. These taxes cover your Social Security and Medicare taxes – for those earning a wage, these taxes are withheld by employers.

Since you'll be self-employed, you'll need to figure out your SE taxes using Schedule SE. Find out more about calculating your SE taxes here .

As a self-employed travel blogger, you'll need to pay your taxes quarterly through estimated tax payments.

Using the previous year's financial information and Form 1040-ES, you can figure out your estimated tax payments for each deadline: April 15, June 15, September 15, and January 15.

If you end up not paying enough tax throughout the year, you could face a penalty from the IRS. However, you can adjust your quarterly payments if you think they're too high or low.

Remote work with a view in Tisno, Croatia (photo: Kornél Máhl)

Where Do Travel Bloggers Pay Tax?

Knowing how to pay taxes as a self-employed individual is extremely important. However, if you own a travel blog, things can get a bit more complicated.

As a travel blogger, you'll naturally spend a large chunk of your time in other countries, or you may even be away from your home country for over a year if you decide to travel the world or temporarily relocate.

Unfortunately, this can make it more difficult for you to file your taxes. How and where should you file them?

Will you have to pay double the amount of taxes by paying in your home country and the country where you're temporarily working?

If you're hoping to avoid paying U.S. taxes during long-term travel, you're out of luck. U.S. citizens who live in another country are still subject to U.S. taxes, and the only way to stop paying U.S. taxes is to renounce your U.S. citizenship.

However, according to certain factors, you may not have to file a tax return, or you may have an exemption.

For example, if you're single and under 65 years old, you won't have to file a tax return if you earn less than $12,500 and if you're married and under 65, you only have to file a tax return if your income exceeds $25,100 when filing jointly with your spouse.

Some tax exemptions can help prevent double taxation, such as foreign earned income exclusion.

By applying for this exclusion, you can reduce your taxable income on money earned for services performed outside of the U.S. – foreign income earned indirectly (e.g., rents, dividends, business profits) is not eligible for this exclusion.

You must be a U.S. citizen who has lived in a foreign country for a complete tax year or been present there for at least 330 days in a year to apply for the foreign earned income exclusion.

When it comes to the taxes you pay in the country you're staying in, you need to check the tax laws in your country or region to find out when you need to start paying taxes and how much you'll need to pay. Unfortunately, this could mean you're subject to double taxation.

However, you can take advantage of tax treaties to reduce the tax you pay as a travel blogger. Tax treaties are agreements between countries that avoid or mitigate double taxation.

Check out this A to Z list of countries with tax treaties with the U.S. – click on each country to find out more.

Another way to avoid double taxation as you live and work in different locations is to move to a country with no income tax.

If you become a resident in one of these countries, you'll significantly reduce your tax bill. These destinations are perfect for adventure seekers, cultural travel, and inspiring great content.

Some income tax-free countries include the United Arab Emirates, the Bahamas, the Cayman Islands, Bermuda, Andorra, and Monaco. However, be aware that some of these countries have high living costs or charge significant fees for a residence permit.

For example, in the Bahamas , you'll need to pay $1,000 for an annual residence permit; in the Cayman Islands , you need a yearly income of at least $120,000 to be considered for permanent residency.

When working abroad as a travel blogger, you should consider whether you have the right to work in a particular country.

Work permits and residence permits aren't the same, and the rules on living and working abroad differ from country to country.

Entrepreneur Austin Distel bicycles in Tulum, Mexico

Tax Deductions and Travel Blogging Expenses

Make sure you deduct expenses incurred through running your blogging business, so you don't pay more tax than you need to.

Anything you buy for your travel blogging business can be classed as a business expense and deducted from your taxable income, which will reduce the amount of tax you pay overall.

For example, some ordinary business expenses you could deduct from your taxable income include camera equipment, laptops, website hosting, training courses, travel expenses, and food and drink costs during business-related travel.

Working from home could even write off part of your utility bills as a business expense.

The critical thing to remember is that you can only take a tax deduction on something solely for your travel blogging business and not for personal use.

The IRS states that these deductions must be ‘ ordinary and necessary ,' meaning they must be typical for your line of work and helpful for your business.

The difficulty lies in determining what is for your business and what is personal. As a travel blogger, some of your business expenses may blur this line.

For instance, travel can be both for your blog and pleasure, or you may use your laptop for blogging and personal things. If in doubt, err on the side of caution and don't deduct the expense, as the IRS can be strict on this issue.

Finally, when filing your taxes and considering what needs to be added and deducted, don't forget about products and experiences that companies have gifted in exchange for a feature on your travel blog.

You'll need to include the monetary value of this gift in your income tax return because it counts as a form of payment during your partnership with a company.

Working outside in Toronto (photo: Jane Palash)

Filing Your Taxes While Traveling

Now that you know more about how to be a self-employed travel blogger and the tax rules you should follow, you're probably wondering how to make this complicated process run more smoothly.

Filing taxes can be difficult and time-consuming, so learning some helpful tips for sorting out your finances as a travel blogger is extremely useful.

One of the best tips is to manage your finances online with accounting software . These online accounting tools can be used all around the world, which means you can keep on top of your finances no matter where you're traveling.

With accounting software, you can save receipts, control your cash flow, send invoices, track business expenses, and, most importantly, keep accurate financial records to quickly complete your tax returns before the deadlines.

With more advanced software packages, you can even run in-depth reports to truly understand your blogging business's financial health.

As your travel blogging business grows, you may find it harder to keep complete and accurate books and file tax returns by yourself.

Hiring an experienced accountant to file your taxes for you will reduce this burden and give you peace of mind as tax deadlines approach.

By using accounting software, you can keep detailed records of your finances and easily send this information to your accountant, which will help them file your tax returns as quickly and accurately as possible.

In addition to keeping accurate records, another essential tip for self-employed travel bloggers is to set money aside for taxes.

This is essential for anyone self-employed, but it's worth repeating that you should set aside around 30% of your income to cover your quarterly taxes or more if you want to be cautious.

You don't want to find yourself with too little cash to pay your taxes when the deadline hits!

Remote work station in Vietnam (photo: Samantha Eaton)

Setting up a travel blog is as easy as creating a free website and starting to write, but turning this hobby into a profitable business is much more challenging.

Then, once you earn money from your travel blog, you have to deal with the arduous task of filing the correct taxes. However, filing taxes as a travel blogger doesn't need to fill you with dread.

By learning about your tax rules as a self-employed travel blogger and the tax deductions you can take advantage of, you can reduce the stress involved in this process and save a lot of money.

Remember to follow the valuable tips in this guide to streamline your tax filing process and grow a successful business.

This story is brought to you in partnership with Sage.

Yossy Akinsanya is a freelance writer and photographer based in London and working everywhere. She is most excited when projects allow her to meet new people, travel to new places, and share stories of her experiences.

Planning a trip? Go Backpacking recommends:

G Adventures for small group tours.
Hostelworld for booking hostels.

Guide to Expense Deductions for Travel Bloggers

One of the most confusing parts of owning a business, is knowing how to do your business bookkeeping and taxes.

And now that you have started your blog, you want to make sure that you are doing things right.

Or maybe you've had your blog for a while now, but still aren't sure about what qualifies for tax breaks and expense deductions for your blog.

There is a shortage of accountants and CPAs in the business world who fully understand online business. I regularly get asked about accountants and tax preparers that can help with online business.

But the list that I have is very short because I have had a hard time finding accountants that I can recommend my clients and friends to since there seem to be so few who are taking the time to expand their knowledge base to include the online world.

But as a business owner, you can arm yourself with the proper knowledge before you go to an accountant and then you will be able to help yourself and your accountant when you know exactly what you are talking about.

In this guide, my aim is to make sure that bloggers know what deductions and tax breaks they can take when it comes to their business.

So let's dive in.

What is an expense?

First of all, what is an expense?

An expense for your business, whether you are a blogger or not, is something that is ordinary and necessary for the running of your business.

An ordinary expense, according to the IRS, is an expense that is common and accepted in your type of business. What is common for one business trade is not always accepted for another type of business trade.

A necessary expense, according to the IRS, is an expense that is helpful and appropriate for your business trade.

For example, as a blogger, your email service provider ( Active Campaign , Convertkit, Mailchimp, Drip, etc.) is both an ordinary and necessary expense for your business. But car expenses are not ordinary and necessary expenses for a blogger.

There is a detailed list of expenses that apply to most businesses . In this post, we are going to dive into the expense deductions that are specific to travel bloggers.

You can find travel bloggers expenses here .

You can find photographers expenses here .

You can find home decor/DIY sellers and bloggers here .

You can find crafters and craft bloggers here .

You can find food bloggers here .

You can find beauty bloggers here .

You can find the general blogger's expenses here .

You can find the general list of expenses here .

You can find more information on the home office deduction here .

What expense deductions can travel bloggers take?

Are you someone who travels to places and then you blog about it?

Or do you always blog about the places to see when you take vacations to certain places?

Then you definitely want to finish reading the rest of this post.

Costs to Travel

If you are the type of blogger who is traveling to places for new posts for your blog, then the travel costs for YOU only, are deductible expenses.

If you have a family or a partner who travels with you, the costs for other people to travel with you are NOT deductible.

But what about renting a vehicle or hotel room as a family/with a partner?

The whole cost of a single hotel room or a single car rental would count as deductible.

If you rent more than one vehicle or hotel room, only the cost of the one is deductible, because a normal human being can’t use more than one car or hotel room at a time.

And food?

For federal tax purposes, the food is deductible. For state tax purposes, you need to check with your state, not all states treat this the same.

But again, only your portion of the food is deductible. You can foot the bill for everyone else, but it’s not deductible.

Keep the Receipts!

Always make sure you keep copies of all of the receipts for your travel if you plan to use them as a deduction.

No receipt will immediately lose you the deduction.

Business Travel

What if you are someone who travels for your business, but don’t use it for your blog post?

Like someone who travels to conferences and hosting VIP days around the world, type of thing in your business?

Same thing, your personal costs are deductible.

BUT if you have an assistant that is traveling with you or meeting you there, yes the business can pay for your assistant’s expenses and it’s deductible.

If your family or partner is traveling with you, that is not deductible, whether the business pays or not.

Workcations?

So you travel to someone that is like a vacation, but you are spending most of your time working in/on your business? Yep the cost of the travel, again for you only, is deductible.

Business Expense Deductions for Travelers and Travel Bloggers

These deductions are pretty self explanatory, but basically, if the expenses are directly related to the business, like for you and people who work in the business, then they are deductible.

When you start including other people, like family, partners and friends, those costs are not deductible.

Any questions? Anything confusing?

How to write off travel expenses: A complete guide on business travel expenses

Many small business owners have to travel a few times a year or even as often as every week. Unfortunately, the cost of transport, lodgings, and meals adds up. However, you can cut down these costs by writing these fees off as business expenses by learning about IRS deductible travel expenses.

Learning how to write off travel expenses can save your business thousands of dollars each year. They also empower owners to network, visit clients, and attend valuable workshops. Finally, knowing which deductions are eligible for a write-off can save you a lot of stress at tax time. This travel expenses tax deduction guide overviews which expenses are deductible, how to deduct them, and how to calculate them.

What qualifies as a business trip for tax deductions?

The IRS allows tax deductions on certain travel expenses when the trip's main purpose directly relates to your business. Since the line between business and nonbusiness travel is hard to draw, you can take a few steps to ensure your trips' overhead costs qualify.

A list of travel expenses deductible criteria.

For a trip to qualify as business travel tax deductions, you must:

Leave the area for longer than a day. The place where you normally conduct business is called a tax home. Travel expenses aren’t deductible unless you spend two or more days doing business outside your tax home.
Spend the majority of your trip on business. The IRS measures trip length in days. So, if you spend four days of a weeklong trip on work and three days on rest, it still qualifies as a business trip.
Limit yourself to “ordinary and necessary” expenses. Businesses can write off expenses if they’re required or typical in their field. Taking a client to dinner is considered ordinary, but renting a yacht won’t count because it isn’t necessary or usual.
Document trip plans in advance. The IRS is more likely to provide deductions if you schedule expenses in advance. Before you leave, document and time-stamp hotel reservations, plane tickets, and conference fees.

Taking these steps to ensure your travel qualifies for a tax deduction will ensure you get the correct deductions.

Which travel expenses are tax deductible?

Understanding business tax deductions is easier with a list of example write-offs. While most expenses outside your tax home qualify for deductions, here are the most common travel expenses that are tax deductible:

Transportation
Event registration
Equipment rentals
Miscellaneous business expenses

However, there are some travel expenses you can’t deduct, such as family travel and lodging costs, entertainment, and unnecessary or unreasonable expenses.

For example, you may deduct your plane tickets from your home to the destination, a lunch meeting with a client, and a rented computer while traveling. However, you can’t deduct the hotel stay for your family members or if you take your client to a concert.

Two scenarios to understand when you can write off travel expenses.

How to write off travel expenses on your taxes

Even if you go on a trip for business purposes, incorrectly filing your tax deductions could stand in the way of a write-off. To ensure the IRS covers every expense, plan your write-offs before leaving and hold onto your receipts once you get home. The main steps to follow include:

1. Confirm your eligibility

Before you can bank on a write-off, you must ensure a trip is eligible for business deductions. The IRS uses rigid criteria to weigh business expenses, so make sure your write-offs meet all the standards.

The eligibility criteria for a business trip tax deduction include:

Booking at least one business-related appointment before you leave. You need to establish a "prior set business purpose" and keep copies of your correspondence and scheduled appointments.
Primarily using it for business purposes. The IRS won’t deduct 100% of your transportation costs unless the trip is primarily for business and lasts longer than an ordinary day’s work.
Being longer than an ordinary day’s work. You can’t write off expenses from a day trip. If your trip involves an overnight stay, then the travel qualifies for a deduction. This applies even if you intersperse your trip with personal days.
Excluding companions from expenses. You can only deduct expenses typically incurred on a solo business trip. You can only deduct the cost of your plane ticket if you travel by air, and your family will have to purchase their own. However, if you drive with friends, you can write off all the transport fees.
Traveling within the United States. The above rules only apply to travel within the United States. If you plan to travel to another country, the IRS has stricter standards when allowing for deductions.

Additionally, you can write off lodging, taxis, car rentals, and 50% of your food costs on business days. You can also deduct laundry, dry cleaning, personal grooming, and other “ordinary and reasonable” expenses for the trip.

Likewise, only 50% of your food costs are deductible, along with your portion of the lodging. So, if you usually rent a single hotel room but need a double and another room for the family, you can only deduct the cost of a single room. If you make a layover in another city for personal reasons, you cannot deduct those related travel expenses.

Tip: The IRS counts travel days as business days, along with any weekends or holidays sandwiched between appointments. If you schedule your time right, you can squeeze in personal vacation time and only have to pay for lodging, meals, and other personal expenses on days that don’t qualify as business days.

For example: If you plan to leave on a Thursday and have a business appointment on Friday and Monday, you will have accumulated five business days and can write off all expenses for them.

2. Make sure expenses are ordinary and necessary

Business owners who try to deduct unnecessary or unreasonable expenses from their taxes may run into trouble. While you can deduct the cost of taking a client to dinner, that doesn’t mean you should spring for a thousand-dollar bottle of wine. Avoiding extravagant fees makes the IRS more likely to accept your deduction.

Note : The IRS offers a temporary 100% deduction on business meals ordered from a restaurant between Dec 31, 2020, and Jan 1, 2023. In all other cases, the write-off is 50%.

3. Save all receipts from a trip

Track all expenses by holding onto every receipt from your trip. While not every expense will earn a write-off, it’s worth checking in with a tax professional before throwing any away. Over time, small write-offs and unexpected deductions lead to huge savings.

The IRS doesn’t require that you keep receipts for payments less than $75, but you do need to keep a log of the time and date of the expenses. To streamline the process, you can use QuickBooks expense tracking software .

4. Itemize your expenses

Once you narrow down the receipts eligible for a deduction, organize them into different categories. Group food, transport, and lodging fees into their own folder and write notes explaining when and how you made each expenditure. You'll be in good shape during tax season if you do this while the information is fresh.

Earning a travel deduction means keeping accurate records of your spending. On a business trip, you should tally up your fees on an expense sheet.

Use this free travel expenses write-off calculation sheet to find the estimated amount you can write off for travel expenses. Make a copy of the spreadsheet and input your expenses by category to use the total as a reference.

Please note this is an estimation tool and should not be taken as financial or tax advice. Always refer to IRS guidelines for the latest updates.

5. File your write-off correctly

Once tax season rolls around, you need to make sure that you properly file your travel expenses. For self-employed travel expenses, you will list travel write-offs on Schedule C Form 1040. Businesses must claim travel expenses on Form 2106 and report them on Form 1040 or Form 1040-SR as an adjustment to their total income.

While there’s no annual travel deduction limit, the IRS scrutinizes higher write-offs. Be sure to calculate your business expenses with a tax attorney before submitting a large filing.

How to calculate business travel expenses

To calculate the estimated travel deductions, you can use one of the following formulas. When tallying write-offs, be careful about what you consider a business expense. While baggage fees, laundry costs, and admission to a workshop all count, you shouldn’t include personal expenses like souvenirs. Additionally, you can only write off entertainment costs when treating a client, vendor, or business acquaintance.

Business trip with no personal days

This formula applies to business trips that involve no personal days. The entire trip consists of travel and business purposes.

Travel deduction = Transportation + lodging + business expenses + (meals / 2)

Business trip with personal days in the middle

This formula applies to business trips with vacation time sandwiched between business days. As long as you spend more time on business than leisure, you can include transport and lodging costs in your deductions.

Travel deduction = Transportation on business days + lodging + business expenses + (meals on business days / 2)

Other trips involving business

This formula applies to trips that are mostly for business with vacation days at the beginning or end or personal vacations with at least one business day. You cannot deduct any fees from personal days, so you will end up spending much more on lodgings and transport.

Travel deduction = Transportation on business days + lodging on business days + business expenses + (meals on business days / 2)

Example business vacations you could write off

If your business requires you to travel, you could be missing deductions that can shrink your taxable income and grow your bottom line. While travel expenses must be business-related to be 100% deductible, taking a little vacation time during a trip isn’t unusual.

With that in mind, here are some ideas that you might be able to coordinate with or plan “in and around” your holiday travel to maximize your tax deductions.

Attending your company’s annual meeting: The IRS offers deductions for attending a corporation or LLC 's annual meeting. These meetings allow you to discuss company goals, learn more about your field, and network with other professionals.
Visiting clients: Strengthening relationships with your customers boosts sales, attracts new customers , and provides tax deductions for businesses with clients all over the country. Try to meet as many important clients as you can when visiting their area.
Visiting vendors: Many vendors, subcontractors, suppliers, and corporate affiliates set up shop all over the country. Take an opportunity to network, renegotiate prices, or tour the facilities.
Attending conferences or workshops: Look into local conferences and workshops when traveling. Seminars on business, management, taxes, marketing, SEO, website building, customer service, and technical training are the most common. Workshops relevant to your profession are tax deductible.

While these ideas might begin as a tax write-off, they can grow into a relationship with clients, business partners, and vendors.

Things to consider when writing off travel expenses for holiday travel

Some businesses keep working through the holiday season, so you may find some overlap between family and business. However, IRS auditors invest time and resources into ensuring these expenses relate to business and not a holiday trip.

Examples of which holiday fees are deductible during business travel.

Here are the main points to consider when deducting write-offs during holiday travel:

Holiday vacations are usually not deductible: If you travel without doing any business, the IRS won’t offer any deductions on your vacation. Even if your trip was primarily a vacation with a little work tacked on, only the costs incurred for business on business days are deductible.
Business expenses on vacation are deductible: You can qualify for a small deduction if you go somewhere for vacation and incidentally work while traveling. In addition, any costs related to business expenses—and not relaxing or vacationing—are eligible for a write-off.
Holiday write-offs only apply to you and work associates: If you travel to see a client over the holidays and bring your family, you cannot write off any costs they incur. You are responsible for funding their meals, lodging, and other expenses. That said, you can deduct rental car payments even if your family rides with you.

Remember to follow IRS guidelines. Passing vacation expenses off as a business write-off will trigger an IRS audit. The IRS may level a fine and revoke other business write-offs. So, to keep earning future tax deductions, stay within IRS guidelines and pay for your own vacation expenses.

Find peace of mind come tax time

Going on a business trip is a worthwhile opportunity to expand your business, meet potential investors, and boost professional development. Whatever the reason for your next business trip, learning how to write off travel expenses can help you save money to invest in other areas of your business.

Whether you're a solopreneur going on your first business trip or you have regular meetings across your state’s borders, keeping records of your expenses is crucial to claim tax deductions. An accounting software like QuickBooks Self-Employed can help you track your expenses on the go so you never lose a receipt.

How to write off travel expenses FAQ

If someone claims a deduction they don’t qualify for, the IRS penalizes them for these disallowed business expense deductions. This penalty occurs when business owners use write-offs to pay substantially less income tax than they should have.

In general, the IRS defines substantially less as the equivalent of a difference of 10% of what a business owner owes, or $5,000—depending on which is higher. Not only will the IRS audit you for disallowed deductions, but they’ll also charge a fine.

Business owners have to pay a penalty for disallowed expenses. They owe 20% of the difference between what they needed to pay and what they actually paid for their income tax. In other words, if you write off disallowed business expenses, you must pay 120% of your tax obligation.

To prove travel expenses for taxes, you should keep a record of your expenses, such as receipts, vouchers, and invoices. As a general rule of thumb, don’t write off an expense unless you can prove it relates to work. Keep your records handy to discuss the expenses and accurately fill out tax forms with your CPA at the end of the year for a well-balanced tax return.

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Home Self-Employed Taxes 2018 Top Tax Deductions for Bloggers

2018 Top Tax Deductions for Bloggers

File your taxes online with confidence.

Tax deductions are a great way to keep more of your hard-earned money and lower your tax bill. They reduce the amount of taxable income earned through your blogging business all year long.

The best part: as a blogger, you can deduct a wide range of expenses, from costs related to conferences and seminars to office supplies and car mileage. Even better, these deductions are available to those who blog full-time and on the side. The Internal Revenue System (IRS) classifies all bloggers as self-employed.

Learn what deductions you can take advantage of so you don’t miss the chance to save a single penny come tax time.

Typical Top Tax Deductions for Bloggers

As a blogger, you can take advantage of the following deductions:

Office supplies
Home office
Writing conferences and seminars
Job-related travel expenses
Books, online resources, and subscriptions
Advertising/marketing
Website fees
Gas/mileage
Unpaid invoices

Here’s a breakdown of each deduction.

Office supplies:

This includes traditional office necessities, like paper, pens, notebooks, staplers, and printer ink cartridges. All of those supplies are deductible expenses on your return. But, when it comes to items that last longer than one year, like laptops or computer equipment such as printers and digital cameras, things get trickier.

Those items are considered business assets, and you must capitalize them. That means you should deduct the cost over the long-term life of the asset, otherwise known as depreciation .

Home office:

Expenses in this category include office furniture (desk, chairs, ergonomic accessories) and physical repairs made to the space as long as it’s used solely for business purposes. Other top expenses include a portion of your rent, Internet access, utility bills, insurance and mortgage interest.There are two ways of handling this deduction. and the newer simplified method is the most advantageous for freelancers and self-employed filers—and is easy to calculate.

You can deduct $5 per square foot up to a maximum of 300 square feet for the portion of your home used for your blogging business. At the maximum, this equates to a tax deduction of $1,500.

Writing conferences and seminars:

This is considered professional development and necessary to your business. As such, you can write off the costs associated with attending these events, including the ticket and related travel along with marketing or advertising costs if you’re also presenting or sponsoring the event.

Job-related travel expenses:

This includes any expenses incurred during business trips, such as airfare, gas, rental vehicles, bus and train fares, and local transportation. Note that travel must be overnight and away from your primary residence or place of business to qualify. And you can only write off 50 percent of meals on business trips.

Books, online resources, subscriptions:

Much like the writing conferences, these purchases are considered professional development. You can also write off dues paid to be a member of any professional organizations.

Advertising or marketing:

Examples of costs in this category are those incurred to advertise and market your blog or business website, including paid ads on search engines and marketing subscription costs.

Website fees:

This includes fees paid for your domain name, domain hosting, your site’s theme and general maintenance costs. If you paid a contract worker to build or maintain your site, for example, you could also deduct that cost.

Any software that’s paid and used to manage your blogging business can be written off.

Gas/mileage:

If you travel to see clients, suppliers, or for any other business-related reason, you can deduct the cost of gas, mileage used and normal wear and tear to your car. This one can be tricky because you have two options for reporting the deduction. You can use the standard mileage option or the actual expense option. Check out a full breakdown of the two to determine which one you should use in this guide .

Using an app or tool to track your mileage is a great way to accurately record your business miles. It’s often more trustworthy than a personal, hand-kept log. As such, check out apps like MileIQ to help you avoid any “red flags” in your return.

Unpaid invoices:

If you provided a product or service to a client, but didn’t get paid, keep track of the unpaid invoices. You can deduct them as a business loss if you already recorded the invoice as income for the year.

Get All Potential Deductions

Using online tax software like TaxAct is a great way to ensure you don’t miss any deductions when you file taxes. The program walks you through every deduction available to your specific tax situation so you don’t leave any money on the table. It takes the guessing game out of the tax filing process. While working with the right tax software is important, staying organized all year long is critical to minimizing your tax bill as well.

Organize Your Finances Now

Don’t wait until the new year to get your finances in order. That is how you miss out potential deductions. When your taxes are due (remember, you have a different pay schedule for taxes, which you can learn about in How to Calculate and Make Estimated Tax Payments ) you’ll have everything in one place. Consider using the following tools. Both make it easy for bloggers and freelancers to stay organized.

Shoeboxed : This is a great tool for managing all of your expenses. Use it to scan receipts, track mileage, organize expenses and more.
Wave : This free tool makes it easy to organize business-related finances, including categorizing all of your income and expenses. You can also generate and download reports, making taxes and deductions easier to manage and catch.

Spend Less on Taxes With Deductions

Hold on to more of your money by taking advantage of all the tax deductions available to you. Use this guide to help you find every opportunity. And don’t forget to start organizing your documents as soon as possible. Use a financial platform like Shoeboxed to help you tackle your taxes like a professional.

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Travel Blog-Success

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The Tax Implications of Being a Travel Blogger

The life of a travel blogger may seem glamorous from the outside. Indeed, the prospect of being able to deduct the cost of exotic trips and gourmet meals seems enticing. But navigating the tax landscape as a professional travel blogger is more complex than it appears at first glance.

Considering Travel Blog Tax Deductions? If you’re also thinking about hiring WordPress technical support, read on to discover how these financial decisions can work together to optimize your travel blog’s success.

Distinguishing between Business and Hobby

Taxes for bloggers dwell in a murky area. The Internal Revenue Service (IRS) has explicit rules to differentiate between a hobby and a business. A business must generate a profit, even if there are years of loss. It should also have a regular revenue stream. The business owner should invest significant time maintaining accurate books and records. The IRS employs other methods for differentiation, typically during an audit. If the blog generates a profit in most years, it will be deemed as a legitimate business for tax purposes.

When to Seek Professional Tax Advice?

While creativity is a prerequisite for successful blogging, it’s never a good idea to get too innovative with taxes. Always err on the side of caution when it comes to claiming deductions. For clarity regarding eligibility for specific deductions, always consult a tax professional.

An Insight into Travel and Meal Deductibility for Travel Bloggers

Wondering if travel bloggers can actually write off their vacations and meals? The answer is both yes and no. As long as the expenses incurred are directly linked to the blog, they can be considered deductible. Expenses for industry events are also deductible provided they are sponsored by a brand or agency.

Tax Deductions Associated with Travel Blogging

Planning a trip with a map and laptop on a marble surface

Here’s a detailed breakdown of the various deductions that travel bloggers can claim:

Start-Up Costs: Start-up costs, or capital expenses, are deductible only if the business owner chooses to do so. The IRS states that up to $5,000 in business start-up costs can be deducted. These costs include advertising, employee training, and supplier acquisition. For bloggers, start-up costs could comprise hiring a web developer to create the website;
Operational Expenses for Website and Hosting: Maintaining a website involves costs for web hosting and other technical services. Such expenses are tax-deductible;
Content-Creation Expenses: The nature of this expense heavily depends on your blog’s theme. For travel bloggers, travel-related expenses can be written off;
Home Office Deductions: Bloggers often manage their work from home. They can claim deductions proportionate to their office space within the home, whether they own or rent it. The deduction extends to any type of residence inclusive of single-family homes, apartments, studios, or houseboats;
Marketing and Promotional Outlays: Any expense incurred to advertise and promote the blog, including ads placed on social media and other websites, is deductible;
Outside Contractors’ Payments: Bloggers often engage freelance contractors for specific tasks. Payments to these contractors count as deductible expenses. If payments to an individual contractor exceed $600 in a year, the blogger must issue IRS form 1099 to that contractor to back their tax deduction claim;
Computing Equipment: Costs for equipment and supplies used during the tax year are deductible. This includes computers and related equipment. The IRS allows bloggers to deduct the full cost of a computer or similar equipment under the Section 179 provision;
Miscellaneous Equipment: Apart from computers, bloggers can claim deductions for other equipment like cameras, provided they are primarily used for blog-related activities;
Travel Deductions: Travel bloggers may deduct travel-related expenses, including transportation and accommodation. However, the line between personal and business purposes can be blurred, so bloggers need to be cautious when claiming travel deductions.

Tax deductions can significantly boost profit margins for travel bloggers, but they must tread carefully. IRS rules must be strictly adhered to, and professional tax advice should be sought when in doubt. By understanding and navigating the complex tax landscape effectively, travel bloggers can ensure their exotic adventures and gourmet meals are not just enjoyable but also financially savvy.

Travel bloggers can avail tax deductions for various blog-related expenses, from lavish trips to premium meals, though there is a critical caveat – these expenses must directly relate to their blogging ventures. Balancing creative endeavors with tax obligations may be complex, but understanding IRS guidelines and judiciously claiming deductions can make this task less daunting. Whether it’s technological equipment, marketing, or start-up costs, identifying the right deductions can significantly reduce the tax burden. However, exercising caution and seeking professional advice when in doubt is paramount to avoiding any legal issues. Thus, with informed decisions and careful planning, travel bloggers can indeed transform their exciting journeys into financially astute ventures.

Best Advice About Tax Deductions for Bloggers and Influencers to Save You 1000s of $$$

I am a Certified Public Accountant turned travel content creator! As an inactive, unregistered CPA, this blog post about tax deductions for bloggers and influencers should not be taken as professional advice. It is merely an informational guide with personal experience.

I’ve been a travel blogger and influencer now for six years! How time flies. In that time, I’ve learned the many ins and outs of tax deductions for bloggers and influencers.

It might seem confusing at first but once you know what to claim as an expense, it becomes yet another part of your content creating business just like taking photos or writing captions is!

In this post, I’ll teach you everything that’s helped me keep track of my expenses and file taxes smoothly with the Internal Revenue Service (IRS). I promise it won’t be as complicated and/or boring as it sounds!

This post was written in conjunction with Lumanu , an app for freelancers that I use myself. All insight comes from my personal experience. This post may also contain affiliate links. Purchases made through genuinely recommended links may earn a commission at no extra cost to you. Learn more.

About Me and My Blogging Accounting Experience

In this post, I may refer to myself as a blogger, influencer or content creator. That’s because I have two blogs, four TikTok accounts, one Instagram account and two Pinterest accounts and have created content for brands

Before I dive into everything you want to know about taking tax deductions as a blogger or influencer, I’d love to share my experience with both blogging and accounting.

6 Years of Blogging, Influencer and Content Creator Experience

My name is Sarah Chetrit and I first started out as a travel blogger in 2015.

Shortly after, I noticed Instagram was getting quite popular so I also became a travel influencer on Instagram. I share my best travel tips and teach people how to get paid to travel like me on there- @sarchetrit.

By 2019, I had been paid to travel by various tourism boards (i.e. Los Angeles, Aruba, Champagne, etc.) and brands (Nike, Herbal Essence, etc.) to highlight the best places to travel and eat around the world and share some of my favorite brands. I have also created content for brands like American Express, Afterpay and Nomador.

In 2020, because of the pandemic, I had more time on my hands so I started to teach people how to make money blogging like me! I started this very blog you’re on now and my blogging and social media TikTok account @sarah.chetrit .

Blogging Accounting Experience

Out of these six years of blogging, I did my own accounting for four years. Recently I started using an accounting program for creatives but still do my own bookkeeping and even do my taxes without a tax accountant or program.

I’m able to do my own bookkeeping and taxes without a tax accountant or program because before I was a blogger, I was a Certified Public Accountant in the State of New York. I am currently inactive and unregistered so anything you read in this post should not be taken as professional advice.

My field of training was actually in auditing, not bookkeeping, but my background as helped me understand the IRS’s website on deducting business expenses for small businesses and self-employed aka influencers, bloggers and freelancers, which has made it easy to do my own bookkeeping.

In my opinion, it might seem confusing but once you know these standard tax deductions for bloggers and you have a good method of keeping track of your expenses, it’s actually quite simple!

Let’s get into everything you need to know on tax deductions for bloggers, influencers and even freelancers.

Must Know Before We Start

As a self-employed freelancer, I file as a sole proprietor using tax form Schedule C . As a result, the following information is based on my experience of tax filings as a sole proprietor.

Also, the followings words may be used interchangeably and for the purposes of this post mean the same thing:

sole proprietor
content creator

Information in this post is a response to how I’ve heard bloggers and influencers talk about their taxes and the lingo they use. It is for beginners.

All the advice stated in this blog post is regarding accounting for the IRS in the United States of America and no other country. Tax laws change from country to country so if you’re not from the US, this post is not for you.

No matter what information I share, this should not be taken as professional advice and it is always best to work with an accountant for influencers so you can get custom information for your specific business.

What are tax deductions?

Tax deductions are deductions you take from your income BEFORE how much tax you owe is calculated.

However, there are two ways to look at tax deductions or at least this is how I see it :

as a salaried/hourly employee
and as a business/sole proprietor

This will really clear up the confusion about deductions as a salaried/hourly employee vs. a business/sole proprietor.

As a Salaried/Hourly Employee

As a salaried or hourly employee, you are probably used to filling out your W2 by:

adding in your wages, salaries, tips, etc. on Line 1,
then taking a standard or itemized deduction in Line 12, which comes from Schedule A.

Taking one of these deductions reduces your taxable income, which is what is used to calculate how much tax you owe. Again, a deduction occurs BEFORE how much tax you owe is calculated.

Standard vs Itemized Deduction

The standard deduction is a prescribed number that the government allows you to deduct based on your marital/household status. But you could also do an itemized deduction for personal qualifying expenses such as property tax, medical expenses, charity donations, etc.

Most people take the standard deduction because they have not incurred enough qualifying expenses to make their itemized deduction higher than the standard deduction.

For example, the standard deduction for a single taxpayer is $12,400 for 2021. A taxpayer would choose to take the standard deduction if their property taxes, medical expenses, etc. are less than $12,400.

A taxpayer would want to take the biggest deduction possible to make their taxable income as low as possible.

Does a blogger take a standard or itemized deduction?

As a blogger or influencer, you get this standard or itemized deduction just like everyone else because you too would fill out the Form 1040 for your taxes.

Which one you take would depend on the personal deductions you have in your life (property taxes, medical expenses, etc.)

For the sake of understanding how deductions work, let’s consider the standard or itemized deduction as a personal deduction.

As a Business/Sole Proprietor

As a blogger, influencer, content creator or freelancer, you own your own business.

In the eyes of the IRS, you are a sole proprietor unless you register as an LLC, which many bloggers do but this post does not go into that at all.

Since you are a business, you also have business expenses.

These business expenses are what reduces your business’ taxable income. This is calculated in Schedule C, which then flows into Line 3 of Schedule 1 and then eventually flows into Line 8 of Form 1040.

If you hear a blogger saying they deducted their website hosting or that they wrote-off a trip they went on, they are actually talking about their business expenses, NOT their personal standard or itemized deduction that we talked about above.

For the sake of understanding how deductions work, let’s consider business expenses as business expenses, write-offs or business deductions ( NOT the personal standard or itemized deduction that we talked about above).

What are tax write-offs?

If you ever hear a blogger talking about a tax write-off, they are talking about a business tax deduction or a business expense.

Tax deductions, tax write-offs or business expenses for bloggers and influencers all refer to these costs spent to run a freelance or content creating business.

What are tax credits?

Often people get confused between tax deductions and tax credits. They are NOT the same thing.

Personal tax deductions lower your taxable income BEFORE how much tax you owe is calculated.

Business tax deductions aka write-offs aka expenses lower your business’ income BEFORE how much tax you owe is calculated.

Tax credits reduce your tax payment AFTER how much tax you owe is calculated.

Why do I want to take tax deductions or tax write-off?

Whether you take a personal standard or itemized deduction or business deductions aka write-offs aka expenses , these all reduce your taxable income.

The lower your taxable income is, the less taxes you will have to pay on that amount.

Can I claim tax deductions as a blogger or influencer?

Yes, as a blogger or influencer, you can claim your personal standard or itemized deductions.

Then you can also claim you can definitely claim business tax deductions as a blogger or influencer as long as you follow the IRS’ rule about whether you are a business or a hobby.

The IRS website makes it really easy and clear to determine whether your business is actually a business or if it’s a hobby. Here are the nine factors they use to determine this.

They want you to consider:

“Whether you carry on the activity in a businesslike manner and maintain complete and accurate books and records.
Whether you have personal motives in carrying on the activity.
Whether the time and effort you put into the activity indicate you intend to make it profitable.
Whether you depend on income from the activity for your livelihood.
Whether your losses are due to circumstances beyond your control (or are normal in the startup phase of your type of business).
Whether you or your advisors have the knowledge needed to carry on the activity as a successful business.
Whether you were successful in making a profit in similar activities in the past.
Whether the activity makes a profit in some years and how much profit it makes.
Whether you can expect to make a future profit from the appreciation of the assets used in the activity.”

If you are a business, you can claim the business tax deductions.

If your activity is a hobby, you cannot claim these business tax deductions.

What are specific tax deductions for bloggers and influencers?

Besides your personal standard or itemized deduction, there are many tax deductions for bloggers and influencers.

Again, from the eyes of the IRS, you are a sole proprietor or the owner of your own business so you can take tax deductions that would fall under Expenses shown in Schedule C (the form for Sole Proprietors).

As mentioned above, tax deductions are also known as businesses expenses or business write-offs.

This image has an empty alt attribute; its file name is Tax-Deductions-for-Bloggers-and-Influencers-2-1024x598.png

Common Expenses for Bloggers, Creators, etc.

Whether you are a blogger, freelancer or content creator, there are common tax deductions you would take.

Here are a few I personally take myself.

If you use your phone to talk with clients, post to social media, create videos, etc., you can deduct part of your phone bill that you use for business.

This is the same for internet usage, water, gas, electricity, etc. See Home Office section below for more details on this.

Office Supplies + Equipment

You can deduct office supplies such as pens, cartridge ink and paper.

You can also deduct equipment like laptops, monitors, camera, SD cards, extra batteries, video camera, any camera gear, tripod, etc. since you use them for your business, and they help your business bring in income.

However, since laptops and certain items last longer than a year, you cannot just deduct the cost in whole when you buy them.

Instead, you have to depreciate them over a few years, which means that you deduct only a portion of the equipment each year (vs. expensing everything all at once the day you buy it).

Since these equipment tax deductions for bloggers get a bit complicated because of depreciation, reach out to your accountant to clarify your specific situation.

As a travel blogger, travel is an ordinary and necessary part of my business. Thus, I expense everything related to travel that helps me make content.

You can even expense travel if you are not a travel blogger but do work while you are traveling. These tax deductions for bloggers include are not limited to:

airfare or train costs,
car rentals,
car mileage,
gas for car,
car parking, etc.

Meals & Entertainment

For meals and entertainment, generally, you can only deduct 50% of it.

For example, if you are traveling abroad for work and you buy food at the airport that goes $20, you can only expense $10.

However, if you are working at home and order UberEats, then you cannot deduct this. This is not an ordinary and necessary expense of working from home since you can cook at home, or even if you were at a WeWork, you could bring your own lunch to work.

For 2021 to 2022 , the IRS is allowing a 100% deduction on food and beverages from restaurants (but not grocery stores or convenient stores).

Home Office

You can expense any items that you use for your home office such as desks and chairs. Remember that anything that lasts more than a year has to be depreciated, not fully expensed right away.

Even better, you can expense a portion of your home office such as:

rent or mortgage interest,
qualified mortgage insurance premiums,
renter’s or home insurance, etc.

Remember that these home tax deductions for bloggers have to be reasonable. As a result, most people will measure the square footage of the space they use for their home office and attribute that portion to their home office deductions.

Unpaid Invoices

If by year end a client hasn’t paid you, you can deduct this as a loss, which will reduce your taxable income.

I hope you never experience this. To reduce the chances of being paid, invoice with the Lumanu invoicing app . Their team will chase down payments that are late for you!

Miscellaneous

Here are some other miscellaneous tax deduction for bloggers that I personally take.

Online storage services such as Google Drive, Dropbox or Amazon Cloud
Professional services such as writers, social media managers, influencer managers, etc.
Advertising (i.e. Facebook, Instagram, Pinterest, Google)
Giveaway prizes

Specific Tax Deductions for Bloggers

There are specific tax deductions for bloggers since bloggers own a website. These tax deductions include but are not limited to your blogging costs related to:

Hosting (i.e. Bluehost , Siteground )
Website Theme
Website developer
SEO course for bloggers
Affiliate marketing course for bloggers
Books for bloggers

There’s one cost you won’t have to deduct though because this blogging course of mine is free!

Specific Social Media Influencer Tax Deductions

As a social media influencer, you might use websites and apps specific to Instagram or TikTok. For example, I use Planoly and Flick solely for Instagram.

You can expense these items that are necessary for your social media influencer business to run. They may include but are not limited to:

Social media scheduler (i.e. Planoly for Instagram, Tailwind for Pinterest)
Design app (i.e. Canva or Adobe )
Photo and video editing apps (i.e. Adobe , Tezza, Final Cut Pro)
Hashtag finder for Instagram

You can also expense courses and books you buy specific to being an influencer.

FYI All items listed above are ones I personally use myself!

Tax Deduction That Bloggers and Influencers May or May Not Be Able to Take

One of the most common questions I get asked is, “Can I deduct my clothes (i.e. clothing haul) as an influencer?”

Normally, you can only deduct clothes if it’s absolutely necessary for your job.

A nurse’s scrubs are a really clear cut example of this. They absolutely need their clothes to work and they only use their scrubs at work. They do not wear their scrubs out and about in their regular life.

With influencing and blogging, clothing and items you use in both your business and content creating life are probably the most confusing tax deductions for bloggers and influencers since our work and personal life cross over so much.

For example, if a female travel blogger buys dresses to wear in her clothes but then also wears it out with her friends and in her personal life, then the IRS probably would not count this as an expense.

However, if a travel blogger’s thing is to wear gorgeous prom dresses at stunning locations and only wears these dresses at these Instagrammable places , then she could argue that this is an ordinary and necessary expense.

Another example in which an influencer could argue that fashion-related expenses are necessary to their business is if they do fashion hauls.

What happens if the IRS audits you and doesn’t accept your expense?

If the IRS audits you and doesn’t accept your expense such as with clothing, then that’ll simply increase your taxable income and you will have to pay taxes on it.

Please consult an accountant for influencers who will help you best decide what you can and cannot expense. This post should not be taken as professional advice.

How do you keep track of expenses as a freelance content creator?

Keeping track of expenses aka tax deductions for bloggers does not have to be as complicated as you think.

In the first four years of blogging, I used a simple Excel spreadsheet to keep track of my income and expenses because bookkeeping for influencers is not too complicated. In the last two years of blogging, I have been using an accounting program for creatives since I’m physically located in the Netherlands and wanted to simplify how I do accounting in both the Netherlands and US combined.

If you need a little more guidance with keeping track of your tax deductions for bloggers and influencers, then keep an eye out for Lumanu’s new expensing tool.

I personally use Lumanu to invoice my clients in the US because there’s no fees and it’s unbelievably easy to use. Considering how great their invoicing function is, I cannot wait for their expensing tool!

Get exclusive access to Lumanu here.

Get exclusive access to Lumanu here with code SARAH_CHETRIT.

Please let me know in the comments below if you found this post about tax deductions for bloggers and influencers to be helpful!

Want to learn more? You can find more helpful blog posts here , get consistent page views to your blog with my SEO course , or follow me on social media to get daily tips:

TikTok for blogging + social tips @sarah.chetrit
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Until next time, Sarah Chetrit

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Tax Deductions for Bloggers and Influencers

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33 Tax Write-Offs for Bloggers

Whether you write about fashion, travel, or finance, find out what you can write off as a blogger.

Blogging is a popular way to share your thoughts, ideas, and expertise with the world. However, creating and distributing quality content does cost money.

Thankfully, the IRS lets you deduct all ordinary and necessary business expenses from your income. Claiming these tax deductions can help you save hundreds or even thousands of dollars on taxes.

Whether you write about fashion, travel, or finance, we've compiled a detailed list of Schedule C (Form 1040) deductions that all bloggers should track to help lower their tax bills.

General expenses

It doesn’t matter what type of blog you write, below are general expenses that all bloggers should track to minimize their tax bill.

It doesn't matter if it's the monthly service fee, ATM withdrawal fee, or credit card renewal fee. If you're paying a fee to the bank to operate your business, you can write it off.

Employees and subcontractors

Whether you hired a team member full-time or work with a subcontractor on an as-needed basis, their salary and fees are tax deductible.

Gear and equipment

Upgraded to the Shure SM7B or got the latest 16-inch MacBook Pro for your business? All of these count towards your deductions.

Legal and professional services

You can deduct all costs associated with hiring professionals for your business. This includes accountants, lawyers, financial advisors, marketing agencies, production logistics, etc.

Marketing and promotion

Website hosting, domain names, promotional swag, digital ads, and listing fees are some of the business marketing expenses that you can write off.

Mobile phone bill

Discovery calls, responding to comments, and posting on social are examples of how you might be using your phone for work. If that's the case, deduct a portion of your phone bill.

Office rent and lease

Prefer working from a studio or a coworking space? You can deduct all your office-related costs if you're not claiming your home-related expenses.

Office supplies

You can deduct all items used in the general operation of your business. This includes sharpies, post-it notes, smoke sticks, printer ink, and staples.

Payment processing fees

Invoiced a sponsor for ad placement? If they paid you with a credit card, you likely paid 2.9% + 30 cents processing fee. You can claim any such fees paid.

Professional development

Enrolling in courses, joining mastermind groups, and listening to audiobooks are some examples of how you can grow as a creator—all of which you can write off.

Software and apps

Canva, Notion, Calendly, Simplecast, and Adobe Creative Cloud. These are just some of the tools and services you can write off as a business expense.

Trade events and seminars

Attending an in-person conference or tuning into an online webinar for work? If so, you can expense the event tickets.

Stop guessing what you can write off.

Benji helps creators find tax write-offs by automatically sorting through your personal and business expenses.

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Home expenses

You can deduct a portion of your home expenses if you primarily work from home and have a dedicated work area (including storage). Note that your workspace doesn’t need to be a whole room; a workstation that’s only used for your business is sufficient.

Furniture and appliances

Whether it's a new office chair, stand-up desk, or a whiteboard, if you're getting stuff for your home office, be sure to claim it.

If you pay for renters or homeowner insurance, you can write off a portion of these costs as part of your home office.

Like heat and water, the internet is a utility that helps you run your business. With this in mind, you can write off a portion of your internet bill as a business expense.

Mortgage interest

If you own your home, you can deduct a portion of your mortgage interest, but not the principal, as a business expense.

Property taxes

If you own your home, you pay property taxes. Thankfully, you can deduct a portion of the bill.

Whether you rent an apartment or a house, you can claim a portion of the cost if you have a dedicated work area.

Repairs and maintenance

You're likely using your home more if you work from home. This can cause things to break or updates to be made—all of which you can deduct a portion of.

You can’t work from home without basic utilities like heat, water, and electricity. Be sure to write off a portion of these expenses.

Vehicle expenses

If you’re using your vehicle for your business, you can write off a portion of your vehicle expenses. This includes attending events related to your blog such as conferences, meetups, or interviews.

Depreciation

Own a car? You can write off the annual depreciation of its value for business-related trips.

Gas and fuel

While you can’t deduct any gas you used for personal transportation, you can claim the amount you used for business-related trips.

Unless you live in Virginia or New Hampshire, you'll need insurance before you drive your vehicle—which you can write off.

License and registration

You can deduct a portion of your safety inspection, registration fees, and roadside assistance.

Loan interest

Did you get a loan to buy a vehicle? You can deduct a portion of the interest on that loan as a business expense.

Parking fees

Parking can be expensive in some place. Thankfully, you can write off those fees if they were for a business trip.

Whether it's an oil change, an unexpected repair or a much-needed wash, you can deduct a portion of the maintenance cost if you use your vehicle for work.

If you have to take toll roads, bridges or tunnels for your business, remember to claim them as tax deductions.

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Business meeting expenses

Having meaningful conversations about your work over a meal can be a write-off. This includes discussing project details with another blogger, meeting a client, and brainstorming ideas with a sponsor.

Business meals

Meeting someone for coffee or lunch to talk about work? You can write off 50% of all business meals, including tips and taxes.

Transportation

Whether you're driving, using rideshare or taking public transport, you can write off the expenses if it was for work.

Business travel expenses

If you travel for your blog, you can write off expenses related to your business trip. This includes attending conferences, visiting out-of-town clients, and location-based photo or video shoots.

Accommodations

Booked a hotel or Airbnb for your business trip? Any business-related accommodation is considered a tax deduction.

Business travel

Trains, planes, and automobiles: if they helped you get from point A to point B during your business trip, you can write off any expenses such as train tickets, airfare, and car rental.

Food and drinks

Yes, you can write off the meals you consumed on your business trip. However, the 50% rule still applies to business travel meals.

How to Deduct Travel Expenses (with Examples)

Reviewed by

November 3, 2022

This article is Tax Professional approved

Good news: most of the regular costs of business travel are tax deductible.

Even better news: as long as the trip is primarily for business, you can tack on a few vacation days and still deduct the trip from your taxes (in good conscience).

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Even though we advise against exploiting this deduction, we do want you to understand how to leverage the process to save on your taxes, and get some R&R while you’re at it.

Follow the steps in this guide to exactly what qualifies as a travel expense, and how to not cross the line.

The travel needs to qualify as a “business trip”

Unfortunately, you can’t just jump on the next plane to the Bahamas and write the trip off as one giant business expense. To write off travel expenses, the IRS requires that the primary purpose of the trip needs to be for business purposes.

Here’s how to make sure your travel qualifies as a business trip.

1. You need to leave your tax home

Your tax home is the locale where your business is based. Traveling for work isn’t technically a “business trip” until you leave your tax home for longer than a normal work day, with the intention of doing business in another location.

2. Your trip must consist “mostly” of business

The IRS measures your time away in days. For a getaway to qualify as a business trip, you need to spend the majority of your trip doing business.

For example, say you go away for a week (seven days). You spend five days meeting with clients, and a couple of days lounging on the beach. That qualifies as business trip.

But if you spend three days meeting with clients, and four days on the beach? That’s a vacation. Luckily, the days that you travel to and from your location are counted as work days.

3. The trip needs to be an “ordinary and necessary” expense

“Ordinary and necessary ” is a term used by the IRS to designate expenses that are “ordinary” for a business, given the industry it’s in, and “necessary” for the sake of carrying out business activities.

If there are two virtually identical conferences taking place—one in Honolulu, the other in your hometown—you can’t write off an all-expense-paid trip to Hawaii.

Likewise, if you need to rent a car to get around, you’ll have trouble writing off the cost of a Range Rover if a Toyota Camry will get you there just as fast.

What qualifies as “ordinary and necessary” can seem like a gray area at times, and you may be tempted to fudge it. Our advice: err on the side of caution. if the IRS chooses to investigate and discovers you’ve claimed an expense that wasn’t necessary for conducting business, you could face serious penalties .

4. You need to plan the trip in advance

You can’t show up at Universal Studios , hand out business cards to everyone you meet in line for the roller coaster, call it “networking,” and deduct the cost of the trip from your taxes. A business trip needs to be planned in advance.

Before your trip, plan where you’ll be each day, when, and outline who you’ll spend it with. Document your plans in writing before you leave. If possible, email a copy to someone so it gets a timestamp. This helps prove that there was professional intent behind your trip.

The rules are different when you travel outside the United States

Business travel rules are slightly relaxed when you travel abroad.

If you travel outside the USA for more than a week (seven consecutive days, not counting the day you depart the United States):

You must spend at least 75% of your time outside of the country conducting business for the entire getaway to qualify as a business trip.

If you travel outside the USA for more than a week, but spend less than 75% of your time doing business, you can still deduct travel costs proportional to how much time you do spend working during the trip.

For example, say you go on an eight-day international trip. If you spend at least six days conducting business, you can deduct the entire cost of the trip as a business expense—because 6 is equivalent to 75% of your time away, which, remember, is the minimum you must spend on business in order for the entire trip to qualify as a deductible business expense.

But if you only spend four days out of the eight-day trip conducting business—or just 50% of your time away—you would only be able to deduct 50% of the cost of your travel expenses, because the trip no longer qualifies as entirely for business.

List of travel expenses

Here are some examples of business travel deductions you can claim:

Plane, train, and bus tickets between your home and your business destination
Baggage fees
Laundry and dry cleaning during your trip
Rental car costs
Hotel and Airbnb costs
50% of eligible business meals
50% of meals while traveling to and from your destination

On a business trip, you can deduct 100% of the cost of travel to your destination, whether that’s a plane, train, or bus ticket. If you rent a car to get there, and to get around, that cost is deductible, too.

The cost of your lodging is tax deductible. You can also potentially deduct the cost of lodging on the days when you’re not conducting business, but it depends on how you schedule your trip. The trick is to wedge “vacation days” in between work days.

Here’s a sample itinerary to explain how this works:

Thursday: Fly to Durham, NC. Friday: Meet with clients. Saturday: Intermediate line dancing lessons. Sunday: Advanced line dancing lessons. Monday: Meet with clients. Tuesday: Fly home.

Thursday and Tuesday are travel days (remember: travel days on business trips count as work days). And Friday and Monday, you’ll be conducting business.

It wouldn’t make sense to fly home for the weekend (your non-work days), only to fly back into Durham for your business meetings on Monday morning.

So, since you’re technically staying in Durham on Saturday and Sunday, between the days when you’ll be conducting business, the total cost of your lodging on the trip is tax deductible, even if you aren’t actually doing any work on the weekend.

It’s not your fault that your client meetings are happening in Durham—the unofficial line dancing capital of America .

Meals and entertainment during your stay

Even on a business trip, you can only deduct a portion of the meal and entertainment expenses that specifically facilitate business. So, if you’re in Louisiana closing a deal over some alligator nuggets, you can write off 50% of the bill.

Just make sure you make a note on the receipt, or in your expense-tracking app , about the nature of the meeting you conducted—who you met with, when, and what you discussed.

On the other hand, if you’re sampling the local cuisine and there’s no clear business justification for doing so, you’ll have to pay for the meal out of your own pocket.

Meals and entertainment while you travel

While you are traveling to the destination where you’re doing business, the meals you eat along the way can be deducted by 50% as business expenses.

This could be your chance to sample local delicacies and write them off on your tax return. Just make sure your tastes aren’t too extravagant. Just like any deductible business expense, the meals must remain “ordinary and necessary” for conducting business.

How Bench can help

Surprised at the kinds of expenses that are tax-deductible? Travel expenses are just one of many unexpected deductible costs that can reduce your tax bill. But with messy or incomplete financials, you can miss these tax saving expenses and end up with a bigger bill than necessary.

Enter Bench, America’s largest bookkeeping service. With a Bench subscription, your team of bookkeepers imports every transaction from your bank, credit cards, and merchant processors, accurately categorizing each and reviewing for hidden tax deductions. We provide you with complete and up-to-date bookkeeping, guaranteeing that you won’t miss a single opportunity to save.

Want to talk taxes with a professional? With a premium subscription, you get access to unlimited, on-demand consultations with our tax professionals. They can help you identify deductions, find unexpected opportunities for savings, and ensure you’re paying the smallest possible tax bill. Learn more .

Bringing friends & family on a business trip

Don’t feel like spending the vacation portion of your business trip all alone? While you can’t directly deduct the expense of bringing friends and family on business trips, some costs can be offset indirectly.

Driving to your destination

Have three or four empty seats in your car? Feel free to fill them. As long as you’re traveling for business, and renting a vehicle is a “necessary and ordinary” expense, you can still deduct your business mileage or car rental costs even when others join you for the ride.

One exception: If you incur extra mileage or “unnecessary” rental costs because you bring your family along for the ride, the expense is no longer deductible because it isn’t “necessary or ordinary.”

For example, let’s say you had to rent an extra large van to bring your children on a business trip. If you wouldn’t have needed to rent the same vehicle to travel alone, the expense of the extra large van no longer qualifies as a business deduction.

Renting a place to stay

Similar to the driving expense, you can only deduct lodging equivalent to what you would use if you were travelling alone.

However, there is some flexibility. If you pay for lodging to accommodate you and your family, you can deduct the portion of lodging costs that is equivalent to what you would pay only for yourself .

For example, let’s say a hotel room for one person costs $100, but a hotel room that can accommodate your family costs $150. You can rent the $150 option and deduct $100 of the cost as a business expense—because $100 is how much you’d be paying if you were staying there alone.

This deduction has the potential to save you a lot of money on accommodation for your family. Just make sure you hold on to receipts and records that state the prices of different rooms, in case you need to justify the expense to the IRS

Heads up. When it comes to AirBnB, the lines get blurry. It’s easy to compare the cost of a hotel room with one bed to a hotel room with two beds. But when you’re comparing significantly different lodgings, with different owners—a pool house versus a condo, for example—it becomes hard to justify deductions. Sticking to “traditional” lodging like hotels and motels may help you avoid scrutiny during an audit. And when in doubt: ask your tax advisor.

So your trip is technically a vacation? You can still claim any business-related expenses

The moment your getaway crosses the line from “business trip” to “vacation” (e.g. you spend more days toasting your buns than closing deals) you can no longer deduct business travel expenses.

Generally, a “vacation” is:

A trip where you don’t spend the majority of your days doing business
A business trip you can’t back up with correct documentation

However, you can still deduct regular business-related expenses if you happen to conduct business while you’re on vacay.

For example, say you visit Portland for fun, and one of your clients also lives in that city. You have a lunch meeting with your client while you’re in town. Because the lunch is business related, you can write off 50% of the cost of the meal, the same way you would any other business meal and entertainment expense . Just make sure you keep the receipt.

Meanwhile, the other “vacation” related expenses that made it possible to meet with this client in person—plane tickets to Portland, vehicle rental so you could drive around the city—cannot be deducted; the trip is still a vacation.

If your business travel is with your own vehicle

There are two ways to deduct business travel expenses when you’re using your own vehicle.

Actual expenses method
Standard mileage rate method

Actual expenses is where you total up the actual cost associated with using your vehicle (gas, insurance, new tires, parking fees, parking tickets while visiting a client etc.) and multiply it by the percentage of time you used it for business. If it was 50% for business during the tax year, you’d multiply your total car costs by 50%, and that’d be the amount you deduct.

Standard mileage is where you keep track of the business miles you drove during the tax year, and then you claim the standard mileage rate .

The cost of breaking the rules

Don’t bother trying to claim a business trip unless you have the paperwork to back it up. Use an app like Expensify to track business expenditure (especially when you travel for work) and master the art of small business recordkeeping .

If you claim eligible write offs and maintain proper documentation, you should have all of the records you need to justify your deductions during a tax audit.

Speaking of which, if your business is flagged to be audited, the IRS will make it a goal to notify you by mail as soon as possible after your filing. Usually, this is within two years of the date for which you’ve filed. However, the IRS reserves the right to go as far back as six years.

Tax penalties for disallowed business expense deductions

If you’re caught claiming a deduction you don’t qualify for, which helped you pay substantially less income tax than you should have, you’ll be penalized. In this case, “substantially less” means the equivalent of a difference of 10% of what you should have paid, or $5,000—whichever amount is higher.

The penalty is typically 20% of the difference between what you should have paid and what you actually paid in income tax. This is on top of making up the difference.

Ultimately, you’re paying back 120% of what you cheated off the IRS.

If you’re slightly confused at this point, don’t stress. Here’s an example to show you how this works:

Suppose you would normally pay $30,000 income tax. But because of a deduction you claimed, you only pay $29,000 income tax.

If the IRS determines that the deduction you claimed is illegitimate, you’ll have to pay the IRS $1200. That’s $1000 to make up the difference, and $200 for the penalty.

Form 8275 can help you avoid tax penalties

If you think a tax deduction may be challenged by the IRS, there’s a way you can file it while avoiding any chance of being penalized.

File Form 8275 along with your tax return. This form gives you the chance to highlight and explain the deduction in detail.

In the event you’re audited and the deduction you’ve listed on Form 8275 turns out to be illegitimate, you’ll still have to pay the difference to make up for what you should have paid in income tax—but you’ll be saved the 20% penalty.

Unfortunately, filing Form 8275 doesn’t reduce your chances of being audited.

Where to claim travel expenses

If you’re self-employed, you’ll claim travel expenses on Schedule C , which is part of Form 1040.

When it comes to taking advantage of the tax write-offs we’ve discussed in this article—or any tax write-offs, for that matter—the support of a professional bookkeeping team and a trusted CPA is essential.

Accurate financial statements will help you understand cash flow and track deductible expenses. And beyond filing your taxes, a CPA can spot deductions you may have overlooked, and represent you during a tax audit.

Learn more about how to find, hire, and work with an accountant . And when you’re ready to outsource your bookkeeping, try Bench .

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Tax Deductions for Business Travelers

When you are self-employed, you generally can deduct the ordinary and necessary expenses of traveling away from home for business from your income. But before you start listing travel deductions, make sure you understand what the Internal Revenue Service (IRS) means by "home," "business," and "ordinary and necessary expenses."

Ordinary vs. necessary expenses

Business home, not home sweet home, transportation expenses on a business trip are deductible, fees for getting around are deductible, lodging, meals and tips are deductible.

Key Takeaways

Typically, you can deduct travel expenses if they are ordinary (common and accepted in your industry) and necessary (helpful and appropriate for your business).
You can deduct business travel expenses when you are away from both your home and the location of your main place of business (tax home).
Deductible expenses include transportation, baggage fees, car rentals, taxis and shuttles, lodging, tips, and fees.
You can also deduct 50% of either the actual cost of meals or the standard meal allowance, which is based on the federal meals and incidental expense per diem rate.

The IRS defines expense ordinary and necessary expenses this way:

An expense is ordinary if it is common and accepted in your industry
An expense is necessary if it is helpful and appropriate for your business

You can claim business travel expenses when you're away from home but "home" doesn't always mean where your family lives. You also have a tax home—the city where your main place of business is located—which may not be the same as the location of your family home.

For example, if you live in Petaluma, California but your permanent work location is in San Jose where you stay in hotels and eat out during the work week, you typically can't deduct your expenses in San Jose or your transportation home on weekends.

In this situation San Jose is your tax home , so no deductions are permitted for ordinary and necessary expenses there.
Your trips to your home in Petaluma are not mandated by business.

Go by plane, train or bus—the actual cost of the ticket to ride is deductible, as well as any baggage fees. If you have to pay top dollar for a last-minute flight, the high-priced ticket is a business expense, but if you use frequent-flyer miles for a free ticket, the deduction is zero.

If you decide to rent a car to go on a business trip, the car rental is deductible. If you drive your own vehicle, you can usually take actual costs or the IRS standard mileage rate. For 2023 the rate is 65.5 cents per mile. You also can add tolls and parking costs onto your deduction. This amount increases to 67 cents per mile for 2024.

TurboTax Tip: Even if you use the federal meals and incidental expense per diem rates to calculate your deductions, be sure to keep receipts from all your meals and incidental expenses.

Fares for taxis or shuttles can be deducted as business travel expenses. For example, you can deduct the fare or other costs to go to:

Airport or train station
Hotel from the airport or train station
Between your hotel and the work location
Between clients in the area

If you rent a car when you arrive at your destination, the expense is deductible as long as the car is used exclusively for business. If you use it both for business and personal purposes, you can only deduct the portion of the rental used for business.

The IRS allows business travelers to deduct business-related meals and hotel costs, as long as they are reasonable considering the circumstances—not lavish or extravagant.

You would have to eat if you were home, so this might explain why the IRS limits meal deductions to 50% of either the:

Actual cost of the meal
Standard meal allowance

This allowance is based on the federal meals and incidental expense per diem rate that depends on where and when you travel.

Generally, you can deduct 50% of the cost of meals. Alternatively, if you do not incur any meal expenses nor claim the standard meal allowance, you can deduct the amount of $5 per day for incidental expenses. You can also deduct incidental expenses, such as:

Fees and tips given to hotel staff
Fees for porters and baggage carriers

But don't forget to keep track of the actual costs.

Let a local tax expert matched to your unique situation get your taxes done 100% right with TurboTax Live Full Service . Your expert will uncover industry-specific deductions for more tax breaks and file your taxes for you. Backed by our Full Service Guarantee . You can also file taxes on your own with TurboTax Premium . We’ll search over 500 deductions and credits so you don’t miss a thing.

Get unlimited advice, an expert final review and your maximum refund, guaranteed .

~37% of taxpayers qualify. Form 1040 + limited credits only .

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The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.

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TurboTax Online: Important Details about Filing Form 1040 Returns with Limited Credits

A Form 1040 return with limited credits is one that's filed using IRS Form 1040 only (with the exception of the specific covered situations described below). Roughly 37% of taxpayers are eligible. If you have a Form 1040 return and are claiming limited credits only, you can file for free yourself with TurboTax Free Edition, or you can file with TurboTax Live Assisted Basic or TurboTax Full Service at the listed price.

Situations covered (assuming no added tax complexity):

Interest or dividends (1099-INT/1099-DIV) that don’t require filing a Schedule B
IRS standard deduction
Earned Income Tax Credit (EITC)
Child Tax Credit (CTC)
Student loan interest deduction

Situations not covered:

Itemized deductions claimed on Schedule A
Unemployment income reported on a 1099-G
Business or 1099-NEC income
Stock sales (including crypto investments)
Rental property income
Credits, deductions and income reported on other forms or schedules

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1099-K Snap and Autofill: Available in mobile app and mobile web only.
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Can travel bloggers write off exotic vacations and fancy meals?

The life of a travel blogger is often envied by most people. As a viewer, it seems like travel bloggers live the ideal life where they can write off exotic vacations and fancy meals, however, the reality is a lot different.

Blogging as a profession is something of a gray zone when it comes to taxes.

The IRS has very specific guidelines determining the difference between a hobby and a business:

Your business must be profitable. If you go three years in a row without turning a profit on your blog, the IRS may disallow losses.
Your business should produce a regular revenue stream, even during the years when there’s a loss.
You must put a significant amount of time into the business and maintain accurate books and records.

There are other methods that the IRS uses to distinguish a hobby from a business, but they will usually only be used during an audit. As a general rule, as long as your blog/website turns a profit in most years, it’ll be classified as a legitimate business for tax purposes. However, it is advised to be careful when claiming tax deductions. If you’re not sure whether you qualify for a specific deduction, consult a tax professional. Creativity is essential for a blogger to have, but getting creative with your taxes can land you in serious trouble. Now, before we list down the deductions applicable to the travel bloggers, let’s first answer the question at hand- Can travel bloggers write off exotic vacations and fancy meals?

It’s a yes and a no. As a travel blogger, your meals and travels can be considered a deductible as long as it’s related to your blog. You can also deduct expenses to and from an industry event if you’re being sponsored by an agency or brand.

The deductions:

Start-up costs

Website and hosting expenses

Content-related expenses

Your home office
Marketing costs
Payments to outside contractors
Computer equipment

Other equipment

Online products and services

Start-up expenses (capital expenses) are not deductible unless the business owner elects to deduct the expenses. According to the IRS, you can deduct up to $5,000 in business startup costs and $5,000 in organizational costs.

Startup costs generally include the costs to get your business up and running before it opens, such as advertising, salaries, and wages for employees in training, travel to obtain suppliers or customers, or consulting fees. So, as a blogger, you’ll also have startup costs associated with building your website. This may include hiring a web developer to set up the website for you.

Once your website is up and running, you’ll encounter certain expenses necessary for the maintenance of the site, as well as paying for web hosting.

You may also pay certain web-related expenses to service providers to maintain the technical side of your blog. All these expenses are deductible.

This expense will depend on the type of blog you run. If your blog is related to traveling you can deduct expenses incurred in connection with travel.

Home office

Most bloggers run their blogs out of their homes. You can claim the home office deduction by setting up your business premises at your home. Here, you can proportionately split your home rent/mortgage interest and utility bills into personal expenses and business expenses, depending on the portion of space your office space consumes.

You can claim the deduction as a homeowner or even as a renter, and you can use the deduction for any type of home where you reside: a single-family home, an apartment, a studio, or a houseboat. However, you can’t use it for temporary lodging.

Marketing and advertising

Bloggers typically incur marketing and advertising costs while promoting their blogs. This includes any marketing and advertising expenses (Facebook or Instagram ads, ads on other websites, and mailer memberships).

Any expense you make to promote your blog is tax-deductible.

Contractor Wages

Many bloggers seek help from outside contractors with specific parts of their business. Paying contractors can serve as a tax deduction for bloggers. You can deduct expenses paid for freelance writers and other contractors. If payments to any individual contractor exceed $600 for the year, you’ll need to issue IRS form 1099 to that contractor. This will be necessary to support the deduction you’ll claim on your tax return.

Computer Equipment

Any equipment needed to perform your job is usually counted as a deductible expense. You can deduct the cost of equipment and supplies consumed and used during the tax year, this includes your computer and related equipment. If you purchase computer hardware, it will typically need to be depreciated over several years. However, if you purchase peripheral equipment, such as headphones, a mouse, or a keyboard, those can be expensed immediately. Fortunately, the IRS allows you to deduct the full cost of a computer or a similar large piece of equipment. It’s done under the Section 179 provision, which allows you to depreciate and claim the expense for 100% of the cost of equipment in the year of purchase.

Computers aren’t the only type of equipment you can claim as a tax deduction. If you purchase a camera or related props so you can take photos and videos of items related to your blogging activities, the equipment may be tax-deductible.

The equipment must be used primarily for your business activities. If it’s used for personal purposes and occasionally used for blogging, it won’t be deductible.

If you’re a travel blogger, you may be able to deduct the cost of travel-related expenses. That includes transportation and lodging at destinations that are the subject of your blog content.

You should be aware that there is a gray area here. The IRS is aware that business-related travel often has a dual purpose: there’s a business purpose and a personal one. You’ll need to make that distinction between business and personal before claiming travel-related expenses. Be very careful not to get carried away with travel deductions.

Conferences and memberships

You may attend conferences or seminars to help you in your blogging business. You may also pay for certain memberships related to your industry.

If you’re blogging for a living, whether as a primary occupation or a side hustle, you’re running a small business. Since your blog is a business, you should treat it like one. FlyFin can help you accomplish organizing your taxes by scanning through all your expenses and categorizing them as personal or business deductions You just have to answer a few questions and get an accurate tax amount within a short span of time.

FlyFin CPA Team

With a combined 150 years of experience, FlyFin's CPA tax team includes tax CPAs, IRS Enrolled Agents and other tax professionals, offering users the most comprehensive tax advice and preparation.

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27 Tax Write-Offs for Bloggers

This content has been reviewed by an Enrolled Agent (EA) with the IRS — the highest credential awarded by the agency. Enrolled Agents are empowered to represent all taxpayers before the IRS, on all types of tax-related matters. Accountants who earn this certification have passed a comprehensive three-part exam on individual and business tax returns. To maintain EA status, they must stay up to date in the field by completing 72 hours of continuing education every three years.

Your NAICS business code is a six-digit string of numbers that shows the type of work your business does. (NAICS stands for North American Industry Classification System.) When you do your taxes, you’ll enter it in Box B of your Schedule C.

Lots of people dream of following their passion for travel, fashion, or food by turning it into a full-fledged job. As a blogger, you're one of the few who's actually making it work.

But if you've been at it this for a while, that dream comes with a nasty wakeup call at tax time. That's right: you'll have to pay taxes on what you earn.

Luckily, you can write off lots of expenses to keep more of your blogging income in your pocket.

Schedule C, Box 27a

If buy a phone or laptop and use it for work, it's partially deductible.

Schedule C, Box 18

Writing tools like Grammarly and Hemingway are tax-deductible. So are word processors like Scrivener and transcription software for interviews.

Schedule C, Box 8

Squarespace, Wix, GoDaddy, and other website service fees are fully tax-deductible.

Ad campaigns on Google, Meta, TikTok, and more are all deductible on your taxes.

Databases, apps, and other tools used to research a topic you're writing about can be written off.

Newspaper or magazine subscriptions used for work-related research can be written off.

If you host a contest for your followers, make sure to write off the prizes you give away.

Deduct anything you buy for your office, like pens, binders, folders, printer ink, or a whiteboard.

Computers, extra monitors, webcams, and microphones needed to teach are write-offs.

Write off any email marketing software like Mailchimp or ActiveCampaign.

Schedule C, Box 11

Do you pay freelance writers to contribute blog posts? That money is tax-deductible!

Track and claim every eligible deduction with Keeper

Keeper is the top-rated all-in-one business expense tracker, tax filing service, and personal accountant.

As a blogger, you'll have plenty of reasons to take the wheel for work purposes. For example, you might find yourself driving in search of things — or people — to write about, or hop in your car to meet up with sponsors, contributors, or fellow bloggers. All of that means you get to write off a portion of your car expenses, from gas to repairs.

Parking for a meeting downtown, or any other work trip, is tax-deductible!

A toll while driving to or from a work destination is tax-deductible!

Schedule C, Box 13

If you buy a new car, you can write off part of the cost every year for five years.

Schedule C, Box 22

Flashlights, tire iron, duct tape, and other tools you may need in your vehicle are deductible.

Schedule C, Box 15

Car insurance monthly fees, registration, even roadside assistance are partially deductible.

Schedule C, Box 9

Oil changes, repairs, and regular checkups are all tax-deductible if you drive for work.

Do you ever grab lunch with advertisers, folks in the industry, or creatives you work with? Those are business meals, and you get to write off 50% of what you spend on them.

Schedule C, Box 24b

If you discuss work with a coworker, mentor, client, or prospective client, it's a write-off!

Even if you're not a travel blogger, your work might take you far from home — attending conventions, taking workshops, or introducing your readers to cool stuff you can't get in your hometown. As long as you're traveling for work, you can write off what you spend on airfare, hotels, and more.

Schedule C, Box 24a

Planes, trains, and car rentals are all work-related travel costs that can be written off.

When you travel for work, lodging expenses such as hotel rooms or Airbnb are write offs.

When you're traveling for work, all meals are tax-deductible. Even takeout!

Whether you're writing every blog post yourself, or managing a big team of staff writers, odds are decent that you can WFH. That means you get to write off a portion of everything you spend on your living space, from your rent to your Wi-Fi.

A desk, chairs, lamps, and other home office necessities are all tax write-offs.

Schedule C, Box 21

You can write off up to $2,500 for individual repairs to your property.

Gotta keep the lights on in your home office! A portion of your electricity bill counts.

Whether it's rental or homeowners insurance, you can write off a portion through your home office deduction.

It'd be hard to work in an office without running water, huh? You water bill counts.

Schedule C, Box 25

Your Comcast bill is a tax write-off. You need internet to do your job!

You may also enjoy learning about:

Everything You Need to Know About the Business Travel Tax Deduction

What Education Expenses Are Tax-Deductible in 2024?

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Receipts for Taxes: What Do You Need to Keep?

Can I Take the Standard Deduction and Deduct Business Expenses?

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It's never too early to start thinking about next year's tax bill, and what you could deduct.
Saving more for retirement in a tax-deferred retirement account is one of the best ways to lower your tax bill and boost your net worth in one fell swoop.
Don't forget about the power of a Health Savings Account, or HSA. This account lets you set aside funds on a tax-deferred basis for future healthcare expenses.

Initial analysis of the Tax Cuts and Jobs Act of 2017 implied that take-home pay would go up for many Americans and that overall taxes would go down — at least for some people. Plenty of people are still freaking out about getting a smaller tax refund this year.

If you're paying attention to your actual tax bill and not just the size of your refund, you should strive to do everything possible (within reason) to maximize your income and reduce how much you owe. Fortunately, the Internal Revenue Service (IRS) offers plenty of ways to reduce your taxable income and your tax bill — many of which can also boost your savings rate.

Consumers who want to pay a lighter tax bill next year should also act now, before it's too late. These are just a few examples of how you could whittle down next year's tax bill, but there are plenty of others. If you're not sure exactly what you should do, your best bet is sitting down with a tax professional now to craft a plan that will yield tax savings for years to come.

1. Start saving for retirement in a tax-deferred retirement plan

Dave Du Val, EA and Chief Customer Advocacy Officer at TaxAudit , says one of the best steps you can take to reduce your tax bill is contributing to a tax-deferred retirement plan like a 401(k) or SEP IRA. Contributing to a tax-deferred account allows you to deduct contributions from your income, which will help you reduce your taxable income and save on your tax bill.

You'll also boost your savings rate and speed up the journey toward retirement, plus put yourself in the best position to harness the unstoppable power of compound interest . Better yet, some employers may even "match" a certain percentage of your retirement contributions, which is the closest thing to "free money" you'll ever find.

Because retirement contributions are taken out of your paycheck on a pre-tax basis, you may not even notice a huge difference in your take-home pay.

2. Set up an efficient system to track your ordinary and necessary business expenses

It's easy to let your business expenses become disorganized if you don't keep track all year, leading to a frenzy of receipt-searching and stress come tax time. Du Val says you should set up a system now to keep better track of expenses that are deductible or may be deductible.

"Many taxpayers are cheating themselves out of ordinary and necessary expenses as they do not remember them a year later when they are preparing their taxes," he says.

Obviously, these missed deductions translate into higher taxes you could avoid with some better organization and planning. There's no perfect system — you can use an app like Empower , a spreadsheet of your own making, or a simple pen and paper. Whatever you'll actually use regularly is the best choice for you.

3. Incorporate your small business

If you have a small business but haven't yet incorporated, there could be valuable tax benefits for doing so. Emil Abedian, founder/CEO of Anchor Bookkeeping , says running your small business as a S-corporation could potentially save you tens of thousands of dollars, for example.

This is due to the fact that, as a sole proprietor, you pay Social Security and Medicare taxes of approximately 15% on your entire income up to approximately $130,000. After the $130,000, the Social Security percentage disappears, and you pay Medicare taxes (2.9%) on your entire income.

Read more: 5 changes to expect when you file your tax return this year

On a $150,000 profit, you will end up paying more than $20,000 in Social Security and Medicare taxes in addition to income taxes, noted Amedian. However, if you run your business as an S-Corporation with the same income under the assumption you will take a "reasonable" salary of $75,000 and have the remaining profit distributed to you in the form of profit distribution, you could end up saving close to $10,000 in taxes per year.

"The lower you can justify the reasonable salary, the more the tax savings will be," he said.

4. Pay your spouse or kids for their work

If your business is a family affair, you should treat it that way come tax time.

"If your spouse or kids work for you, make sure you pay them through payroll so that they can have the option to defer income for retirement," said Abedian.

The wages you pay them become a tax deduction for your business, which helps you reduce your taxable business income. If they in turn decide to put their salary in a 401(k) or IRA account, they can defer taxes on that income even further.

"This could save the family lot of money," said Abedian.

5. Max out your retirement savings, including 'catch up' allowances

If you're already saving for retirement but want more tax savings, consider boosting your contribution percentage or even maxing it out. The IRS increased the amount you can contribute to a 401(k), 403(b), and most 457 plans to $19,000 in 2019, up from $18,500 the year before. Traditional IRA contributions, which may also be deductible on your taxes, also received an annual boost up to $6,000.

Read More: A retirement account can reduce your tax bill, but the type you decide to use determines when

Also be aware that many retirement accounts let you contribute more if you're ages 50 or older. With a 401(k), for example, you can save an additional $6,000 per year in catch-up contributions. With an IRA, the catch-up component allows for an additional $1,000 in annual savings.

6. Be strategic with charitable contributions

Tax attorney Megan Gorman of Chequers Financial Management , a High Net Worth Tax and Financial Planning firm, says it's crucial to be intentional when it comes to charitable giving if you hope to maximize the tax benefits of your contributions.

If 2019 is going to be a significant income year, for example, but you don't believe 2020 will be, you may want to consider "bunching" your contributions into a single year, she says. The driver behind this is the newly doubled standard deduction, which requires taxpayers to have a lot more deductions to itemize. You have to itemize to be able to deduct your charitable contributions, so bunching them all in a single year can help you reach that threshold.

You can also utilize a donor advised fund to hold the funds until you are ready to disperse to charity, said Gorman. "The benefit is that, when you fund the donor advised fund, you get the charitable donation," she said.

Fidelity's popular donor-advised fund makes it easy to set aside funds now for future charitable contributions.

7. Contribute to a health savings account (HSA)

Certified Public Accountant Riley Adams, who also blogs at Young and the Invested , wants to remind taxpayers it's never too late to open a health savings account , or HSA.

To qualify, health insurance plans must have a minimum deductible of $1,350 for individuals and $2,700 for families, plus a maximum out-of-pocket of $6,750 for singles and $13,500 for families in 2019.

Read more: The best tax software you can use to file your taxes online — TurboTax, H&R Block, and TaxAct

If your health insurance plan allows you to contribute, individuals can save $3,500 per year and families up to $7,000 on a tax-deferred basis. Your money then grows tax-free until you remove it from the account to cover qualified healthcare expenses.

Personal Finance Insider offers tools and calculators to help you make smart decisions with your money. We do not give investment advice or encourage you to buy or sell stocks or other financial products. What you decide to do with your money is up to you. If you take action based on one of the recommendations listed in the calculator, we get a small share of the revenue from our commerce partners.

Main content

The Best Way To Travel For Free And Lower Your Taxable Income

Travel is amazing, especially when you can travel for free. With the pandemic over and a strong US dollar, traveling abroad during another global financial crisis is not a bad idea.

This post will highlight the best way to travel for free and lower your taxable income as well!

My Travel Background

Since childhood, I've had the travel bug because growing up, that's all I did. I was born in Manila, Philippines, stayed briefly in Washington, DC and moved to Lusaka, Zambia for a couple years. In Kobe, Japan I started kindergarten. In Taipei, Taiwan I had four years of elementary school.

Then I went to Kuala Lumpur, Malaysia for middle school where I learned a lot of bad things. Finally, I returned to the States for high school and college. As the son of US foreign service parents, life was interesting. Just don't remember to renew your passport !

As an adult, my frequent travel continued because luckily I found jobs in the international equities department of two large financial organizations. Up to four times a year, I'd travel to Asia to attend conferences or bring clients to see companies. Kissing the ring in New York City HQ was also an annual rite of passage. It was a whole lot of fun!

Traveling to new places on business is one of the most rewarding experiences you can have. Not only do you get to explore new worlds and meet amazing people, you get to travel for free.

All your flights, hotels, and meals are free because your employer foots the bill. Since I'm no longer in Corporate, I needed to some how recreate this perk.

Travel Blogging To The Rescue

The great thing about the personal finance arena is that money touches everything we do, including travel. I can write about how to save money on flights and hotels. Or I can discuss how to travel for free with credit card rewards points . There're innumerable topics I can write about that relate to travel and money, including this post!

My epiphany came while I was hanging with a bunch of travel bloggers who said a lot of transportation and hospitality companies provide free everything in exchange for writing a review.

For example, one travel blogger stayed at a 5-star resort in Bali for free in exchange for publishing a post about his experience. The retail value of his stay was ~$1,500, and the actual cost to the hotel was less than $100 for food and cleaning. What a win-win!

Travel For Free As A Travel Blogger

Therefore, the easiest way to get free travel and accommodations is to start a travel blog , establish yourself as an enthusiastic traveler and contact the marketing departments of places you want to visit and make a deal to write about them.

You probably want to chronicle your experiences anyway. Maybe companies won't comp everything, but freebies might include an upgrade, meals, or an excursion. I get some nice bonuses all the time once I mention I have a site. You never know until you ask.

Financial Samurai in Prague - The Best Way To Travel For Free And Lower Your Taxable Income

Then, while watching a Rick Steves' Guide To Rome episode on TV, I had another epiphany. Given I like to travel and write, why can't I do something similar to Rick Steves and write about my experiences around the world through a personal finance lens?

Instead of doing the same old “Top 10 Places To See,” why not interview the locals about their thoughts on happiness, life, work, family, and play? At the same time, I'd offer the usual travel tips to make a traveler's trip as pleasant and economical as possible. What a no brainer.

As global economies gradually open up post pandemic, travel blogging is once again going to be a great way to travel for free.

Some Travel Posts For Business

I've Seen The Future And It Looks So Bright – Given America's government continues to grow in size and reach, I went to Europe to see what our future might look like with super high tax rates, higher unemployment, free health care, and good public infrastructure. What I found made me so bullish on America's future and gave me the confidence to leave my job and not be afraid of falling through the cracks.

Learning From The World's Happiest People – Scandinavian countries are consistently ranked the happiest countries in the world by the World Happiness Monitor survey. As a result, I went to Stockholm to see why and share my knowledge with all of you. Financial Samurai is really a blog about maximizing happiness with the use of money.

Living In An Expensive City Can Make You Richer, Happier And More Diplomatic – After returning from beautiful, but impoverished Angkor Wat, Cambodia, I was reminded how lucky we are living in a developed country. I turned a memorable visual I had of kids walking for miles in 100+F degree heat into a post about the upside of living in expensive cities like New York, San Francisco, London, and Hong Kong.

What Is Capitalism? To Understand Let's First Explore Communist China – Most people, when they go to China, visit Beijing and Shanghai. I went to the fire pit of Chongqing, in the center of China and wrote about the different perspectives of Communism and Capitalism. The city is developing quickly, but its views are still 10+ years behind the coastal cities. I think you'll love the pictures I took.

Even More Fun Travel Posts To Travel For Free

Exploring The Edge Of The World: Welcome To The DMZ – Here is a fascinating post about what happens when one people is divided by two different ideologies. If you go to Seoul, you must take the one hour trek to visit the Demilitarized Zone between North and South Korea. You will realize how lucky you are to be free. You'll also gain a lot of empathy for North Koreans. And with more empathy, comes more harmony. You'll be less quick to judge someone based on how they look or where they come from. Enjoy the video I embedded.

The Best Food In The World – Hands down, the best food in the world is in Malaysia. Check out the mouth watering pictures and you'll see why.

My posts are so different from the typical travel guide or travel blogger article. With the publication of several more travel articles, I should be able to package all my travel-related posts into an insightful Travel Diaries ebook to make extra passive income. Bingo!

What Travel Expenses Are Deductible?

Great question. I asked my CPA and he said, “All reasonable related travel expenses required to produce and sell your product.” The key word in his answer is “reasonable.”

Spending $10,000 to fly first class to Paris doesn't seem reasonable when you can fly for $1,500 in economy class and your business only generates $50,000 a year in operating profits.

But what if you are writing a series about flying first class on the world's top 10 major airlines to compare which has the best service and most comfortable seats?

Then perhaps the cost of a first class ticket is reasonable because you can't properly assess the experience from coach. And if your business is generating at least $500,000 a year in operating profits, and you are the CEO of the company, maybe first class is reasonable too.

After all, plenty of CEOs of bigger companies fly first class or business class. I know I did as an Executive Director.

Reasonable Travel Deductions

As you can see from my examples, “reasonable” can be subjective. So let's look at an excerpt from the IRS website for an explanation.

Travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job. Generally, employees deduct these expenses by using Form 2106 (PDF), Employee Business Expenses , or Form 2106-EZ (PDF), Unreimbursed Employee Business Expenses , and Form 1040, Schedule A (PDF), Itemized Deductions . You cannot deduct expenses that are lavish or extravagant, or that are for personal purposes . You are traveling away from home if your duties require you to be away from the general area of your tax home for a period substantially longer than an ordinary day's work, and you need to get sleep or rest to meet the demands of your work while away. Generally, your tax home is the entire city or general area where your main place of business or work is located, regardless of where you maintain your family home. For example, you live with your family in Chicago but work in Milwaukee where you stay in a hotel and eat in restaurants. You return to Chicago every weekend. You may not deduct any of your travel, meals or lodging in Milwaukee because that is your tax home. Your travel on weekends to your family home in Chicago is not for your work, so these expenses are also not deductible. If you regularly work in more than one place, your tax home is the general area where your main place of business or work is located.

Determining Your Main Place Of Business

In determining your main place of business, take into account the length of time you normally need to spend at each location for business purposes, the degree of business activity in each area, and the relative significance of the financial return from each area. However, the most important consideration is the length of time you spend at each location. You can deduct travel expenses paid or incurred in connection with a temporary work assignment away from home. However, you cannot deduct travel expenses paid in connection with an indefinite work assignment. Any work assignment in excess of one year is considered indefinite. Also, you may not deduct travel expenses at a work location if you realistically expect that you will work there for more than one year, whether or not you actually work there that long. If you realistically expect to work at a temporary location for one year or less, and the expectation changes so that at some point you realistically expect to work there for more than one year, travel expenses become nondeductible when your expectation changes. For an exception to the 1-year rule for federal crime investigations or prosecutions, refer to Publication 463, Travel, Entertainment, Gift, and Car Expenses .

It Continues on…

You may deduct travel expenses, including meals and lodging you incurred in looking for a new job in your present trade or business. You may not deduct these expenses if you had them while looking for work in a new trade or business or while looking for work for the first time. If you are unemployed and there is a substantial break between the time of your past work and your looking for new work, you may not deduct these expenses, even if the new work is in the same trade or business as your previous work. Refer to Publication 529, Miscellaneous Deductions . Travel expenses for conventions are deductible if you can show that your attendance benefits your trade or business. Special rules apply to conventions held outside the North American area.

Deductible Travel Expenses

Deductible travel expenses while away from home include, but are not limited to the costs of: Travel by airplane, train, bus or car between your home and your business destination. (If you are provided with a ticket or you are riding free as a result of a frequent traveler or similar program, your cost is zero.) Fares for taxis or other types of transportation between the airport or train station and your hotel, the hotel and the work location, and from one customer to another, or from one place of business to another. Shipping of baggage, and sample or display material between your regular and temporary work locations. Using your car while at your business destination. You can deduct actual expenses or the standard mileage rate, as well as business-related tolls and parking fees. If you rent a car, you can deduct only the business-use portion for the expenses. Meals and lodging. Dry cleaning and laundry. Business calls while on your business trip. (This includes business communications by fax machine or other communication devices.) Tips you pay for services related to any of these expenses. Other similar ordinary and necessary expenses related to your business travel. (These expenses might include transportation to and from a business meal, public stenographer's fees, computer rental fees, and operating and maintaining a house trailer.) Good records are essential. Refer to Topic 305 for information on record-keeping. For more information on these and other travel expenses, refer to Publication 463, Travel, Entertainment, Gift, and Car Expenses .

Did You Catch All That?

OK, great! Everybody understand the rules? If not, please read again. The key words are “ lavish and extravagant .” Again, subjective words that are open to interpretation.

For a multi-millionaire, booking a suite at the Ritz might not be extravagant. For a bootstrapping entrepreneur living paycheck to paycheck, anything other than a hostel room could be considered extreme!

If you are going to write a detailed post about flying private jets , then your private jet flying expense could be deductible as well. However, you best check with your CPA.

Make Sure You Have Real Revenue Eventually

If you want to travel for free, your business needs to have some revenue to be able to utilize your travel deductions. Below is a sample of a Travel Blogger's income statement.

Travel Blogging Income Statement - How to travel for free

What the IRS frowns upon is people dumping all their lifestyle expenses into their business and never making a profit. With no profits, the IRS can't collect any of your hard earned money. The general rule is that your business needs to make a profit after the third year . If not, you'd better lower your expenses and prepare for potential scrutiny.

The great thing about having a website is that you can easily pivot or add multiple income streams. After seven years of operation, Financial Samurai earns a healthy income from financial services. I want to now build my travel business through partnerships with travel companies and my favorite airlines and hotels.

To build my travel business will require startup costs. If my travel business was an isolated department, it would certainly be loss making. Good thing I don't create silos at Financial Samurai.

Utilize Your Own Business To Travel For Free

My financial services business will help subsidize the build out of my travel business until profitable. Meanwhile, the losses from my travel business will help reduce my taxable income from my financial services business. It's one team, one dream baby! Now you know why conglomerates like Alphabet (ex Google) are created.

Given I earn a good operating profit from Financial Samurai Inc, my travel business could incur losses for a very long time without triggering an IRS audit because I would never let the losses of my travel business exceed the profits of my financial business.

I love supporting America and paying over $100,000 in income taxes a year. I could also hire my family members as freelance travel writers for FS as well. After all, my parents just got back from a three week cruise from Panama City to Barcelona.

Just look at unprofitable companies like Tesla and Amazon. They are worth billions, but pay ZERO corporate income taxes because they make operating losses. What about companies like GE who engineer the most complicated tax strategies to avoid taxes. Got to love it. It's the small business owners like me who are paying all the taxes and keeping our country strong.

You Too Can Travel For Free

I hope this post gives you some ideas on how you might be able to travel for free or at a discount at the very least. More importantly, I want you guys to realize how having a business can legitimately reduce your taxable income. America is great because anybody is allowed to give entrepreneurship a go. Nobody says you have to be a crazy success either.

I'm thankful starting an online business costs so little and takes under an hour to set up. It allows us to experiment without fear of financial ruin. The magic happens when you can make money doing what you love every day.

Launch your website today

Check out my step-by-step tutorial guide on how you can launch a site like mine in under 30 minutes for just $2.95/month. A website legitimizes your business and becomes your online portal.

Not a day goes by where I'm not thankful for starting Financial Samurai in 2009. In just 2.5 years, I was able to quit my job and be free. Everyone should leverage the internet to build a brand, build a business, and become untethered from an office to live a life of purpose!

For further suggestions on saving money and growing wealth, check out my Top Financial Products page. I review the best products to help you save money, make money, and better organize your financial life.

In addition, if you enjoyed this article and want to get more personal finance insights and tips, please sign up for the free Financial Samurai newsletter . I go over the week's most important events so you never miss a thing.

About The Author

Financial Samurai

84 thoughts on “the best way to travel for free and lower your taxable income”.

It is one business, “blogging”.

A freelance journalist may write about sport, politics, finance etc. They wouldnt be deemed to be operating seperate businesses for each topic.

Travel blogging is definitely lucrative, but the landscape has changed so much in the last 10 years. You can have traveling as a passion. The question is are you able to grind it out, write compelling content, and navigate around SEO in order to get traffic to funnel to your site.

In addition to that, Google has restructured how they rank web sites to include the AGE (how old since it was created). The longer the better. Google will no longer reward higher SERPs to newbies. Aspiring bloggers will just have to grind it out longer :)

Good to know, and that makes sense. But is there proof?

I’ve been running FS for 10 years now and plan to keep it going for much longer.

https://www.financialsamurai.com/up-next-for-financial-samurai-less-retirement-more-entrepreneurship/

I view your site more of a personal financial site than travel. You’re also well established with pretty much every Google metric that you can measure.

That’s much different than a new travel blogger just starting today. Statistics show most bloggers give up before the first year so there’s a lot of dead blogs in the early goings.

BTW, love your site. I’ve been reading it for almost as long as you’ve had it!

Cool. How did you stumble across this post? Search?

In my journey to better monetize the side, I am hoping that the longevity of the side can help propel me forward more easily. But who knows.

No, coincidentally, I was teaching a panel on SEO and was using Ahrefs’ backlink checker and stumbled upon this old post.

Overall, I think this site is well positioned to continue to monetize down the road. A lot of organic searches come from a variety of key words and long search phrases.

I know you probably have already, but I would keep checking the top financial blogs and see what they’re up to. Some are churning 6 figures a month and not doing that many new posts.

Enjoyed this article, and as my wife and I are in the early stages of getting our Travel Blog rolling, your article gave us some good ideas.

I would be interested in knowing how you broached the subject with a company regarding you writing a travel piece about them? For example, we are headed to Europe in late April, and I was pondering whether or not to contact the Cruise Line and make such an inquiry. Any light you could shed on this would be highly appreciated.

Thanks for the helpful post! Could you please go further in depth with this paragraph

“Given I earn a good operating profit from Financial Samurai Inc, my travel business could incur losses for a very long time without triggering an IRS audit because I would never let the losses of my travel business exceed the profits of my financial business. ”

I’m a wedding photographer (it does make a profit) and I have my regular 9-5. I recently started a travel and fashion blog and want to know how to continue to lower my taxable income from my 9-5 without triggering an audit. Thanks so much!

This is something I haven’t taken advantage of yet, even though I own my own business and have rental properties out of state (which I haven’t seen).

I do travel a lot for fun, so I should really look for these opportunities. Thanks for the ideas!

Great travel tips and insights. Credit cards can be a great way to travel for free, if you use the rewards correctly and are responsible.

Thanks for the read!

So how much are we talking on tax deductions? If I spend $10k on a trip, how much of a savings can I expect? And how is the blogging business tax deductions going to save me in my personal life? Cheers!

Did you set up a separate business for your travel blog or do both websites fall under Financial Samurai? I have several ideas for blogs and wondered what the advantages would be of having each a separate business or if I should have one company with several sites.

Thanks for any advice you can offer!

I created one umbrella media company.

More business you create he more fees I have to pay. Not worth it when starting out.

IRS requires to have separate businesses for separate lines of business. You cannot just mix them up. So, you will HAVE to show the net loss on the tax return of your blog business and then net profit of your other business, either they are separate Schedule C each or separate LLCs or S corps, does not matter. You can try to mix them if they somewhat related. Otherwise, it is illegal according to the IRS. So, IRS still will see your net loss, and then IRS will see that you are netting the net loss with income from another business. The choice is yours.

Awesome post. I’ve been able to travel a little bit for free back to where I grew up thanks to my investment properties there. I use those to come back and look for more properties because the ROI has been great. While I’m there I’ll visit family and friends.

Hey Sam, I’m not sure if we’ll be there at the same time but I’ll be in Paris on the evening of the 30th. I live in Germany and I’ll just be there for the night before I fly back the next day. I’ve been a long time reader and I would love to catch a drink and pick your brain about finances and your upcoming travel plans. -Katie

Whoops, I’ll actually be there the 29th, so our times should overlap.

Cool. Where are you staying? No brain picking allowed though. It hurts!

Fine, I’ll leave my instruments at home. I am staying at my friend’s apt near the Chatelet Les Halles station. What about you?

Excellent article, Sam. Every entrepreneur has one thing in common: The desire to lower their taxable income. I’ve been considering leaving my country (US) for a good year or two to take advantage of this. I’m considering Thailand. Thanks for the article. It’s very valuable. What you mentioned about less than $100 for food and cleaning was eye opening.

If you move to Thailand and earn money like you normally do I’m pretty sure you’ll still have to pay taxes to the US even though you don’t live there. I have no idea how living abroad and working for a US company or depositing money into a US bank account works.

Would like to see your entry and photos about Chongqing, I am reading your blog from CQ, my hometown for the past 12 month, learnt a lot about how to manage my asset in US.

Really interesting post and definitely something to consider. I think the idea of increasing your audit risk freaks people out when it comes to doing something like this. There are an incredible number of decisions that come in to play when considering where to travel, what to do, and the costs related to all aspects. I’m thinking this could play in well with my new blog adventure!

Great article Samurai, My wife and I always talk about traveling outside of the US more but with 5 young kids it is tough (energy and financially). I think once I get my finances at a good point and my house paid off traveling will become a reality. I am always up for something new each day. Sounds like you are too. Cheers, DividendFamilyGuy

Agree that travel is awesome. Traveling in style is even better though. Have you ever flown private? If someone can do that on a regular basis, that’s when they’re truly part of the 1% in my view.

A travel blog would be really nice. You get to have fun and travel at the same time plus you can deduct a ton of business expenses. My wife loves to travel and I always am in the lookout mode for deals and freebies. Last year, we went to Las Vegas and found ourselves spending under 100 dollars for 6 days, well, thanks to rewards, family and friends’ discounts on hotels, coupons on foods, among others.

I love this post.

As a business owner, there are so many opportunities to maximize your after-tax income that employees don’t have access to.

And you didn’t even mention all the great ways business owners can save much greater amounts in pretax retirement accounts.

And thanks for the detail about deductible travel expenses. Lots of great ideas.

For folks interested in pre-tax retirement accounts for business owners:

How To Save Over $100,000 Pre-Tax In A SEP IRA and Solo 401k

How Much Can I Contribute To My Self-Employed 401k?

Hi Sam, This is probably not the place to ask this, but can you or your readers recommend the nicest resort to stay at in Hawaii? I’ve never been but figure it’s time to “research” potential new marketplace expansions.

Thank You, Bill

The Kahala Resort & Spa!

Thank you Sam. I hadn’t even considered Honolulu.

Thanks for all your helpful posts. I love the fact that you can deduct your expenses if you “blog” about “your” travel experience. However, how would this work if you bring a family? Unfortunately I will be traveling with my family most of the time. if that is the case, will I just be able to deduct the expenses for myself?

Sounds like you have it all figured out – I wish you well in your travels. Incidentally, this was one of my dreams in a few years if I ever turn my blog into something great. Who can turn down an all expenses (or close to) trip paid to other countries? Not I.

My business had me traveling to a conference in a city I love exploring. Saw a friend I adore while there, and got the tax write-off for something I wanted to do. I’m considering which conferences that are beneficial to my LLC are affordable and in a place I’d like to be. This is extra important since I’m still not earning anything through the LLC. It supports itself, but does not pay me, yet.

I have not yet begun dreaming of traveling for my blog… I should.

Hey Sam, Credit card points are the most common “free” travel for sure, but I thought of something you may qualify for.

I have heard people of Chinese decent can often get a extremely subsidized tour of China in 4 star hotels and paid meals. A trip for over a week could be $200 or something ridiculous. I can not vouch for quality or experience and I believe they are only in Chinese.

Never heard of that Chinese specific perk. The Chinese are DOMINATING the travel industry right now with huge tour buses of Chinese folks everywhere I go. It’s impressive b/c their GDP per capita is so low versus everywhere they visit.

What a clever way to combine passions for writing and travel. In the best case scenario, many expenses are camped. In a less optimal, but still excellent scenario, your expenses are tax-deductible. Frequent travel writing sounds like an excellent direction for a FIRE blog to take after RE is accomplished.

Thanks for the links to the old posts; I particularly enjoyed the Stockholm article. I lived there for 6 weeks as a medical student on an exchange program. I’ve had “Stockholm syndrome” ever since… oh, wait… that’s something entirely different. (see Patty Hearst story for differentiation). But I’d love to go back there someday!

Cheers! -PoF

Glad you enjoyed the Stockholm article! Yes, I’m finding that a FIRE blog with a heavy travel element is a perfect combination. Just looking around at all my fellow travelers, and 70% of them are 65+ and retired!

If you are up for a lunch or beer or two tomorrow in Prague let me know. moved here 16 years ago, to be a travel writer… ended up somewhere completely different, but have loved every second of Prague. Sent you an email.

In the boiler room, it’s always be closing. In entrepreneurship, it’s always be thinking.

Great way to extend your existing business into new lines, while reducing your audit risk.

Mrs. E is a amateur photographer, so once the dust settles, we’ve been considering setting up a stock photo site and selling her photos online. If you can generate enough revenue to avoid the “hobby” trap, suddenly traveling to exotic locations to take pictures isn’t a vacation, it’s a business… But generating enough revenue is always the trick.

Check this post out regarding your “hobby trap” term: Real Entrepreneurs Are Successful

Haha yeah anything that is helping you to generate income should be deductible. My problem is I don’t have any substantial blog income to deduct travel expenses :)

Thanks for sharing!

Better get going then!

I feel really lucky that I’ve been able to travel to so many places across the US and internationally. So many people have never left the U.S. or even their own state. Travel blogging is a competitive space but the awesome thing about it is bloggers can really weave their own individual personalities and interests into their posts, products and insights. I’ve done some fun travel blogging posts over the years but haven’t focused on building out that niche that much. Maybe I should.

Very cool idea, I’m like you, got bitten by the travel bug. I didn’t know you went to elementary school in Taiwan before. Did you have to attend school on Sat too?

His at is US ambassador :) he probably get to go to the badass international school, US-UK standard, no Saturdays. LOL :) I went to school on Saturdays up until high school, bleh.

I’ve recently bought a property in the Midwest, so I hope each time I visit home, I can use it as a tax write off – checking on construction, tenants and such. Win-win situation for us.

I did the Saturday school in Taiwan and Malaysia. Not fun! But, I wish I did more. Mandarin is rusty, but was once quit fluent with 3,500 characters under my belt. I attended all the international schools like TAS, ISKL, etc.

Sam, This is a great post for anyone interested in starting a travel blog…

I’m going to write only a couple of Travel posts in August (Florida) and October (New Orleans) this year. Maybe next year I’ll write more if I can get to go to Maine or Memphis.

Will you be writing about traveling in the San Fran area?

Yes, SF is on my list for sure. I should be an expert by now after 15 years!

Brilliant! I feel like a schmuck still working for the “the man” while other people have figured out how to travel for a living. :) The year I spent teaching English in Japan making like 1/5 of my current income was still among the happiest in my life.

Ah yes… those good old times when we were younger and much poorer. I remember the same studying abroad in Japan and China as well. So fun.

The idea is to create the most asset light business possible to keep costs down and then travel for business. What’s more asset light and easy to set up than a blog? And yet, what also has some of the highest margins as well? Bingo!

Fun post! Chalk up another great benefit to the long list of benefits to having your own business. Lots of possibilities and good food for thought. My wife has a small business with a vendor in Kansas City. Turns out her sister lives in Kansas City too. Now, every time we visit her sister, we write-off the trip!

A little tax knowledge goes a long way.

When we took our first cruise several years ago I asked my CPA if I could deduct all or part of the trip if I wrote about the experience on my blog (which at that point had more than enough revenue to cover the cost).

His answer was similar to yours above…”maybe”.

In the end we discussed it and it appeared that I could reasonably deduct maybe 20% of the trip or so. Not bad.

Your travel posts are more in-depth and more frequent. You also have higher income than I had (guessing) so it seems like you certainly could deduct a trip to some extent.

The key part is, as you say, “lavish and extravagant”. Is a cruise by definition lavish and extravagant? Is it a relative measure as you allude or an absolute one?

As in most cases, the tax-related decisions are about as clear as mud.

Interesting your CPA said only “20%.” It would be great if he elaborated as to why for you. Cheers

Great ideas, Sam. This post has stimulated me to think outside the box a bit.

When embarking on a complicated path involving possible tax liability, I think it is important to have a CPA-friend close by. I am fortunate that one of my good friends is also my CPA.

Wow, we have similar plans this summer. We’re doing London, Amsterdam, Prague, Vienna, Bratislava, Budapest, Bangkok, and Singapore. Four weeks doing that and then we have 3 days back at home before leaving for a 1 week cruise and a few days in Miami to see the beach and family close by. Gotta love rewards points; this will be our last time in Cathay Pacific first class now that prices have almost doubled.

As a site owner the most lucrative thing you can do is start pushing credit card affiliate links. They’re almost always $100+ per approval and some Biz cards are upwards of $200. You’ll never get an actual answer do to NDAs, but it is very lucrative. FWIW, I have never had an affiliate partnership, this is only what I have gleaned online.

I work from home also, so shoot me an email if you ever want to chat.

I can see the flow… but then to Bangkok from Budapest? that’s a great long trip!

I hear you on credit cards, I’ve just never had that much of an interest writing about them b/c their interest rates are so high. A lot of folks get in way over their head with credit cards, and I’m afraid some readers here might too.

What is it that you do?

The order was a bit off. We go from Budapest to Dusseldorf for a night before catching our flight to Bangkok. The plan was to return home after Budapest, but we wanted to fly Cathay Pacific in F one last time while we still could. And that meant flying east. We have Embassy friends in Bangkok and last time we visited Singapore we only had 1 night, and that was after a nightmare overnight train from KL so we didn’t get to see much. If we had more time we’d go back to Hong Kong, we love that city.

Credit cards are great if you pay off balances in full, otherwise you’re paying interest and there’s no point in doing that. Definitely not for everyone.

I’m a reseller on Amazon and my wife is a public school teacher. Both not high paying fields.

Yeap, you need to make money or else the IRS really frown upon the travel expense. JD was audited a couple years ago and they said he couldn’t deduct those travel expenses. I guess he wasn’t making much income at that point. I’m planning to deduct our Thailand expense later this year for myself and my editor. I’ll write a series of in-dept articles on retiring there. Probably can’t deduct our kid’s ticket, though. Enjoy your trip! I’d love to visit Prague someday. It’s high on my list.

Looking forward to that series Joe. Haven’t been to Thailand yet, but who knows…maybe someday I’ll make a big enough online income I can afford to visit and then write-off the expense. :)

Wow Sam, you’ve already traveled the world and you still want to travel more? I’m amazed. The more I travel it seems like I want to travel less in the future.

Once you’ve seen a few giant cities in the world, they all start to look the same. Sure, I guess the museums are a little different, and the architecture does vary. I just can’t get very excited about traditional tourist travel anymore….

Warm places are still nice to visit though. We live in a pretty cold place.

After I early retired I became a lot more content with life. Now that I don’t work, I don’t need to “escape” on vacation anymore.

Great tips on writing off travel expenses though!

Thanks for an alternate perspective. I do think Sam’s idea for niche financial travel blogging is perfect for him, and a good inspiration to do similar niche travel blogging. Sometimes I think that before traveling the world, I’d like to know every corner of my state and every state in the US.

Very interesting to read that “After I early retired I became a lot more content with life. Now that I don’t work, I don’t need to “escape” on vacation anymore.”!

Although I think I will never grow tired of travelling and discovering new places (it doesn’t have to be far far away for me by the way), I really like to know that you are so content with life now that you don’t feel the need to escape. I hope I can get that feeling too when the time comes!

Glad to see you decided to hit Prague AND Budapest.

Yeah, I was thinking… why not right? Why does it have to be one or the other. I’ve got no time constraints and the train system is good.

Having a profitable travel blog would definitely be a fun gig. Not for me – but definitely worth looking into for people who want to travel a lot and don’t mind taking pictures and writing.

Sad, I had to cancel my trip to Budapest on dates you would have been there :/ Adding travel blogging from a financial perspective would def give a new dimension to financial samurai and help it evolve and give even greater interest and complexity. I know I’ll continue reading it for sure. As for free travel besides credit cards your options are numerous, from portal shopping to manufactured spending, resale, promotions or simply buying cheap packages from less known sources. The hassle of credit cards shouldn’t hold anyone back from enjoying the marvels of free or cheap travel.

Ah, bummer. It would have been nice to drink together. I’m meeting up with a college friend who is the Bloomberg Bureau Chief. Should be fun.

That sounds like a new avenue for both new opportunities and recharging the mind, and since that last post of potentially stepping away from the laptop for good (although the post was done in fun), this could be can be the best of both worlds. You can keep the laptop and get to see some great locations at the same time.

The balance of being able to work for 2-3 hours a day (it’s 4:08am here as jetlag finally sets in), and then explore for 6-8 hours, then eat new foods is such a joy.

Ever since I wrote the Shutting Down For Now post, I’ve been itching to travel. So far, it’s been good for the creative juices!

Love the post! We are now 6 weeks early retired and travel will be a big part of our new lifestyle. Our blog has grown dramatically and the travel articles we have written are very popular reads. Now you have my mind clicking!

Always be thinking in retirement!

Very timely post as we’ve been discussing this over at The Green Swan lately. One perk we have is a family member that works for a large hotel company… that means cheap hotel rooms (but good ones too, not the dirty kind). We also have a CPA in the family which helps us understand the “reasonable” expenses we can categorize in the business. I love the idea of adding travel to the repertoire. You certainly have traveled the world already!

The Green Swan

Got to love those free hotel stay perks working for a hotel company! I remember meeting some folks who work at the Hilton and The Ritz. Lucky folks.

I feel I’m not well-rounded with Europe compared to Asia. So trying to round those curves now and catch up.

I have take a a few trips for work for free, the best one was to our Ukraine office for 12 days in the Hilton.

Great way to leverage your existing platform and find a way to do something you love to do! Look forward to reading about your adventures!

I am thinking about going to Europe this fall on a very similar trip to yours. Munich, Vienna, Prague, and Budapest. Looking forward to reading more about your trip. I will most likely be going alone, are you solo traveling?

No solo traveling this time. I’m here with my business partner as we explore together and have our semi-annual offsite in Paris.

I’d love to do Munich/Berlin… and if we had more time, we would have started at Berlin and then trained it down. But starting in Prague will have to do. Let me know how Germany is!

I’m on a temporary work assignment in Prague, which I’m learning is a very good thing for me. I can deduct my housing and transportation expenses and up to 50% of the State Department set per diem rate for Prague, which is WAY higher than it costs to actually eat here.

Every trip we’ve taken in Europe while here begins with me emailing a colleague from the area and setting up a speaking engagement or “research meeting.” With that, all of my costs are either paid by the host institution, paid by my institution, or tax deductible.

I’m working on several study-abroad programs for my university and I collaborate with a lot of international colleagues, so as long as I visit some colleagues at the local universities everywhere I go, I’m doing research. Ahhhh, the benefits of self-employment with the added security of a steady paycheck. I keep reading about retiring early, and I’m just not getting why I would ever want to do that.

What is baffling to me, is that most of my colleagues in the US will take a sabbatical and just stay at home, when there is just sooooo much rich-people professor welfare out there and easy tax deductions.

Sounds like a great gig!

I’ve got a new post that touches upon retiring early and travel blogging. The similarities are uncanny!

Any must try local favorite restaurant here in Prague? I’ve had my fill of ham, sausage, potatoes and sauerkraut so far. Fresh beer too!

It doesn’t take long to have your fill of those things. It took me about 1 day to never want another bland, boiled bread or potato dumpling.

U Flek brewery has my favorite unfiltered dark beer, but the food is … ham, sausage, potatoes and sauerkraut. Terasa U Zlate Studne is soooper fancy and has a great view of the city and actual food, but it is mostly for the rich tourists and where locals take visiting big shots, so not really local. Kulový Blesk (ball lightning in English) seems pretty popular for the actual Czech locals. Somewhere around 100 beer options, but traditional Prague food. For wine and tapas, my wife and I love Wine O’ Clock in Old Town.

Unfortunately, the best food I’ve had here in CZ has been in Brno. The Moravians know how to smoke some pig, and they have some good wines, too.

Good God is it hard to find a decent hamburger in this country!

Thanks for the tips! I’m going to try this place called Fat Koala at 5:30pm Tuesday if you wanna join.

We walked the city again. I wonder if I’m missing something after two days. Probably a lot, but it’s a small place yeah?

Fun post, Sam! Great way to integrate lessons on tax deductible expenses here.

Business owners have a lot of opportunities to find cool and fun ways to benefit from travel. I certainly don’t complain when I need to go out to check on my rental properties in Las Vegas. :)

It’s interesting that you mentioned 3 years before showing a profit. My CPA mentioned 5 years, but I was thinking that was a bit long. How did you figure out 3 years is the inflection point where scrutiny increases?

From the IRS: The IRS presumes that an activity is carried on for profit if it makes a profit during at least three of the last five tax years, including the current year — at least two of the last seven years for activities that consist primarily of breeding, showing, training or racing horses.

Michael & Financial Samurai,

Any recommendations on finding a good personal CPA? Should I go local or search/research online?

– John Gardner, Curious 23 year old newbie

The Ultimate Small Business Tax Deductions Checklist

By Homebase Team

Taxes are an undeniable reality that small business owners have to come to terms with each year. But with the help of a small business tax deductions checklist, you can find the deductions that keep more of your hard-earned money where it belongs—in your pocket.

No matter what small business you run, there are tax deductions to claim. But keeping on top of them can be one more thankless task that keeps you from growing your business. That’s why we’ve pulled together a comprehensive checklist of all the small business tax deductions so you can make the biggest impact on your federal income tax return.

What are small business tax deductions?

A tax deduction for small businesses is a business expense that can be claimed as a deduction on your federal income tax return. Tax deductions, sometimes called “write-offs,” lower the amount your business will be assessed for taxes.

How do you know what’s considered a tax write-off for small businesses?

The IRS has very clear criteria for what’s considered a tax write-off—and what isn’t. Generally speaking, write-offs are business expenses on your company’s income statement. The IRS has laid out some exceptions.

Most business expenses are fully or partially deductible. Small business owners need to claim as many business expenses as possible to decrease the taxes they’ll need to pay.

You must run a for-profit business to claim tax deductions —if you run a non-profit or a hobby business that isn’t run to make money, you can’t make deductions for tax purposes.

How do you write off business expenses?

The first step to writing off your business expenses is to track them—whether you use a third-party app or an Excel spreadsheet, you should document all your expenses. Once you’ve set up tracking your expenses, follow these three steps to reduce your small business taxes.

1. Categorize all your expenses.

The first step is determining which expenses qualify for deduction and which don’t. You need to understand what expenses can be written off for your business. A dedicated credit card and business bank account make categorizing your expenses easier.

Remember that not everything can be fully deducted—some expenses only qualify for a partial deduction. For example, you can’t deduct all the gas purchases you make for a vehicle you use personally, but you can deduct the standard mileage rate per mile when the car is used for business.

Once you’ve determined which expenses qualify for a deduction (full or partial), you’re ready to move on to the next step.

2. Add up your expenses.

With your expenses categorized, it’s time to find out their amounts. If you’re using accounting software like Wave or FreshBooks, it should run the numbers for you. But if you’re using an Excel spreadsheet or good old-fashioned receipts, carve out some extra time to add up the expenses yourself.

3. Add the total to Schedule C.

Once you’ve added up your expenses, you’ll list the totals on the itemized deductions on Schedule C (Form 1040) . This form can be used to file personal income taxes, whether employed, self-employed, or running a business as a sole proprietor or LLC.

If your business is structured as a corporation, you’ll need to file a corporate tax return.

To get the most out of your small business deductions, consult a professional like a CPA or tax specialist. Knowing how to write off business expenses is their full time job, so they’ll figure out what deductions are available and how they apply to your business.

The comprehensive small business tax deduction checklist.

Now that we’ve filled you in on all the need-to-know info about small business write-offs, it’s time to get into the good stuff: what’s actually tax deductible for your small business?

Some business deductions are partial, while others can comprise 100% of your expenses up to a specific limit. This comprehensive list will help you categorize expenses and get the most from deductions.

1. Business startup cost deduction.

Did you start your business this year? Then, you can deduct 100% of your startup expenses, up to $5,000.

The cost must be a normal deduction that other established businesses would incur to qualify as a startup expense. But, as a startup cost, these expenses happened before you officially started operating your business.

There are a lot of expenses that may qualify for this deduction, including:

Building your website
Running an advertising or marketing campaign
Working with a business coach or consultant
Attending trainings in your industry

2. Qualified business income deduction.

Some small businesses can deduct up to 20% of their qualified business income (QBI) from their taxes. The IRS defines qualified business income as “the net amount of qualified items of income, gain, deduction, and loss from any qualified trade or business.” In more general terms, it refers to your business’s net profit.

It also excludes some types of business income, including:

Capital gains or losses
Interest income
Income earned outside the U.S.
Certain wage and guaranteed payments made to partners and shareholders

To qualify for the QBI deduction, you must be a sole proprietorship, partnership, S corporation, or limited liability company (LLC).

3. Business vehicle or business use of car tax deduction.

Business vehicles are a tax write-off. But things get a bit more tricky if you use your personal vehicle for business purposes.

If a vehicle is used solely for business and never for personal use, you can deduct 100% of the cost of operating and maintaining the vehicle. Any expense related to the vehicle—gas, maintenance, repairs, insurance, registration fees, lease payments, tolls, and more—can be deducted.

But if your business vehicle doubles as your personal vehicle, you can only deduct the amount relating to your business expenses. There are two ways to calculate your vehicle tax deduction:

Actual expenses : You need to keep track of your actual vehicle costs, such as gas, oil, maintenance and repairs, insurance, registration fees, and lease payments or depreciation.
Standard mileage rate : If you choose to use the standard mileage rate, multiply your miles driven by the IRS mileage rate , which is set annually.

4. Office space.

Your monthly payments can be deducted from your taxable income if your business rents office or retail space. It’s important to note that this has to be a physical space outside your home—if you run your business from home, you’ll need to claim the home office deduction instead.

The home office deduction allows you to deduct $5 per square foot of space used as a home office, up to 300 square feet for a maximum deduction of $1,500. The deduction includes all associated costs such as heat, Wi-Fi, and electricity, so they cannot be claimed separately.

To qualify for the home office deduction, you must meet the following requirements:

The workspace has defined boundaries
You use the workspace consistently
You must engage in business from your home workspace

5. Charitable donations.

When you donate to qualifying charities, you can use that amount as a tax deduction. The IRS sets limits on how much you can deduct. Additionally, sole proprietors, partnerships, and LLC owners must claim charitable donations on their personal income tax returns.

6. Office supplies.

Every business has a list of things that keep it running smoothly. Whether it’s pens and paper or computer software and highlighters, you can write off the cost of office supplies from your taxes.

7. Depreciation.

Depreciation is a tax deduction that lets you spread the cost of an asset over a fixed number of years. Examples of depreciating business assets include:

Real estate (if you own commercial real estate for your business)
Business use vehicles
Office furniture and appliances
Computers and other electronic equipment

As of 2024, small business owners can deduct a maximum of $1,220,000 in depreciation for qualifying assets.

There are restrictions on claiming depreciation—computers and cars, for example, must be written off over five years. In contrast, furniture and appliances must be written off over seven years.

8. Legal and professional fees.

Did you work with a lawyer, accountant, or bookkeeper this year? That’s a tax write-off as long as the professional services provided are relevant to your business.

9. Advertising and marketing.

Advertising and marketing expenses are tax deductible if they are ordinary and necessary for your business. You can write off 100% of your marketing and advertising expenses for the table year up to a maximum of $5,000.

Running digital or print ads, hiring a social media manager, and working with freelance copywriters to write blog posts are all business expenses .

10. Employee wages and benefits.

If you have employees, you can deduct the cost of their wages and benefits . This only applies to businesses that employ someone other than themselves—sole proprietors, partners, and LLC members are not eligible.

You can also deduct an employee’s paid time off, commission/bonuses, and employment taxes related to payroll .

11. Bad debts.

A bad debt happens when someone owes you money, but there is no way for you to collect it. It becomes worthless because you’ll never recoup that money. For example, a customer buys a $700 item from your store using store credit. But after repeatedly invoicing the customer with no response, their debt becomes bad.

If you have bad debt included in your gross income, it can be claimed as a tax write-off to lower your business’s tax liability.

12. Education and training.

Did you hit the books this year or attend training related to your business? You can write off the costs. Work-related educational expenses are tax-deductible for business owners if they meet the following criteria:

The program improves or maintains the skills you need for your current job
You are legally required to take the course to keep your job or salary
The program won’t help you learn skills for a new trade or business

If you’re unsure if your continuing education expenses are covered, speak with a tax specialist or CPA. But some of the tax-deductible costs include:

Seminars and webinars that apply to your business
Subscriptions to professional publications if they’re relevant to your business
Classes and workshops in your field (in-person and online)

13. Insurance premiums.

You can deduct the premiums depending on the type of insurance you have for your business. They must be considered “ordinary and necessary” and used specifically for your business. There is no limit to the amount you can deduct from your tax bill.

If you have any of the following insurance policies, you may be able to write off the premiums:

Health insurance
Workers’ compensation insurance
Life insurance
Liability insurance
Unemployment insurance

14. Interest on business loans and credit cards.

If you have a small business loan from a financial institution, payments against the loan’s principle aren’t tax deductible. However, there is a chance that you can write off the interest you pay on the loan or a business credit card. You’ll need to show that the funds were used for your business and provide proof of repayment to claim the interest on your business loan.

15. Business meals.

For many businesses, client meals or employee lunches are semi-regular events. It’s easy to assume you can write off the whole meal whenever you’re out with clients or team members.

The reality is that the meal needs to be work-related. So, grabbing lunch with your team while you discuss the latest episode of The Bachelor is not a deductible expense—unless you work on The Bachelor, of course.

If you’re claiming the business dining tax deduction, keep a log of:

The price of the meal
The date and location
Who was there, and the business relationship

16. Telephone and internet expenses.

You can deduct the cost of your internet and cell phone plan from your federal tax return. To qualify, your phone and internet must be essential to your business’s ability to operate. Additionally, if your phone and internet are used for personal purposes, you can only deduct the percentage of the cost used to conduct your business.

17. Inventory.

If you run an inventory-based business, you can deduct the cost of your inventory from your taxes. Be sure to value inventory at the beginning and end of each tax year to determine the cost of goods sold.

Keep track of the following types of expenses to make sure you’re able to figure out the cost of goods sold each year:

The cost of products or raw materials
Freight costs
Labor costs for workers who produce the products
Factory overhead costs

18. Banking fees.

All small businesses should have a dedicated business bank account. If your bank charges monthly service fees, overdraft fees, or wire transfer fees, you can deduct those costs from your taxes.

Additionally, you can deduct the fees of a third-party payment processor, like Square or Wise.

You can’t deduct bank fees only if you’re using your personal bank account. So, any profit deposited into your personal account isn’t eligible for the deduction—another reason to get a business bank account.

19. Independent contractors.

Does your business work with independent contractors and freelancers? If you do, the money you pay them counts as a deductible as long as:

The contractor is not an employee of your business
The services provided are for the business, not the business owner personally

It’s also important to remember that you must send all freelancers and contractors a Form 1099-NEC if you pay them more than $600 during the tax year. Failure to do so can result in a fine from the IRS.

20. Retirement plan contributions.

Most small business owners make 100% of their retirement plan contributions. Thankfully, the IRS recognizes that you’re doing this and allows you to write off contributions from your income taxes for one of the following accounts:

Traditional IRA
Solo 401(k)

21. Business travel.

Business trips can be a complicated process when it comes to tax deductions. Simply put, the business expenses on a trip are tax deductible.

The IRS has strict rules about who can claim this deduction—to qualify, your trip must meet the following criteria:

The trip was overnight
You traveled at least 100 miles from home
The expenses must be ordinary and necessary

It’s essential to keep a record of all expenses from your trip. When you file your taxes, you’ll need all your receipts. Keep everything, but be sure to keep all receipts related to:

Train tickets
Taxis and rideshares
Hotels and Airbnbs
Shipping items (for a trade show, for example)

Download your free small business tax deductions checklist (PDF).

Tax deductions are essential for small businesses to minimize the taxes they must pay. Keeping track of your expenses will help you maximize your return and keep the IRS happy if they decide to swing by for an audit.

This small business deductions checklist will help you keep track of the tax write offs for small business owners to claim each fiscal year:

Small business tax deductions checklist.

Looking to get more than just your tax deductions managed for your small business? Homebase can help you manage the important—but sometimes tedious—business tasks, like scheduling , payroll , and compliance —in half the time it usually takes.

Get your team in sync with our easy-to-use, all-in-one app to manage your hourly team. Get started for free with Homebase.

Small business tax deductions FAQs

How much can a small business make before paying taxes in the usa.

Regardless of your small business’s incorporation status, if the company earns $400 or more in net earnings during a table year, you must file a tax return and pay any applicable taxes.

What deductions can I claim without receipts?

The IRS recommends having records (receipts, bills, invoices) to prove your expenses. But there are some deductions you can claim without a receipt. For example, if you use the standard mileage rate when claiming your business vehicle expenses, you don’t need receipts for gas or car repairs.

How much can businesses write off for advertising?

Tax write offs for small businesses can include 100% of your marketing and advertising expenses up to $5,000 annually.

Remember: This is not legal advice. If you have questions about your particular situation, please consult a lawyer, CPA, or other appropriate professional advisor or agency.

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Can You Deduct Your Trip From Your Taxes? Experts Weigh In

P eople are traveling like crazy these days. The Sunday after Thanksgiving 2023 was the biggest single travel day in U.S. aviation history, with TSA screening more than 2.9 million passengers on November 26.

If you're one of those travelers racking up frequent flier miles as quickly as you can fasten your seat belt, you may be looking for ways to recoup some of the cost. Can you legally write off your trip? If you're self-employed (for example, if you're an entrepreneur, freelancer, or consultant, or have an online business) and you did some work while on the road, there's a good chance you can.

Here's what it takes to get two thumbs up from the IRS.

Pass these four tests

For starters, your trip must have a business purpose, meaning it must include activities such as client meetings, attending a conference, being a guest speaker at a conference, doing research and development for the business, or holding a board meeting or annual shareholders' meeting. The activity should have the potential to generate revenue.

"Don't think you can take a personal trip, talk business for an hour and then try and deduct the whole amount of your trip. The intent of the trip needs to be business," says Caitlynn Eldridge, founder and CEO of Eldridge CPA .

The second and third requirements deem that the trip must be both "ordinary and necessary," according to IRS guidelines on business travel expenses . "An ordinary expense means it's typical in your business, both [in terms of] amount [as well as in] frequency and purpose. Necessary means it actually helps you increase your profits or expand your business," explains Tom Wheelwright, a certified public accountant and author of the book Tax-Free Wealth (BZK Press, 2018).

Lastly, every expense must be properly documented. To get a deduction for travel, Wheelwright said that you must spend more than half your time during the business day doing business and have everything documented. "So, if you spend four and a half hours a day doing business, it becomes deductible. You also must have documentation, which includes receipts, of what you did, and a log of your expenses," says Wheelwright.

On receipts, write the name of the client who you had the meal with for further proof. "Save the emailed confirmation and receipt from the hotel reservation or conference ticket payment that show the dates, times, and name of the events as well as the receipts from the travel it took to get there and back [such as for gas or flights]," says Ben Watson, founder of Fiscal Fluency , a personal finance and business coaching company.

Note that for 2024, the IRS mileage reimbursement rate is 67 cents for employees or a self-employed individual traveling for work, up from 65.5 cents in 2023.

Know, too, that you must be away from home overnight-the IRS requires an overnight stay for the trip to qualify as business travel, Wheelwright says.

Domestic travel versus travel abroad

There's a big difference between how you calculate deductions if the work trip was taken in the United States versus abroad. According to Wheelwright, "It's an all-or-nothing test in the U.S., so either you spent more than 50 percent of your time on business, and it's all deductible, or you spent 50 percent or less and none of it's deductible."

For international business travel, the deductions work differently. He explained that when you travel to another country, the deduction is proportionate. "For example, if you spent 40 percent of your time doing business in Italy, then 40 percent is deductible," says Wheelwright.

Stick to the rules

It has to be a legitimate business trip. "You can't simply do some work while on the beach and call it a business trip," says Watson. But if you make it a "bleisure trip" by adding a couple days at the beach onto your preplanned business trip to the coast, you could still write off at least some of your lodging fees, he explained. If you do extend your trip for vacation, you can only deduct the expenses that were directly related to work and took place on the days that you conducted business. If you are traveling to multiple cities, keep in mind that each must have a business purpose.

You do have to work. If you are at a conference, make sure you fully participate, which means not just attending one or two sessions. If you only attend a small number of the business-related events, the entire purpose of the trip would be considered a personal trip with "incidental" business activities, Watson points out. Remember you need a log of what you did, and if it's thin on details, it could prove problematic. "You don't want to lose the ability to deduct transportation, lodging, meals, and other expenses," says Watson.

If it's a business trip of your own making, be sure it includes meetings with clients or participating in some work-related activity. "To demonstrate evidence of these events, it's wise to put calendar appointments down in your phone in advance and hold onto receipts when the time comes to file your tax return and claim your deductions. Remember, the primary purpose of this trip is [supposed to be] for work," says Riley Adams, a CPA and CEO and founder of WealthUp , a financial literacy website.

Don't try to bend what "ordinary and necessary" means. "If you have the ability to accomplish the same business tasks while staying at a modest hotel as you would at the Four Seasons, you'll have a hard time justifying the extra cost if you're ever audited," Watson cautions.

Stay at a place that is similar to places you normally stay on a business trip, so your expenses are considered "ordinary." Wheelwright explains that if you usually stay at five-star hotels for your business trips, then the Four Seasons would fall into the same category. However, if you usually stay at hotels like the Comfort Inn, and suddenly switch to a luxury hotel, the high-end venue could raise red flags with the IRS. He says that it doesn't matter whether you stay at a hotel or a vacation rental, the quality level and price tag should be similar to what is typical for your business trips.

When traveling with non–business companions, such as a spouse or family members, you may only deduct the cost of the lodging you would have paid if you were traveling alone-for example, if a single room costs $150 per night, and you paid $200 for a double room, you could only deduct at the $150 rate.

What can you deduct?

Personal meals are not deductible, but half the cost of food expenses related to business can be deducted. Expenses for your family's meals and entertainment cannot be deducted unless they are actively engaged in the business and you can show that their expense is both ordinary and necessary.

Travel expenses are only deductible on the days in which the work-related event occurs. "For example, a taxi ride to the meeting, train to a conference, or plane ride to the event [are deductible]," says Adams. "Lodging, much like travel expenses, is deductible on the days in which business is set to occur."

Understand too, that if you're provided with a plane ticket paid for by your company, or you're riding free because you're redeeming frequent flier miles, your cost is zero, so you can't deduct it.

But there are a couple of things you may not be aware of. For example, if you have to ship your baggage, you can deduct that cost; you also can deduct for tips for services, such as a tip to the waiter during a meal with a client.

Be strategic

It's best to put your "vacation" days in the middle of the business days, advises CPA Greg O'Brien. "For example, if [a] business owner took a seven-day trip to Florida and spent five days meeting with clients or prospects and two days relaxing on the beach, this would still qualify as a deductible business trip. The trick is to stick the ‘vacation' days in the middle of the business days," he says.

By placing the vacation days in the middle, the travel days to and from are still considered business related, rather than personal.

Watson offers another tip: "Laundry, dry-cleaning and shoe-shine expenses are perfectly acceptable expenses if incurred shortly after returning home."

If there's a certain amount of work involved, you may be able to claim travel costs on your taxes.

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Travel expenses defined.

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Tax Home Different From Family Home

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Travel for days you depart and return.

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Travel considered entirely for business.

Exception 1—No substantial control.

Exception 2—Outside United States no more than a week.

Exception 3—Less than 25% of time on personal activities.

Exception 4—Vacation not a major consideration.

Travel allocation rules.

Counting business days.

Transportation day.

Presence required.

Day spent on business.

Certain weekends and holidays.

Nonbusiness activity on the way to or from your business destination.

Nonbusiness activity at, near, or beyond business destination.

Other methods.

Travel Primarily for Personal Reasons

Daily limit on luxury water travel.

Meals and entertainment.

Not separately stated.

Convention agenda.

North American area.

Reasonableness test.

Cruise Ships

Deduction may depend on your type of business.

Exceptions to the Rules

Entertainment events.

Entertainment facilities.

Club dues and membership fees.

Gift or entertainment.

Other rules for meals and entertainment expenses.

Costs to include or exclude.

Application of 50% limit.

When to apply the 50% limit.

Taking turns paying for meals.

1—Expenses treated as compensation.

2—Employee's reimbursed expenses.

3—Self-employed reimbursed expenses.

4—Recreational expenses for employees.

5—Advertising expenses.

6—Sale of meals.

Individuals subject to “hours of service” limits.

Incidental costs.

Exceptions.

Illustration of transportation expenses.

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Two places of work.

Armed Forces reservists.

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Parking fees.

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What Is TAS?

How can you learn about your taxpayer rights, what can tas do for you, how can you reach tas, how else does tas help taxpayers, low income taxpayer clinics (litcs), appendix a-1. inclusion amounts for passenger automobiles first leased in 2018, appendix a-2. inclusion amounts for passenger automobiles first leased in 2019, appendix a-3. inclusion amounts for passenger automobiles first leased in 2020, appendix a-4. inclusion amounts for passenger automobiles first leased in 2021, appendix a-5. inclusion amounts for passenger automobiles first leased in 2022, appendix a-6. inclusion amounts for passenger automobiles first leased in 2023, publication 463 - additional material, publication 463 (2023), travel, gift, and car expenses.

For use in preparing 2023 Returns

Publication 463 - Introductory Material

For the latest information about developments related to Pub. 463, such as legislation enacted after it was published, go to IRS.gov/Pub463 .

Standard mileage rate. For 2023, the standard mileage rate for the cost of operating your car for business use is 65.5 cents ($0.655) per mile. Car expenses and use of the standard mileage rate are explained in chapter 4.

Depreciation limits on cars, trucks, and vans. The first-year limit on the depreciation deduction, special depreciation allowance, and section 179 deduction for vehicles acquired before September 28, 2017, and placed in service during 2023, is $12,200. The first-year limit on depreciation, special depreciation allowance, and section 179 deduction for vehicles acquired after September 27, 2017, and placed in service during 2023 increases to $20,200. If you elect not to claim a special depreciation allowance for a vehicle placed in service in 2023, the amount increases to $12,200. Depreciation limits are explained in chapter 4.

Section 179 deduction. The maximum amount you can elect to deduct for section 179 property (including cars, trucks, and vans) you placed in service in tax years beginning in 2023 is $1,160,000. This limit is reduced by the amount by which the cost of section 179 property placed in service during the tax year exceeds $2,890,000. Section 179 deduction is explained in chapter 4.Also, the maximum section 179 expense deduction for sport utility vehicles placed in service in tax years beginning in 2023 is $28,900.

Temporary deduction of 100% business meals. The 100% deduction on certain business meals expenses as amended under the Taxpayer Certainty and Disaster Tax Relief Act of 2020, and enacted by the Consolidated Appropriations Act, 2021, has expired. Generally, the cost of business meals remains deductible, subject to the 50% limitation. See 50% Limit in chapter 2 for more information.

Photographs of missing children. The IRS is a proud partner with the National Center for Missing & Exploited Children® (NCMEC) . Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 800-THE-LOST (800-843-5678) if you recognize a child.

Per diem rates. Current and prior per diem rates may be found on the U.S. General Services Administration (GSA) website at GSA.gov/travel/plan-book/per-diem-rates .

Introduction

You may be able to deduct the ordinary and necessary business-related expenses you have for:

Non-entertainment-related meals,

Transportation.

This publication explains:

What expenses are deductible,

How to report them on your return,

What records you need to prove your expenses, and

How to treat any expense reimbursements you may receive.

You should read this publication if you are an employee or a sole proprietor who has business-related travel, non-entertainment-related meals, gift, or transportation expenses.

If an employer-provided vehicle was available for your use, you received a fringe benefit. Generally, your employer must include the value of the use or availability of the vehicle in your income. However, there are exceptions if the use of the vehicle qualifies as a working condition fringe benefit (such as the use of a qualified nonpersonal use vehicle).

A working condition fringe benefit is any property or service provided to you by your employer, the cost of which would be allowable as an employee business expense deduction if you had paid for it.

A qualified nonpersonal use vehicle is one that isn’t likely to be used more than minimally for personal purposes because of its design. See Qualified nonpersonal use vehicles under Actual Car Expenses in chapter 4.

For information on how to report your car expenses that your employer didn’t provide or reimburse you for (such as when you pay for gas and maintenance for a car your employer provides), see Vehicle Provided by Your Employer in chapter 6.

Partnerships, corporations, trusts, and employers who reimburse their employees for business expenses should refer to the instructions for their required tax forms, for information on deducting travel, meals, and entertainment expenses.

If you are an employee, you won’t need to read this publication if all of the following are true.

You fully accounted to your employer for your work-related expenses.

You received full reimbursement for your expenses.

Your employer required you to return any excess reimbursement and you did so.

There is no amount shown with a code L in box 12 of your Form W-2, Wage and Tax Statement.

If you perform services as a volunteer worker for a qualified charity, you may be able to deduct some of your costs as a charitable contribution. See Out-of-Pocket Expenses in Giving Services in Pub. 526, Charitable Contributions, for information on the expenses you can deduct.

We welcome your comments about this publication and suggestions for future editions.

You can send us comments through IRS.gov/FormComments . Or, you can write to the Internal Revenue Service, Tax Forms and Publications, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224.

Although we can’t respond individually to each comment received, we do appreciate your feedback and will consider your comments and suggestions as we revise our tax forms, instructions, and publications. Don’t send tax questions, tax returns, or payments to the above address.

If you have a tax question not answered by this publication or the How To Get Tax Help section at the end of this publication, go to the IRS Interactive Tax Assistant page at IRS.gov/Help/ITA where you can find topics by using the search feature or viewing the categories listed.

Go to IRS.gov/Forms to download current and prior-year forms, instructions, and publications.

Go to IRS.gov/OrderForms to order current forms, instructions, and publications; call 800-829-3676 to order prior-year forms and instructions. The IRS will process your order for forms and publications as soon as possible. Don’t resubmit requests you’ve already sent us. You can get forms and publications faster online.

Useful Items

Publication

946 How To Depreciate Property

Form (and Instructions)

Schedule A (Form 1040) Itemized Deductions

Schedule C (Form 1040) Profit or Loss From Business (Sole Proprietorship)

Schedule F (Form 1040) Profit or Loss From Farming

2106 Employee Business Expenses

4562 Depreciation and Amortization (Including Information on Listed Property)

See How To Get Tax Help for information about getting these publications and forms.

If you temporarily travel away from your tax home, you can use this chapter to determine if you have deductible travel expenses.

This chapter discusses:

Traveling away from home,

Temporary assignment or job, and

What travel expenses are deductible.

For tax purposes, travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job.

An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your business. An expense doesn’t have to be required to be considered necessary.

You will find examples of deductible travel expenses in Table 1-1 .

Traveling Away From Home

You are traveling away from home if:

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, and

You need to sleep or rest to meet the demands of your work while away from home.

You are a railroad conductor. You leave your home terminal on a regularly scheduled round-trip run between two cities and return home 16 hours later. During the run, you have 6 hours off at your turnaround point where you eat two meals and rent a hotel room to get necessary sleep before starting the return trip. You are considered to be away from home.

You are a truck driver. You leave your terminal and return to it later the same day. You get an hour off at your turnaround point to eat. Because you aren’t off to get necessary sleep and the brief time off isn’t an adequate rest period, you aren’t traveling away from home.

If you are a member of the U.S. Armed Forces on a permanent duty assignment overseas, you aren’t traveling away from home. You can’t deduct your expenses for meals and lodging. You can’t deduct these expenses even if you have to maintain a home in the United States for your family members who aren’t allowed to accompany you overseas. If you are transferred from one permanent duty station to another, you may have deductible moving expenses, which are explained in Pub. 3, Armed Forces' Tax Guide.

A naval officer assigned to permanent duty aboard a ship that has regular eating and living facilities has a tax home (explained next) aboard the ship for travel expense purposes.

To determine whether you are traveling away from home, you must first determine the location of your tax home.

Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home. It includes the entire city or general area in which your business or work is located.

If you have more than one regular place of business, your tax home is your main place of business. See Main place of business or work , later.

If you don’t have a regular or a main place of business because of the nature of your work, then your tax home may be the place where you regularly live. See No main place of business or work , later.

If you don’t have a regular or main place of business or post of duty and there is no place where you regularly live, you are considered an itinerant (a transient) and your tax home is wherever you work. As an itinerant, you can’t claim a travel expense deduction because you are never considered to be traveling away from home.

If you have more than one place of work, consider the following when determining which one is your main place of business or work.

The total time you ordinarily spend in each place.

The level of your business activity in each place.

Whether your income from each place is significant or insignificant.

You live in Cincinnati where you have a seasonal job for 8 months each year and earn $40,000. You work the other 4 months in Miami, also at a seasonal job, and earn $15,000. Cincinnati is your main place of work because you spend most of your time there and earn most of your income there.

You may have a tax home even if you don’t have a regular or main place of work. Your tax home may be the home where you regularly live.

If you don’t have a regular or main place of business or work, use the following three factors to determine where your tax home is.

You perform part of your business in the area of your main home and use that home for lodging while doing business in the area.

You have living expenses at your main home that you duplicate because your business requires you to be away from that home.

You haven’t abandoned the area in which both your historical place of lodging and your claimed main home are located; you have a member or members of your family living at your main home; or you often use that home for lodging.

If you satisfy all three factors, your tax home is the home where you regularly live. If you satisfy only two factors, you may have a tax home depending on all the facts and circumstances. If you satisfy only one factor, you are an itinerant; your tax home is wherever you work and you can’t deduct travel expenses.

You are single and live in Boston in an apartment you rent. You have worked for your employer in Boston for a number of years. Your employer enrolls you in a 12-month executive training program. You don’t expect to return to work in Boston after you complete your training.

During your training, you don’t do any work in Boston. Instead, you receive classroom and on-the-job training throughout the United States. You keep your apartment in Boston and return to it frequently. You use your apartment to conduct your personal business. You also keep up your community contacts in Boston. When you complete your training, you are transferred to Los Angeles.

You don’t satisfy factor (1) because you didn’t work in Boston. You satisfy factor (2) because you had duplicate living expenses. You also satisfy factor (3) because you didn’t abandon your apartment in Boston as your main home, you kept your community contacts, and you frequently returned to live in your apartment. Therefore, you have a tax home in Boston.

You are an outside salesperson with a sales territory covering several states. Your employer's main office is in Newark, but you don’t conduct any business there. Your work assignments are temporary, and you have no way of knowing where your future assignments will be located. You have a room in your married sister's house in Dayton. You stay there for one or two weekends a year, but you do no work in the area. You don’t pay your sister for the use of the room.

You don’t satisfy any of the three factors listed earlier. You are an itinerant and have no tax home.

If you (and your family) don’t live at your tax home (defined earlier), you can’t deduct the cost of traveling between your tax home and your family home. You also can’t deduct the cost of meals and lodging while at your tax home. See Example 1 , later.

If you are working temporarily in the same city where you and your family live, you may be considered as traveling away from home. See Example 2 , later.

You are a truck driver and you and your family live in Tucson. You are employed by a trucking firm that has its terminal in Phoenix. At the end of your long runs, you return to your home terminal in Phoenix and spend one night there before returning home. You can’t deduct any expenses you have for meals and lodging in Phoenix or the cost of traveling from Phoenix to Tucson. This is because Phoenix is your tax home.

Your family home is in Pittsburgh, where you work 12 weeks a year. The rest of the year you work for the same employer in Baltimore. In Baltimore, you eat in restaurants and sleep in a rooming house. Your salary is the same whether you are in Pittsburgh or Baltimore.

Because you spend most of your working time and earn most of your salary in Baltimore, that city is your tax home. You can’t deduct any expenses you have for meals and lodging there. However, when you return to work in Pittsburgh, you are away from your tax home even though you stay at your family home. You can deduct the cost of your round trip between Baltimore and Pittsburgh. You can also deduct your part of your family's living expenses for non-entertainment-related meals and lodging while you are living and working in Pittsburgh.

Temporary Assignment or Job

You may regularly work at your tax home and also work at another location. It may not be practical to return to your tax home from this other location at the end of each workday.

If your assignment or job away from your main place of work is temporary, your tax home doesn’t change. You are considered to be away from home for the whole period you are away from your main place of work. You can deduct your travel expenses if they otherwise qualify for deduction. Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for 1 year or less.

However, if your assignment or job is indefinite, the location of the assignment or job becomes your new tax home and you can’t deduct your travel expenses while there. An assignment or job in a single location is considered indefinite if it is realistically expected to last for more than 1 year, whether or not it actually lasts for more than 1 year.

If your assignment is indefinite, you must include in your income any amounts you receive from your employer for living expenses, even if they are called “travel allowances” and you account to your employer for them. You may be able to deduct the cost of relocating to your new tax home as a moving expense. See Pub. 3 for more information.

If you are a federal employee participating in a federal crime investigation or prosecution, you aren’t subject to the 1-year rule. This means you may be able to deduct travel expenses even if you are away from your tax home for more than 1 year provided you meet the other requirements for deductibility.

For you to qualify, the Attorney General (or their designee) must certify that you are traveling:

For the federal government;

In a temporary duty status; and

To investigate, prosecute, or provide support services for the investigation or prosecution of a federal crime.

You must determine whether your assignment is temporary or indefinite when you start work. If you expect an assignment or job to last for 1 year or less, it is temporary unless there are facts and circumstances that indicate otherwise. An assignment or job that is initially temporary may become indefinite due to changed circumstances. A series of assignments to the same location, all for short periods but that together cover a long period, may be considered an indefinite assignment.

The following examples illustrate whether an assignment or job is temporary or indefinite.

You are a construction worker. You live and regularly work in Los Angeles. You are a member of a trade union in Los Angeles that helps you get work in the Los Angeles area. Your tax home is Los Angeles. Because of a shortage of work, you took a job on a construction project in Fresno. Your job was scheduled to end in 8 months. The job actually lasted 10 months.

You realistically expected the job in Fresno to last 8 months. The job actually did last less than 1 year. The job is temporary and your tax home is still in Los Angeles.

The facts are the same as in Example 1 , except that you realistically expected the work in Fresno to last 18 months. The job was actually completed in 10 months.

Your job in Fresno is indefinite because you realistically expected the work to last longer than 1 year, even though it actually lasted less than 1 year. You can’t deduct any travel expenses you had in Fresno because Fresno became your tax home.

The facts are the same as in Example 1 , except that you realistically expected the work in Fresno to last 9 months. After 8 months, however, you were asked to remain for 7 more months (for a total actual stay of 15 months).

Initially, you realistically expected the job in Fresno to last for only 9 months. However, due to changed circumstances occurring after 8 months, it was no longer realistic for you to expect that the job in Fresno would last for 1 year or less. You can deduct only your travel expenses for the first 8 months. You can’t deduct any travel expenses you had after that time because Fresno became your tax home when the job became indefinite.

If you go back to your tax home from a temporary assignment on your days off, you aren’t considered away from home while you are in your hometown. You can’t deduct the cost of your meals and lodging there. However, you can deduct your travel expenses, including meals and lodging, while traveling between your temporary place of work and your tax home. You can claim these expenses up to the amount it would have cost you to stay at your temporary place of work.

If you keep your hotel room during your visit home, you can deduct the cost of your hotel room. In addition, you can deduct your expenses of returning home up to the amount you would have spent for meals had you stayed at your temporary place of work.

If you take a job that requires you to move, with the understanding that you will keep the job if your work is satisfactory during a probationary period, the job is indefinite. You can’t deduct any of your expenses for meals and lodging during the probationary period.

What Travel Expenses Are Deductible?

Once you have determined that you are traveling away from your tax home, you can determine what travel expenses are deductible.

You can deduct ordinary and necessary expenses you have when you travel away from home on business. The type of expense you can deduct depends on the facts and your circumstances.

Table 1-1 summarizes travel expenses you may be able to deduct. You may have other deductible travel expenses that aren’t covered there, depending on the facts and your circumstances.

If you have one expense that includes the costs of non-entertainment-related meals, entertainment, and other services (such as lodging or transportation), you must allocate that expense between the cost of non-entertainment-related meals, and entertainment and the cost of other services. You must have a reasonable basis for making this allocation. For example, you must allocate your expenses if a hotel includes one or more meals in its room charge.

If a spouse, dependent, or other individual goes with you (or your employee) on a business trip or to a business convention, you generally can’t deduct their travel expenses.

You can deduct the travel expenses of someone who goes with you if that person:

Is your employee,

Has a bona fide business purpose for the travel, and

Would otherwise be allowed to deduct the travel expenses.

If a business associate travels with you and meets the conditions in (2) and (3) above, you can deduct the travel expenses you have for that person. A business associate is someone with whom you could reasonably expect to actively conduct business. A business associate can be a current or prospective (likely to become) customer, client, supplier, employee, agent, partner, or professional advisor.

Table 1-1. Travel Expenses You Can Deduct

A bona fide business purpose exists if you can prove a real business purpose for the individual's presence. Incidental services, such as typing notes or assisting in entertaining customers, aren’t enough to make the expenses deductible.

You drive to Chicago on business and take your spouse with you. Your spouse isn’t your employee. Your spouse occasionally types notes, performs similar services, and accompanies you to luncheons and dinners. The performance of these services doesn’t establish that your spouse’s presence on the trip is necessary to the conduct of your business. Your spouse’s expenses aren’t deductible.

You pay $199 a day for a double room. A single room costs $149 a day. You can deduct the total cost of driving your car to and from Chicago, but only $149 a day for your hotel room. If both you and your spouse use public transportation, you can only deduct your fare.

You can deduct a portion of the cost of meals if it is necessary for you to stop for substantial sleep or rest to properly perform your duties while traveling away from home on business. Meal and entertainment expenses are discussed in chapter 2 .

You can't deduct expenses for meals that are lavish or extravagant. An expense isn't considered lavish or extravagant if it is reasonable based on the facts and circumstances. Meal expenses won't be disallowed merely because they are more than a fixed dollar amount or because the meals take place at deluxe restaurants, hotels, or resorts.

You can figure your meal expenses using either of the following methods.

Actual cost.

If you are reimbursed for the cost of your meals, how you apply the 50% limit depends on whether your employer's reimbursement plan was accountable or nonaccountable. If you aren’t reimbursed, the 50% limit applies even if the unreimbursed meal expense is for business travel. Chapter 2 discusses the 50% Limit in more detail, and chapter 6 discusses accountable and nonaccountable plans.

You can use the actual cost of your meals to figure the amount of your expense before reimbursement and application of the 50% deduction limit. If you use this method, you must keep records of your actual cost.

Standard Meal Allowance

Generally, you can use the “standard meal allowance” method as an alternative to the actual cost method. It allows you to use a set amount for your daily meals and incidental expenses (M&IE), instead of keeping records of your actual costs. The set amount varies depending on where and when you travel. In this publication, “standard meal allowance” refers to the federal rate for M&IE, discussed later under Amount of standard meal allowance . If you use the standard meal allowance, you must still keep records to prove the time, place, and business purpose of your travel. See the recordkeeping rules for travel in chapter 5 .

The term “incidental expenses” means fees and tips given to porters, baggage carriers, hotel staff, and staff on ships.

Incidental expenses don’t include expenses for laundry, cleaning and pressing of clothing, lodging taxes, costs of telegrams or telephone calls, transportation between places of lodging or business and places where meals are taken, or the mailing cost of filing travel vouchers and paying employer-sponsored charge card billings.

You can use an optional method (instead of actual cost) for deducting incidental expenses only. The amount of the deduction is $5 a day. You can use this method only if you didn’t pay or incur any meal expenses. You can’t use this method on any day that you use the standard meal allowance. This method is subject to the proration rules for partial days. See Travel for days you depart and return , later, in this chapter.

The incidental-expenses-only method isn’t subject to the 50% limit discussed below.

If you use the standard meal allowance method for non-entertainment-related meal expenses and you aren’t reimbursed or you are reimbursed under a nonaccountable plan, you can generally deduct only 50% of the standard meal allowance. If you are reimbursed under an accountable plan and you are deducting amounts that are more than your reimbursements, you can deduct only 50% of the excess amount. The 50% Limit is discussed in more detail in chapter 2, and accountable and nonaccountable plans are discussed in chapter 6.

You can use the standard meal allowance whether you are an employee or self-employed, and whether or not you are reimbursed for your traveling expenses.

You can use the standard meal allowance to figure your meal expenses when you travel in connection with investment and other income-producing property. You can also use it to figure your meal expenses when you travel for qualifying educational purposes. You can’t use the standard meal allowance to figure the cost of your meals when you travel for medical or charitable purposes.

The standard meal allowance is the federal M&IE rate. For travel in 2023, the rate for most small localities in the United States is $59 per day.

Most major cities and many other localities in the United States are designated as high-cost areas, qualifying for higher standard meal allowances.

If you travel to more than one location in one day, use the rate in effect for the area where you stop for sleep or rest. If you work in the transportation industry, however, see Special rate for transportation workers , later.

Per diem rates are listed by the federal government's fiscal year, which runs from October 1 to September 30. You can choose to use the rates from the 2022 fiscal year per diem tables or the rates from the 2023 fiscal year tables, but you must consistently use the same tables for all travel you are reporting on your income tax return for the year. See Transition Rules , later.

The standard meal allowance rates above don’t apply to travel in Alaska, Hawaii, or any other location outside the continental United States. The Department of Defense establishes per diem rates for Alaska, Hawaii, Puerto Rico, American Samoa, Guam, Midway, the Northern Mariana Islands, the U.S. Virgin Islands, Wake Island, and other non-foreign areas outside the continental United States. The Department of State establishes per diem rates for all other foreign areas.

You can use a special standard meal allowance if you work in the transportation industry. You are in the transportation industry if your work:

Directly involves moving people or goods by airplane, barge, bus, ship, train, or truck; and

Regularly requires you to travel away from home and, during any single trip, usually involves travel to areas eligible for different standard meal allowance rates.

Using the special rate for transportation workers eliminates the need for you to determine the standard meal allowance for every area where you stop for sleep or rest. If you choose to use the special rate for any trip, you must use the special rate (and not use the regular standard meal allowance rates) for all trips you take that year.

For both the day you depart for and the day you return from a business trip, you must prorate the standard meal allowance (figure a reduced amount for each day). You can do so by one of two methods.

Method 1: You can claim 3 / 4 of the standard meal allowance.

Method 2: You can prorate using any method that you consistently apply and that is in accordance with reasonable business practice.

You are employed in New Orleans as a convention planner. In March, your employer sent you on a 3-day trip to Washington, DC, to attend a planning seminar. You left your home in New Orleans at 10 a.m. on Wednesday and arrived in Washington, DC, at 5:30 p.m. After spending 2 nights there, you flew back to New Orleans on Friday and arrived back home at 8 p.m. Your employer gave you a flat amount to cover your expenses and included it with your wages.

Under Method 1 , you can claim 2½ days of the standard meal allowance for Washington, DC: 3 / 4 of the daily rate for Wednesday and Friday (the days you departed and returned), and the full daily rate for Thursday.

Under Method 2 , you could also use any method that you apply consistently and that is in accordance with reasonable business practice. For example, you could claim 3 days of the standard meal allowance even though a federal employee would have to use Method 1 and be limited to only 2½ days.

Travel in the United States

The following discussion applies to travel in the United States. For this purpose, the United States includes the 50 states and the District of Columbia. The treatment of your travel expenses depends on how much of your trip was business related and on how much of your trip occurred within the United States. See Part of Trip Outside the United States , later.

You can deduct all of your travel expenses if your trip was entirely business related. If your trip was primarily for business and, while at your business destination, you extended your stay for a vacation, made a personal side trip, or had other personal activities, you can deduct only your business-related travel expenses. These expenses include the travel costs of getting to and from your business destination and any business-related expenses at your business destination.

You work in Atlanta and take a business trip to New Orleans in May. Your business travel totals 900 miles round trip. On your way home, you stop in Mobile to visit your parents. You spend $2,165 for the 9 days you are away from home for travel, non-entertainment-related meals, lodging, and other travel expenses. If you hadn’t stopped in Mobile, you would have been gone only 6 days, and your total cost would have been $1,633.50. You can deduct $1,633.50 for your trip, including the cost of round-trip transportation to and from New Orleans. The deduction for your non-entertainment-related meals is subject to the 50% limit on meals mentioned earlier.

If your trip was primarily for personal reasons, such as a vacation, the entire cost of the trip is a nondeductible personal expense. However, you can deduct any expenses you have while at your destination that are directly related to your business.

A trip to a resort or on a cruise ship may be a vacation even if the promoter advertises that it is primarily for business. The scheduling of incidental business activities during a trip, such as viewing videotapes or attending lectures dealing with general subjects, won’t change what is really a vacation into a business trip.

Part of Trip Outside the United States

If part of your trip is outside the United States, use the rules described later in this chapter under Travel Outside the United States for that part of the trip. For the part of your trip that is inside the United States, use the rules for travel in the United States. Travel outside the United States doesn’t include travel from one point in the United States to another point in the United States. The following discussion can help you determine whether your trip was entirely within the United States.

If you travel by public transportation, any place in the United States where that vehicle makes a scheduled stop is a point in the United States. Once the vehicle leaves the last scheduled stop in the United States on its way to a point outside the United States, you apply the rules under Travel Outside the United States , later.

You fly from New York to Puerto Rico with a scheduled stop in Miami. Puerto Rico isn’t considered part of the United States for purposes of travel. You return to New York nonstop. The flight from New York to Miami is in the United States, so only the flight from Miami to Puerto Rico is outside the United States. Because there are no scheduled stops between Puerto Rico and New York, all of the return trip is outside the United States.

Travel by private car in the United States is travel between points in the United States, even though you are on your way to a destination outside the United States.

You travel by car from Denver to Mexico City and return. Your travel from Denver to the border and from the border back to Denver is travel in the United States, and the rules in this section apply. The rules below under Travel Outside the United States apply to your trip from the border to Mexico City and back to the border.

Travel Outside the United States

If any part of your business travel is outside the United States, some of your deductions for the cost of getting to and from your destination may be limited. For this purpose, the United States includes the 50 states and the District of Columbia.

How much of your travel expenses you can deduct depends in part upon how much of your trip outside the United States was business related.

Travel Entirely for Business or Considered Entirely for Business

You can deduct all your travel expenses of getting to and from your business destination if your trip is entirely for business or considered entirely for business.

If you travel outside the United States and you spend the entire time on business activities, you can deduct all of your travel expenses.

Even if you didn’t spend your entire time on business activities, your trip is considered entirely for business if you meet at least one of the following four exceptions.

Your trip is considered entirely for business if you didn’t have substantial control over arranging the trip. The fact that you control the timing of your trip doesn’t, by itself, mean that you have substantial control over arranging your trip.

You don’t have substantial control over your trip if you:

Are an employee who was reimbursed or paid a travel expense allowance, and

Aren’t related to your employer, or

Aren’t a managing executive.

“Related to your employer” is defined later in chapter 6 under Per Diem and Car Allowances .

A “managing executive” is an employee who has the authority and responsibility, without being subject to the veto of another, to decide on the need for the business travel.

A self-employed person generally has substantial control over arranging business trips.

Your trip is considered entirely for business if you were outside the United States for a week or less, combining business and nonbusiness activities. One week means 7 consecutive days. In counting the days, don’t count the day you leave the United States, but do count the day you return to the United States.

You traveled to Brussels primarily for business. You left Denver on Tuesday and flew to New York. On Wednesday, you flew from New York to Brussels, arriving the next morning. On Thursday and Friday, you had business discussions, and from Saturday until Tuesday, you were sightseeing. You flew back to New York, arriving Wednesday afternoon. On Thursday, you flew back to Denver.

Although you were away from your home in Denver for more than a week, you weren’t outside the United States for more than a week. This is because the day you depart doesn’t count as a day outside the United States.

You can deduct your cost of the round-trip flight between Denver and Brussels. You can also deduct the cost of your stay in Brussels for Thursday and Friday while you conducted business. However, you can’t deduct the cost of your stay in Brussels from Saturday through Tuesday because those days were spent on nonbusiness activities.

Your trip is considered entirely for business if:

You were outside the United States for more than a week, and

You spent less than 25% of the total time you were outside the United States on nonbusiness activities.

You flew from Seattle to Tokyo, where you spent 14 days on business and 5 days on personal matters. You then flew back to Seattle. You spent 1 day flying in each direction.

Because only 5 / 21 (less than 25%) of your total time abroad was for nonbusiness activities, you can deduct as travel expenses what it would have cost you to make the trip if you hadn’t engaged in any nonbusiness activity. The amount you can deduct is the cost of the round-trip plane fare and 16 days of non-entertainment-related meals (subject to the 50% Limit ), lodging, and other related expenses.

Your trip is considered entirely for business if you can establish that a personal vacation wasn’t a major consideration, even if you have substantial control over arranging the trip.

Travel Primarily for Business

If you travel outside the United States primarily for business but spend some of your time on other activities, you generally can’t deduct all of your travel expenses. You can only deduct the business portion of your cost of getting to and from your destination. You must allocate the costs between your business and other activities to determine your deductible amount. See Travel allocation rules , later.

If your trip outside the United States was primarily for business, you must allocate your travel time on a day-to-day basis between business days and nonbusiness days. The days you depart from and return to the United States are both counted as days outside the United States.

To figure the deductible amount of your round-trip travel expenses, use the following fraction. The numerator (top number) is the total number of business days outside the United States. The denominator (bottom number) is the total number of business and nonbusiness days of travel.

Your business days include transportation days, days your presence was required, days you spent on business, and certain weekends and holidays.

Count as a business day any day you spend traveling to or from a business destination. However, if because of a nonbusiness activity you don’t travel by a direct route, your business days are the days it would take you to travel a reasonably direct route to your business destination. Extra days for side trips or nonbusiness activities can’t be counted as business days.

Count as a business day any day your presence is required at a particular place for a specific business purpose. Count it as a business day even if you spend most of the day on nonbusiness activities.

If your principal activity during working hours is the pursuit of your trade or business, count the day as a business day. Also, count as a business day any day you are prevented from working because of circumstances beyond your control.

Count weekends, holidays, and other necessary standby days as business days if they fall between business days. But if they follow your business meetings or activity and you remain at your business destination for nonbusiness or personal reasons, don’t count them as business days.

Your tax home is New York City. You travel to Quebec, where you have a business meeting on Friday. You have another meeting on the following Monday. Because your presence was required on both Friday and Monday, they are business days. Because the weekend is between business days, Saturday and Sunday are counted as business days. This is true even though you use the weekend for sightseeing, visiting friends, or other nonbusiness activity.

If, in Example 1 , you had no business in Quebec after Friday, but stayed until Monday before starting home, Saturday and Sunday would be nonbusiness days.

If you stopped for a vacation or other nonbusiness activity either on the way from the United States to your business destination, or on the way back to the United States from your business destination, you must allocate part of your travel expenses to the nonbusiness activity.

The part you must allocate is the amount it would have cost you to travel between the point where travel outside the United States begins and your nonbusiness destination and a return to the point where travel outside the United States ends.

You determine the nonbusiness portion of that expense by multiplying it by a fraction. The numerator (top number) of the fraction is the number of nonbusiness days during your travel outside the United States, and the denominator (bottom number) is the total number of days you spend outside the United States.

You live in New York. On May 4, you flew to Paris to attend a business conference that began on May 5. The conference ended at noon on May 14. That evening, you flew to Dublin where you visited with friends until the afternoon of May 21, when you flew directly home to New York. The primary purpose for the trip was to attend the conference.

If you hadn’t stopped in Dublin, you would have arrived home the evening of May 14. You don’t meet any of the exceptions that would allow you to consider your travel entirely for business. May 4 through May 14 (11 days) are business days and May 15 through May 21 (7 days) are nonbusiness days.

You can deduct the cost of your non-entertainment-related meals (subject to the 50% Limit ), lodging, and other business-related travel expenses while in Paris.

You can’t deduct your expenses while in Dublin. You also can’t deduct 7 / 18 of what it would have cost you to travel round trip between New York and Dublin.

You paid $750 to fly from New York to Paris, $400 to fly from Paris to Dublin, and $700 to fly from Dublin back to New York. Round-trip airfare from New York to Dublin would have been $1,250.

You figure the deductible part of your air travel expenses by subtracting 7 / 18 of the round-trip airfare and other expenses you would have had in traveling directly between New York and Dublin ($1,250 × 7 / 18 = $486) from your total expenses in traveling from New York to Paris to Dublin and back to New York ($750 + $400 + $700 = $1,850).

Your deductible air travel expense is $1,364 ($1,850 − $486).

If you had a vacation or other nonbusiness activity at, near, or beyond your business destination, you must allocate part of your travel expenses to the nonbusiness activity.

The part you must allocate is the amount it would have cost you to travel between the point where travel outside the United States begins and your business destination and a return to the point where travel outside the United States ends.

None of your travel expenses for nonbusiness activities at, near, or beyond your business destination are deductible.

Assume that the dates are the same as in the previous example but that instead of going to Dublin for your vacation, you fly to Venice, Italy, for a vacation.

You can’t deduct any part of the cost of your trip from Paris to Venice and return to Paris. In addition, you can’t deduct 7 / 18 of the airfare and other expenses from New York to Paris and back to New York.

You can deduct 11 / 18 of the round-trip plane fare and other travel expenses from New York to Paris, plus your non-entertainment-related meals (subject to the 50% Limit ), lodging, and any other business expenses you had in Paris. (Assume these expenses total $4,939.) If the round-trip plane fare and other travel-related expenses (such as food during the trip) are $1,750, you can deduct travel costs of $1,069 ( 11 / 18 × $1,750), plus the full $4,939 for the expenses you had in Paris.

You can use another method of counting business days if you establish that it more clearly reflects the time spent on other than business activities outside the United States.

If you travel outside the United States primarily for vacation or for investment purposes, the entire cost of the trip is a nondeductible personal expense. However, if you spend some time attending brief professional seminars or a continuing education program, you can deduct your registration fees and other expenses you have that are directly related to your business.

The university from which you graduated has a continuing education program for members of its alumni association. This program consists of trips to various foreign countries where academic exercises and conferences are set up to acquaint individuals in most occupations with selected facilities in several regions of the world. However, none of the conferences are directed toward specific occupations or professions. It is up to each participant to seek out specialists and organizational settings appropriate to their occupational interests.

Three-hour sessions are held each day over a 5-day period at each of the selected overseas facilities where participants can meet with individual practitioners. These sessions are composed of a variety of activities including workshops, mini-lectures, roleplaying, skill development, and exercises. Professional conference directors schedule and conduct the sessions. Participants can choose those sessions they wish to attend.

You can participate in this program because you are a member of the alumni association. You and your family take one of the trips. You spend about 2 hours at each of the planned sessions. The rest of the time you go touring and sightseeing with your family. The trip lasts less than 1 week.

Your travel expenses for the trip aren’t deductible since the trip was primarily a vacation. However, registration fees and any other incidental expenses you have for the five planned sessions you attended that are directly related and beneficial to your business are deductible business expenses. These expenses should be specifically stated in your records to ensure proper allocation of your deductible business expenses.

Luxury Water Travel

If you travel by ocean liner, cruise ship, or other form of luxury water transportation for business purposes, there is a daily limit on the amount you can deduct. The limit is twice the highest federal per diem rate allowable at the time of your travel. (Generally, the federal per diem is the amount paid to federal government employees for daily living expenses when they travel away from home within the United States for business purposes.)

The highest federal per diem rate allowed and the daily limit for luxury water travel in 2023 are shown in the following table.

You are a travel agent and traveled by ocean liner from New York to London, England, on business in May. Your expense for the 6-day cruise was $6,200. Your deduction for the cruise can’t exceed $4,776 (6 days × $796 daily limit).

If your expenses for luxury water travel include separately stated amounts for meals or entertainment, those amounts are subject to the 50% limit on non-entertainment-related meals and entertainment before you apply the daily limit. For a discussion of the 50% Limit , see chapter 2.

In the previous example, your luxury water travel had a total cost of $6,200. Of that amount, $3,700 was separately stated as non-entertainment-related meals and $1,000 was separately stated as entertainment. Considering that you are self-employed, you aren’t reimbursed for any of your travel expenses. You figure your deductible travel expenses as follows.

If your meal or entertainment charges aren’t separately stated or aren’t clearly identifiable, you don’t have to allocate any portion of the total charge to meals or entertainment.

The daily limit on luxury water travel (discussed earlier) doesn’t apply to expenses you have to attend a convention, seminar, or meeting on board a cruise ship. See Cruise Ships , later, under Conventions.

Conventions

You can deduct your travel expenses when you attend a convention if you can show that your attendance benefits your trade or business. You can’t deduct the travel expenses for your family.

If the convention is for investment, political, social, or other purposes unrelated to your trade or business, you can’t deduct the expenses.

The convention agenda or program generally shows the purpose of the convention. You can show your attendance at the convention benefits your trade or business by comparing the agenda with the official duties and responsibilities of your position. The agenda doesn’t have to deal specifically with your official duties and responsibilities; it will be enough if the agenda is so related to your position that it shows your attendance was for business purposes.

Conventions Held Outside the North American Area

You can’t deduct expenses for attending a convention, seminar, or similar meeting held outside the North American area unless:

The meeting is directly related to the active conduct of your trade or business, and

It is as reasonable to hold the meeting outside the North American area as within the North American area. See Reasonableness test , later.

The North American area includes the following locations.

The following factors are taken into account to determine if it was as reasonable to hold the meeting outside the North American area as within the North American area.

The purpose of the meeting and the activities taking place at the meeting.

The purposes and activities of the sponsoring organizations or groups.

The homes of the active members of the sponsoring organizations and the places at which other meetings of the sponsoring organizations or groups have been or will be held.

Other relevant factors you may present.

You can deduct up to $2,000 per year of your expenses of attending conventions, seminars, or similar meetings held on cruise ships. All ships that sail are considered cruise ships.

You can deduct these expenses only if all of the following requirements are met.

The convention, seminar, or meeting is directly related to the active conduct of your trade or business.

The cruise ship is a vessel registered in the United States.

All of the cruise ship's ports of call are in the United States or in territories of the United States.

You attach to your return a written statement signed by you that includes information about:

The total days of the trip (not including the days of transportation to and from the cruise ship port),

The number of hours each day that you devoted to scheduled business activities, and

A program of the scheduled business activities of the meeting.

You attach to your return a written statement signed by an officer of the organization or group sponsoring the meeting that includes:

A schedule of the business activities of each day of the meeting, and

The number of hours you attended the scheduled business activities.

2. Meals and Entertainment

You can no longer take a deduction for any expense related to activities generally considered entertainment, amusement, or recreation. You can continue to deduct 50% of the cost of business meals if you (or your employee) are present and the food or beverages aren't considered lavish or extravagant.

Entertainment

Entertainment—defined.

Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation. Examples include entertaining guests at nightclubs; at social, athletic, and sporting clubs; at theaters; at sporting events; on yachts; or on hunting, fishing, vacation, and similar trips. Entertainment may also include meeting personal, living, or family needs of individuals, such as providing meals, a hotel suite, or a car to customers or their families.

Your kind of business may determine if a particular activity is considered entertainment. For example, if you are a dress designer and have a fashion show to introduce your new designs to store buyers, the show generally isn’t considered entertainment. This is because fashion shows are typical in your business. But, if you are an appliance distributor and hold a fashion show for the spouses of your retailers, the show is generally considered entertainment.

If you have one expense that includes the costs of entertainment and other services (such as lodging or transportation), you must allocate that expense between the cost of entertainment and the cost of other services. You must have a reasonable basis for making this allocation. For example, you must allocate your expenses if a hotel includes entertainment in its lounge on the same bill with your room charge.

In general, entertainment expenses are nondeductible. However, there are a few exceptions to the general rule, including:

Entertainment treated as compensation on your originally filed tax returns (and treated as wages to your employees);

Recreational expenses for employees such as a holiday party or a summer picnic;

Expenses related to attending business meetings or conventions of certain exempt organizations such as business leagues, chambers of commerce, professional associations, etc.; and

Entertainment sold to customers. For example, if you run a nightclub, your expenses for the entertainment you furnish to your customers, such as a floor show, aren’t subject to the nondeductible rules.

Examples of Nondeductible Entertainment

Generally, you can't deduct any expense for an entertainment event. This includes expenses for entertaining guests at nightclubs; at social, athletic, and sporting clubs; at theaters; at sporting events; on yachts; or on hunting, fishing, vacation, and similar trips.

Generally, you can’t deduct any expense for the use of an entertainment facility. This includes expenses for depreciation and operating costs such as rent, utilities, maintenance, and protection.

An entertainment facility is any property you own, rent, or use for entertainment. Examples include a yacht, hunting lodge, fishing camp, swimming pool, tennis court, bowling alley, car, airplane, apartment, hotel suite, or home in a vacation resort.

You can’t deduct dues (including initiation fees) for membership in any club organized for business, pleasure, recreation, or other social purposes.

This rule applies to any membership organization if one of its principal purposes is either:

To conduct entertainment activities for members or their guests; or

To provide members or their guests with access to entertainment facilities, discussed later.

The purposes and activities of a club, not its name, will determine whether or not you can deduct the dues. You can’t deduct dues paid to:

Country clubs,

Golf and athletic clubs,

Airline clubs,

Hotel clubs, and

Clubs operated to provide meals under circumstances generally considered to be conducive to business discussions.

Any item that might be considered either a gift or entertainment will generally be considered entertainment. However, if you give a customer packaged food or beverages that you intend the customer to use at a later date, treat it as a gift.

As discussed above, entertainment expenses are generally nondeductible. However, you may continue to deduct 50% of the cost of business meals if you (or an employee) is present and the food or beverages are not considered lavish or extravagant. The meals may be provided to a current or potential business customer, client, consultant, or similar business contact.

Food and beverages that are provided during entertainment events are not considered entertainment if purchased separately from the entertainment, or if the cost of the food and beverages is stated separately from the cost of the entertainment on one or more bills, invoices, or receipts. However, the entertainment disallowance rule may not be circumvented through inflating the amount charged for food and beverages.

Any allowed expense must be ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your business. An expense doesn't have to be required to be considered necessary. Expenses must not be lavish or extravagant. An expense isn't considered lavish or extravagant if it is reasonable based on the facts and circumstances.

For each example, assume that the food and beverage expenses are ordinary and necessary expenses under section 162(a) paid or incurred during the tax year in carrying on a trade or business and are not lavish or extravagant under the circumstances. Also assume that the taxpayer and the business contact are not engaged in a trade or business that has any relation to the entertainment activity.

Taxpayer A invites B, a business contact, to a baseball game. A purchases tickets for A and B to attend the game. While at the game, A buys hot dogs and drinks for A and B. The baseball game is entertainment as defined in Regulations section 1.274-11(b)(1)(i) and, thus, the cost of the game tickets is an entertainment expense and is not deductible by A. The cost of the hot dogs and drinks, which are purchased separately from the game tickets, is not an entertainment expense and is not subject to the section 274(a)(1) disallowance. Therefore, A may deduct 50% of the expenses associated with the hot dogs and drinks purchased at the game.

Taxpayer C invites D, a business contact, to a basketball game. C purchases tickets for C and D to attend the game in a suite, where they have access to food and beverages. The cost of the basketball game tickets, as stated on the invoice, includes the food and beverages. The basketball game is entertainment as defined in Regulations section 1.274-11(b)(1)(i) and, thus, the cost of the game tickets is an entertainment expense and is not deductible by C. The cost of the food and beverages, which are not purchased separately from the game tickets, is not stated separately on the invoice. Thus, the cost of the food and beverages is also an entertainment expense that is subject to the section 274(a)(1) disallowance. Therefore, C may not deduct any of the expenses associated with the basketball game.

Assume the same facts as in Example 2 , except that the invoice for the basketball game tickets separately states the cost of the food and beverages. As in Example 2 , the basketball game is entertainment as defined in Regulations section 1.274-2(b)(1)(i) and, thus, the cost of the game tickets, other than the cost of the food and beverages, is an entertainment expense and is not deductible by C. However, the cost of the food and beverages, which is stated separately on the invoice for the game tickets, is not an entertainment expense and is not subject to the section 274(a)(1) disallowance. Therefore, C may deduct 50% of the expenses associated with the food and beverages provided at the game.

In general, you can deduct only 50% of your business-related meal expenses, unless an exception applies. (If you are subject to the Department of Transportation's “hours of service” limits, you can deduct 80% of your business-related meal expenses. See Individuals subject to hours of service limits , later.)

The 50% limit applies to employees or their employers, and to self-employed persons (including independent contractors) or their clients, depending on whether the expenses are reimbursed.

Examples of meals might include:

Meals while traveling away from home (whether eating alone or with others) on business, or

Meal at a business convention or business league meeting.

Figure A. Does the 50% Limit Apply to Your Expenses?

There are exceptions to these rules. See Exceptions to the 50% Limit for Meals , later.

Figure A. Does the 50% limit apply to Your Expenses?TAs for Figure A are: Notice 87-23; Form 2106 instructions

Summary: This is a flowchart used to determine if employees and self-employed persons need to put a 50% limit on their business expense deductions.

This is the starting of the flowchart.

Decision (1)

Were your meal and entertainment expenses reimbursed? (Count only reimbursements your employer didn’t include in box 1 of your Form W-2. If self-employed, count only reimbursements from clients or customers that aren’t included on Form 1099-MISC, Miscellaneous Income.)

Decision (2)

If an employee, did you adequately account to your employer under an accountable plan? If self-employed, did you provide the payer with adequate records? (See Chapter 6.)

Decision (3)

Did your expenses exceed the reimbursement?

Decision (4)

Process (a)

Your meal and entertainment expenses are NOT subject to the limitations. However, since the reimbursement wasn’t treated as wages or as other taxable income, you can’t deduct the expenses.

Process (b)

Your nonentertainment meal expenses ARE subject to the 50% limit. Your entertainment expenses are nondeductible.

This is the ending of the flowchart.

Please click here for the text description of the image.

Taxes and tips relating to a business meal are included as a cost of the meal and are subject to the 50% limit. However, the cost of transportation to and from the meal is not treated as part of the cost and would not be subject to the limit.

The 50% limit on meal expenses applies if the expense is otherwise deductible and isn’t covered by one of the exceptions discussed later. Figure A can help you determine if the 50% limit applies to you.

The 50% limit also applies to certain meal expenses that aren’t business related. It applies to meal expenses you have for the production of income, including rental or royalty income. It also applies to the cost of meals included in deductible educational expenses.

The 50% limit will apply after determining the amount that would otherwise qualify for a deduction. You first have to determine the amount of meal expenses that would be deductible under the other rules discussed in this publication.

If a group of business acquaintances takes turns picking up each others' meal checks primarily for personal reasons, without regard to whether any business purposes are served, no member of the group can deduct any part of the expense.

You spend $200 (including tax and tip) for a business meal. If $110 of that amount isn’t allowable because it is lavish and extravagant, the remaining $90 is subject to the 50% limit. Your deduction can’t be more than $45 (50% (0.50) × $90).

You purchase two tickets to a concert for $200 for you and your client. Your deduction is zero because no deduction is allowed for entertainment expenses.

Exception to the 50% Limit for Meals

Your meal expense isn’t subject to the 50% limit if the expense meets one of the following exceptions.

In general, expenses for goods, services, and facilities, to the extent the expenses are treated by the taxpayer, with respect to entertainment, amusement, or recreation, as compensation to an employee and as wages to the employee for tax purposes.

If you are an employee, you aren’t subject to the 50% limit on expenses for which your employer reimburses you under an accountable plan. Accountable plans are discussed in chapter 6.

If you are self-employed, your deductible meal expenses aren’t subject to the 50% limit if all of the following requirements are met.

You have these expenses as an independent contractor.

Your customer or client reimburses you or gives you an allowance for these expenses in connection with services you perform.

You provide adequate records of these expenses to your customer or client. (See chapter 5 .)

In this case, your client or customer is subject to the 50% limit on the expenses.

You are a self-employed attorney who adequately accounts for meal expenses to a client who reimburses you for these expenses. You aren’t subject to the limitation on meal expenses. If the client can deduct the expenses, the client is subject to the 50% limit.

If you (as an independent contractor) have expenses for meals related to providing services for a client but don’t adequately account for and seek reimbursement from the client for those expenses, you are subject to the 50% limit on non-entertainment-related meals and the entertainment-related meal expenses are nondeductible to you.

You aren't subject to the 50% limit for expenses for recreational, social, or similar activities (including facilities) such as a holiday party or a summer picnic.

You aren’t subject to the 50% limit if you provide meals to the general public as a means of advertising or promoting goodwill in the community. For example, neither the expense of sponsoring a television or radio show nor the expense of distributing free food and beverages to the general public is subject to the 50% limit.

You aren’t subject to the 50% limit if you actually sell meals to the public. For example, if you run a restaurant, your expense for the food you furnish to your customers isn’t subject to the 50% limit.

You can deduct a higher percentage of your meal expenses while traveling away from your tax home if the meals take place during or incident to any period subject to the Department of Transportation's “hours of service” limits. The percentage is 80%.

Individuals subject to the Department of Transportation's “hours of service” limits include the following persons.

Certain air transportation workers (such as pilots, crew, dispatchers, mechanics, and control tower operators) who are under Federal Aviation Administration regulations.

Interstate truck operators and bus drivers who are under Department of Transportation regulations.

Certain railroad employees (such as engineers, conductors, train crews, dispatchers, and control operations personnel) who are under Federal Railroad Administration regulations.

Certain merchant mariners who are under Coast Guard regulations.

If you give gifts in the course of your trade or business, you may be able to deduct all or part of the cost. This chapter explains the limits and rules for deducting the costs of gifts.

You can deduct no more than $25 for business gifts you give directly or indirectly to each person during your tax year. A gift to a company that is intended for the eventual personal use or benefit of a particular person or a limited class of people will be considered an indirect gift to that particular person or to the individuals within that class of people who receive the gift.

If you give a gift to a member of a customer's family, the gift is generally considered to be an indirect gift to the customer. This rule doesn’t apply if you have a bona fide, independent business connection with that family member and the gift isn’t intended for the customer's eventual use.

If you and your spouse both give gifts, both of you are treated as one taxpayer. It doesn’t matter whether you have separate businesses, are separately employed, or whether each of you has an independent connection with the recipient. If a partnership gives gifts, the partnership and the partners are treated as one taxpayer.

You sell products to a local company. You and your spouse gave the local company three gourmet gift baskets to thank them for their business. You and your spouse paid $80 for each gift basket, or $240 total. Three of the local company's executives took the gift baskets home for their families' use. You and your spouse have no independent business relationship with any of the executives' other family members. You and your spouse can deduct a total of $75 ($25 limit × 3) for the gift baskets.

Incidental costs, such as engraving on jewelry, or packaging, insuring, and mailing, are generally not included in determining the cost of a gift for purposes of the $25 limit.

A cost is incidental only if it doesn’t add substantial value to the gift. For example, the cost of gift wrapping is an incidental cost. However, the purchase of an ornamental basket for packaging fruit isn’t an incidental cost if the value of the basket is substantial compared to the value of the fruit.

The following items aren’t considered gifts for purposes of the $25 limit.

An item that costs $4 or less and:

Has your name clearly and permanently imprinted on the gift, and

Is one of a number of identical items you widely distribute. Examples include pens, desk sets, and plastic bags and cases.

Signs, display racks, or other promotional material to be used on the business premises of the recipient.

Figure B. When Are Transportation Expenses Deductible?

Most employees and self-employed persons can use this chart. (Don’t use this chart if your home is your principal place of business. See Office in the home , later.)

Figure B. When Are Local Transportation Expenses Deductible?TAs for Figure B are: Reg 1.162-1(a); RR 55–109; RR 94–47

Summary: This illustration depicts the rules used to determine if transportation expenses are deductible.

The image then lists definitions for words used in the graphic:

Any item that might be considered either a gift or entertainment will generally be considered entertainment. However, if you give a customer packaged food or beverages you intend the customer to use at a later date, treat it as a gift.

4. Transportation

This chapter discusses expenses you can deduct for business transportation when you aren’t traveling away from home , as defined in chapter 1. These expenses include the cost of transportation by air, rail, bus, taxi, etc., and the cost of driving and maintaining your car.

Transportation expenses include the ordinary and necessary costs of all of the following.

Getting from one workplace to another in the course of your business or profession when you are traveling within the city or general area that is your tax home. Tax home is defined in chapter 1.

Visiting clients or customers.

Going to a business meeting away from your regular workplace.

Getting from your home to a temporary workplace when you have one or more regular places of work. These temporary workplaces can be either within the area of your tax home or outside that area.

Daily transportation expenses you incur while traveling from home to one or more regular places of business are generally nondeductible commuting expenses. However, there may be exceptions to this general rule. You can deduct daily transportation expenses incurred going between your residence and a temporary work station outside the metropolitan area where you live. Also, daily transportation expenses can be deducted if (1) you have one or more regular work locations away from your residence; or (2) your residence is your principal place of business and you incur expenses going between the residence and another work location in the same trade or business, regardless of whether the work is temporary or permanent and regardless of the distance.

Illustration of transportation expenses.

Figure B above illustrates the rules that apply for deducting transportation expenses when you have a regular or main job away from your home. You may want to refer to it when deciding whether you can deduct your transportation expenses.

If you have one or more regular work locations away from your home and you commute to a temporary work location in the same trade or business, you can deduct the expenses of the daily round-trip transportation between your home and the temporary location, regardless of distance.

If your employment at a work location is realistically expected to last (and does in fact last) for 1 year or less, the employment is temporary unless there are facts and circumstances that would indicate otherwise.

If your employment at a work location is realistically expected to last for more than 1 year or if there is no realistic expectation that the employment will last for 1 year or less, the employment isn’t temporary, regardless of whether it actually lasts for more than 1 year.

If employment at a work location initially is realistically expected to last for 1 year or less, but at some later date the employment is realistically expected to last more than 1 year, that employment will be treated as temporary (unless there are facts and circumstances that would indicate otherwise) until your expectation changes. It won’t be treated as temporary after the date you determine it will last more than 1 year.

If the temporary work location is beyond the general area of your regular place of work and you stay overnight, you are traveling away from home. You may have deductible travel expenses, as discussed in chapter 1 .

If you have no regular place of work but ordinarily work in the metropolitan area where you live, you can deduct daily transportation costs between home and a temporary work site outside that metropolitan area.

Generally, a metropolitan area includes the area within the city limits and the suburbs that are considered part of that metropolitan area.

You can’t deduct daily transportation costs between your home and temporary work sites within your metropolitan area. These are nondeductible commuting expenses.

If you work at two places in 1 day, whether or not for the same employer, you can deduct the expense of getting from one workplace to the other. However, if for some personal reason you don’t go directly from one location to the other, you can’t deduct more than the amount it would have cost you to go directly from the first location to the second.

Transportation expenses you have in going between home and a part-time job on a day off from your main job are commuting expenses. You can’t deduct them.

A meeting of an Armed Forces reserve unit is a second place of business if the meeting is held on a day on which you work at your regular job. You can deduct the expense of getting from one workplace to the other as just discussed under Two places of work .

You usually can’t deduct the expense if the reserve meeting is held on a day on which you don’t work at your regular job. In this case, your transportation is generally a nondeductible commuting expense. However, you can deduct your transportation expenses if the location of the meeting is temporary and you have one or more regular places of work.

If you ordinarily work in a particular metropolitan area but not at any specific location and the reserve meeting is held at a temporary location outside that metropolitan area, you can deduct your transportation expenses.

If you travel away from home overnight to attend a guard or reserve meeting, you can deduct your travel expenses. These expenses are discussed in chapter 1 .

If you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you may be able to deduct some of your reserve-related travel costs as an adjustment to gross income rather than as an itemized deduction. For more information, see Armed Forces Reservists Traveling More Than 100 Miles From Home under Special Rules in chapter 6.

You can’t deduct the costs of taking a bus, trolley, subway, or taxi, or of driving a car between your home and your main or regular place of work. These costs are personal commuting expenses. You can’t deduct commuting expenses no matter how far your home is from your regular place of work. You can’t deduct commuting expenses even if you work during the commuting trip.

You sometimes use your cell phone to make business calls while commuting to and from work. Sometimes business associates ride with you to and from work, and you have a business discussion in the car. These activities don’t change the trip from personal to business. You can’t deduct your commuting expenses.

Fees you pay to park your car at your place of business are nondeductible commuting expenses. You can, however, deduct business-related parking fees when visiting a customer or client.

Putting display material that advertises your business on your car doesn’t change the use of your car from personal use to business use. If you use this car for commuting or other personal uses, you still can’t deduct your expenses for those uses.

You can’t deduct the cost of using your car in a nonprofit car pool. Don’t include payments you receive from the passengers in your income. These payments are considered reimbursements of your expenses. However, if you operate a car pool for a profit, you must include payments from passengers in your income. You can then deduct your car expenses (using the rules in this publication).

Hauling tools or instruments in your car while commuting to and from work doesn’t make your car expenses deductible. However, you can deduct any additional costs you have for hauling tools or instruments (such as for renting a trailer you tow with your car).

If you get your work assignments at a union hall and then go to your place of work, the costs of getting from the union hall to your place of work are nondeductible commuting expenses. Although you need the union to get your work assignments, you are employed where you work, not where the union hall is located.

If you have an office in your home that qualifies as a principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business. (See Pub. 587, Business Use of Your Home, for information on determining if your home office qualifies as a principal place of business.)

The following examples show when you can deduct transportation expenses based on the location of your work and your home.

You regularly work in an office in the city where you live. Your employer sends you to a 1-week training session at a different office in the same city. You travel directly from your home to the training location and return each day. You can deduct the cost of your daily round-trip transportation between your home and the training location.

Your principal place of business is in your home. You can deduct the cost of round-trip transportation between your qualifying home office and your client's or customer's place of business.

You have no regular office, and you don’t have an office in your home. In this case, the location of your first business contact inside the metropolitan area is considered your office. Transportation expenses between your home and this first contact are nondeductible commuting expenses. Transportation expenses between your last business contact and your home are also nondeductible commuting expenses. While you can’t deduct the costs of these trips, you can deduct the costs of going from one client or customer to another.

Car Expenses

If you use your car for business purposes, you may be able to deduct car expenses. You can generally use one of the two following methods to figure your deductible expenses.

Actual car expenses.

The cost of using your car as an employee, whether measured using actual expenses or the standard mileage rate, will no longer be allowed to be claimed as an unreimbursed employee travel expense as a miscellaneous itemized deduction due to the suspension of miscellaneous itemized deductions that are subject to the 2% floor under section 67(a). The suspension applies to tax years beginning after December 2017 and before January 2026. Deductions for expenses that are deductible in determining adjusted gross income are not suspended. For example, Armed Forces reservists, qualified performing artists, and fee-basis state or local government officials are allowed to deduct unreimbursed employee travel expenses as an adjustment to total income on Schedule 1 (Form 1040), line 12.

If you use actual expenses to figure your deduction for a car you lease, there are rules that affect the amount of your lease payments you can deduct. See Leasing a Car , later.

In this publication, “car” includes a van, pickup, or panel truck. For the definition of “car” for depreciation purposes, see Car defined under Actual Car Expenses , later.

Standard Mileage Rate

For 2023, the standard mileage rate for the cost of operating your car for business use is 65.5 cents ($0.655) per mile.

You can generally use the standard mileage rate whether or not you are reimbursed and whether or not any reimbursement is more or less than the amount figured using the standard mileage rate. See chapter 6 for more information on reimbursements .

If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Then, in later years, you can choose to use either the standard mileage rate or actual expenses.

If you want to use the standard mileage rate for a car you lease, you must use it for the entire lease period. For leases that began on or before December 31, 1997, the standard mileage rate must be used for the entire portion of the lease period (including renewals) that is after 1997.

You must make the choice to use the standard mileage rate by the due date (including extensions) of your return. You can’t revoke the choice. However, in later years, you can switch from the standard mileage rate to the actual expenses method. If you change to the actual expenses method in a later year, but before your car is fully depreciated, you have to estimate the remaining useful life of the car and use straight line depreciation for the car’s remaining estimated useful life, subject to depreciation limits (discussed later).

For more information about depreciation included in the standard mileage rate, see Exception under Methods of depreciation , later.

You can’t use the standard mileage rate if you:

Use five or more cars at the same time (such as in fleet operations);

Claimed a depreciation deduction for the car using any method other than straight line for the car’s estimated useful life;

Used the Modified Accelerated Cost Recovery System (MACRS) (as discussed later under Depreciation Deduction );

Claimed a section 179 deduction (discussed later) on the car;

Claimed the special depreciation allowance on the car; or

Claimed actual car expenses after 1997 for a car you leased.

You can elect to use the standard mileage rate if you used a car for hire (such as a taxi) unless the standard mileage rate is otherwise not allowed, as discussed above.

If you own or lease five or more cars that are used for business at the same time, you can’t use the standard mileage rate for the business use of any car. However, you may be able to deduct your actual expenses for operating each of the cars in your business. See Actual Car Expenses , later, for information on how to figure your deduction.

You aren’t using five or more cars for business at the same time if you alternate using (use at different times) the cars for business.

The following examples illustrate the rules for when you can and can’t use the standard mileage rate for five or more cars.

A salesperson owns three cars and two vans that they alternate using for calling on their customers. The salesperson can use the standard mileage rate for the business mileage of the three cars and the two vans because they don’t use them at the same time.

You and your employees use your four pickup trucks in your landscaping business. During the year, you traded in two of your old trucks for two newer ones. You can use the standard mileage rate for the business mileage of all six of the trucks you owned during the year.

You own a repair shop and an insurance business. You and your employees use your two pickup trucks and van for the repair shop. You alternate using your two cars for the insurance business. No one else uses the cars for business purposes. You can use the standard mileage rate for the business use of the pickup trucks, the van, and the cars because you never have more than four vehicles used for business at the same time.

You own a car and four vans that are used in your housecleaning business. Your employees use the vans, and you use the car to travel to various customers. You can’t use the standard mileage rate for the car or the vans. This is because all five vehicles are used in your business at the same time. You must use actual expenses for all vehicles.

If you are an employee, you can’t deduct any interest paid on a car loan. This applies even if you use the car 100% for business as an employee.

However, if you are self-employed and use your car in your business, you can deduct that part of the interest expense that represents your business use of the car. For example, if you use your car 60% for business, you can deduct 60% of the interest on Schedule C (Form 1040). You can’t deduct the part of the interest expense that represents your personal use of the car.

If you itemize your deductions on Schedule A (Form 1040), you can deduct on line 5c state and local personal property taxes on motor vehicles. You can take this deduction even if you use the standard mileage rate or if you don’t use the car for business.

If you are self-employed and use your car in your business, you can deduct the business part of state and local personal property taxes on motor vehicles on Schedule C (Form 1040), or Schedule F (Form 1040). If you itemize your deductions, you can include the remainder of your state and local personal property taxes on the car on Schedule A (Form 1040).

In addition to using the standard mileage rate, you can deduct any business-related parking fees and tolls. (Parking fees you pay to park your car at your place of work are nondeductible commuting expenses.)

If you sell, trade in, or otherwise dispose of your car, you may have a gain or loss on the transaction or an adjustment to the basis of your new car. See Disposition of a Car , later.

Actual Car Expenses

If you don’t use the standard mileage rate, you may be able to deduct your actual car expenses.

Actual car expenses include:

If you have fully depreciated a car that you still use in your business, you can continue to claim your other actual car expenses. Continue to keep records, as explained later in chapter 5 .

If you use your car for both business and personal purposes, you must divide your expenses between business and personal use. You can divide your expense based on the miles driven for each purpose.

You are a contractor and drive your car 20,000 miles during the year: 12,000 miles for business use and 8,000 miles for personal use. You can claim only 60% (12,000 ÷ 20,000) of the cost of operating your car as a business expense.

If you use a vehicle provided by your employer for business purposes, you can deduct your actual unreimbursed car expenses. You can’t use the standard mileage rate. See Vehicle Provided by Your Employer in chapter 6.

If you are an employee, you can’t deduct any interest paid on a car loan. This interest is treated as personal interest and isn’t deductible. If you are self-employed and use your car in that business, see Interest , earlier, under Standard Mileage Rate.

If you are an employee, you can deduct personal property taxes paid on your car if you itemize deductions. Enter the amount paid on Schedule A (Form 1040), line 5c.

Generally, sales taxes on your car are part of your car's basis and are recovered through depreciation, discussed later.

You can’t deduct fines you pay or collateral you forfeit for traffic violations.

If your car is damaged, destroyed, or stolen, you may be able to deduct part of the loss not covered by insurance. See Pub. 547, Casualties, Disasters, and Thefts, for information on deducting a loss on your car.

Generally, the cost of a car, plus sales tax and improvements, is a capital expense. Because the benefits last longer than 1 year, you generally can’t deduct a capital expense. However, you can recover this cost through the section 179 deduction (the deduction allowed by section 179 of the Internal Revenue Code), special depreciation allowance, and depreciation deductions. Depreciation allows you to recover the cost over more than 1 year by deducting part of it each year. The section 179 deduction , special depreciation allowance , and depreciation deductions are discussed later.

Generally, there are limits on these deductions. Special rules apply if you use your car 50% or less in your work or business.

You can claim a section 179 deduction and use a depreciation method other than straight line only if you don’t use the standard mileage rate to figure your business-related car expenses in the year you first place a car in service.

If, in the year you first place a car in service, you claim either a section 179 deduction or use a depreciation method other than straight line for its estimated useful life, you can’t use the standard mileage rate on that car in any future year.

For depreciation purposes, a car is any four-wheeled vehicle (including a truck or van) made primarily for use on public streets, roads, and highways. Its unloaded gross vehicle weight (for trucks and vans, gross vehicle weight) must not be more than 6,000 pounds. A car includes any part, component, or other item physically attached to it or usually included in the purchase price.

A car doesn’t include:

An ambulance, hearse, or combination ambulance-hearse used directly in a business;

A vehicle used directly in the business of transporting persons or property for pay or hire; or

A truck or van that is a qualified nonpersonal use vehicle.

These are vehicles that by their nature aren’t likely to be used more than a minimal amount for personal purposes. They include trucks and vans that have been specially modified so that they aren’t likely to be used more than a minimal amount for personal purposes, such as by installation of permanent shelving and painting the vehicle to display advertising or the company's name. Delivery trucks with seating only for the driver, or only for the driver plus a folding jump seat, are qualified nonpersonal use vehicles.

See Depreciation Deduction , later, for more information on how to depreciate your vehicle.

Section 179 Deduction

You can elect to recover all or part of the cost of a car that is qualifying section 179 property, up to a limit, by deducting it in the year you place the property in service. This is the section 179 deduction. If you elect the section 179 deduction, you must reduce your depreciable basis in the car by the amount of the section 179 deduction.

You can claim the section 179 deduction only in the year you place the car in service. For this purpose, a car is placed in service when it is ready and available for a specifically assigned use in a trade or business. Even if you aren’t using the property, it is in service when it is ready and available for its specifically assigned use.

A car first used for personal purposes can’t qualify for the deduction in a later year when its use changes to business.

In 2022, you bought a new car and used it for personal purposes. In 2023, you began to use it for business. Changing its use to business use doesn’t qualify the cost of your car for a section 179 deduction in 2023. However, you can claim a depreciation deduction for the business use of the car starting in 2023. See Depreciation Deduction , later.

You must use the property more than 50% for business to claim any section 179 deduction. If you used the property more than 50% for business, multiply the cost of the property by the percentage of business use. The result is the cost of the property that can qualify for the section 179 deduction.

You purchased a new car in April 2023 for $24,500 and used it 60% for business. Based on your business usage, the total cost of your car that qualifies for the section 179 deduction is $14,700 ($24,500 cost × 60% (0.60) business use). But see Limit on total section 179, special depreciation allowance, and depreciation deduction , discussed later.

There are limits on:

The amount of the section 179 deduction;

The section 179 deduction for sport utility and certain other vehicles; and

The total amount of the section 179 deduction, special depreciation allowance, and depreciation deduction (discussed later ) you can claim for a qualified property.

For tax years beginning in 2023, the total amount you can elect to deduct under section 179 can’t be more than $1,160,000.

If the cost of your section 179 property placed in service in tax years beginning in 2023 is over $2,890,000, you must reduce the $1,160,000 dollar limit (but not below zero) by the amount of cost over $2,890,000. If the cost of your section 179 property placed in service during tax years beginning in 2023 is $4,050,000 or more, you can’t take a section 179 deduction.

The total amount you can deduct under section 179 each year after you apply the limits listed above cannot be more than the taxable income from the active conduct of any trade or business during the year.

If you are married and file a joint return, you and your spouse are treated as one taxpayer in determining any reduction to the dollar limit, regardless of which of you purchased the property or placed it in service.

If you and your spouse file separate returns, you are treated as one taxpayer for the dollar limit. You must allocate the dollar limit (after any reduction) between you.

For more information on the above section 179 deduction limits, see Pub. 946, How To Depreciate Property.

You cannot elect to deduct more than $28,900 of the cost of any heavy sport utility vehicle (SUV) and certain other vehicles placed in service during the tax years beginning in 2023. This rule applies to any four-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways that isn’t subject to any of the passenger automobile limits explained under Depreciation Limits , later, and that is rated at more than 6,000 pounds gross vehicle weight and not more than 14,000 pounds gross vehicle weight. However, the $28,900 limit doesn’t apply to any vehicle:

Designed to have a seating capacity of more than nine persons behind the driver's seat;

Equipped with a cargo area of at least 6 feet in interior length that is an open area or is designed for use as an open area but is enclosed by a cap and isn’t readily accessible directly from the passenger compartment; or

That has an integral enclosure, fully enclosing the driver compartment and load carrying device, doesn’t have seating rearward of the driver's seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield.

The first-year limit on the depreciation deduction, special depreciation allowance, and section 179 deduction for vehicles acquired before September 28, 2017, and placed in service during 2023, is $12,200. The first-year limit on depreciation, special depreciation allowance, and section 179 deduction for vehicles acquired after September 27, 2017, and placed in service during 2023 increases to $20,200. If you elect not to claim a special depreciation allowance for a vehicle placed in service in 2023, the amount increases to $12,200. The limit is reduced if your business use of the vehicle is less than 100%. See Depreciation Limits , later, for more information.

In the earlier example under More than 50% business use requirement , you had a car with a cost (for purposes of the section 179 deduction) of $14,700. However, based on your business usage of the car, the total of your section 179 deduction, special depreciation allowance, and depreciation deductions is limited to $12,120 ($20,200 limit x 60% (0.60) business use) because the car was acquired after September 27, 2017, and placed in service during 2023.

For purposes of the section 179 deduction, the cost of the car doesn’t include any amount figured by reference to any other property held by you at any time. For example, if you buy a car as a replacement for a car that was stolen or that was destroyed in a casualty loss, and you use section 1033 to determine the basis in your replacement vehicle, your cost for purposes of the section 179 deduction doesn’t include your adjusted basis in the relinquished car. In that case, your cost includes only the cash you paid.

The amount of the section 179 deduction reduces your basis in your car. If you choose the section 179 deduction, you must subtract the amount of the deduction from the cost of your car. The resulting amount is the basis in your car you use to figure your depreciation deduction.

If you want to take the section 179 deduction, you must make the election in the tax year you place the car in service for business or work.

Employees use Form 2106, Employee Business Expenses, to make the election and report the section 179 deduction. All others use Form 4562, Depreciation and Amortization, to make an election.

File the appropriate form with either of the following.

Your original tax return filed for the year the property was placed in service (whether or not you file it timely).

An amended return filed within the time prescribed by law. An election made on an amended return must specify the item of section 179 property to which the election applies and the part of the cost of each such item to be taken into account. The amended return must also include any resulting adjustments to taxable income.

An election (or any specification made in the election) to take a section 179 deduction for 2023 can only be revoked with the Commissioner's approval.

To be eligible to claim the section 179 deduction, you must use your car more than 50% for business or work in the year you acquired it. If your business use of the car is 50% or less in a later tax year during the recovery period, you have to recapture (include in income) in that later year any excess depreciation. Any section 179 deduction claimed on the car is included in figuring the excess depreciation. For information on this calculation, see Excess depreciation , later in this chapter under Car Used 50% or Less for Business. For more information on recapture of a section 179 deduction, see Pub. 946.

If you dispose of a car on which you had claimed the section 179 deduction, the amount of that deduction is treated as a depreciation deduction for recapture purposes. You treat any gain on the disposition of the property as ordinary income up to the amount of the section 179 deduction and any allowable depreciation (unless you establish the amount actually allowed). For information on the disposition of a car, see Disposition of a Car , later. For more information on recapture of a section 179 deduction, see Pub. 946.

Special Depreciation Allowance

You may be able to claim the special depreciation allowance for your car, truck, or van if it is qualified property and was placed in service in 2023. The allowance for 2023 is an additional depreciation deduction for 100% of the car's depreciable basis (after any section 179 deduction, but before figuring your regular depreciation deduction under MACRS) if the vehicle was acquired after September 27, 2017, and placed in service during 2023. Further, while it applies to a new vehicle, it also applies to a used vehicle only if the vehicle meets the used property requirements. For more information on the used property requirements, see section 168(k)(2)(E)(ii). To qualify for the allowance, more than 50% of the use of the car must be in a qualified business use (as defined under Depreciation Deduction , later).

The first-year limit on the depreciation deduction, special depreciation allowance, and section 179 deduction for vehicles acquired before September 28, 2017, and placed in service during 2023, is $12,200. Your combined section 179 depreciation, special depreciation allowance, and regular MACRS depreciation deduction is limited to the maximum allowable depreciation deduction for vehicles acquired after September 27, 2017, and placed in service during 2023 is $20,200. If you elect not to claim a special depreciation allowance for a vehicle placed in service in 2023, the amount is $12,200. See Depreciation Limits , later in this chapter.

To be qualified property, the car (including the truck or van) must meet all of the following tests.

You acquired the car after September 27, 2017, but only if no written binding contract to acquire the car existed before September 28, 2017.

You acquired the car new or used.

You placed the car in service in your trade or business before January 1, 2027.

You used the car more than 50% in a qualified business use during the tax year.

You can elect not to claim the special depreciation allowance for your car, truck, or van that is qualified property. If you make this election, it applies to all 5-year property placed in service during the year.

To make this election, attach a statement to your timely filed return (including extensions) indicating the class of property (5-year for cars) for which you are making the election and that you are electing not to claim the special depreciation allowance for qualified property in that class of property.

Depreciation Deduction

If you use actual car expenses to figure your deduction for a car you own and use in your business, you can claim a depreciation deduction. This means you can deduct a certain amount each year as a recovery of your cost or other basis in your car.

You generally need to know the following things about the car you intend to depreciate.

Your basis in the car.

The date you place the car in service.

The method of depreciation and recovery period you will use.

Your basis in a car for figuring depreciation is generally its cost. This includes any amount you borrow or pay in cash, other property, or services.

Generally, you figure depreciation on your car, truck, or van using your unadjusted basis (see Unadjusted basis , later). However, in some situations, you will use your adjusted basis (your basis reduced by depreciation allowed or allowable in earlier years). For one of these situations, see Exception under Methods of depreciation , later.

If you change the use of a car from personal to business, your basis for depreciation is the lesser of the fair market value or your adjusted basis in the car on the date of conversion. Additional rules concerning basis are discussed later in this chapter under Unadjusted basis .

You generally place a car in service when it is available for use in your work or business, in an income-producing activity, or in a personal activity. Depreciation begins when the car is placed in service for use in your work or business or for the production of income.

For purposes of figuring depreciation, if you first start using the car only for personal use and later convert it to business use, you place the car in service on the date of conversion.

If you place a car in service and dispose of it in the same tax year, you can’t claim any depreciation deduction for that car.

Generally, you figure depreciation on cars using the Modified Accelerated Cost Recovery (MACRS) discussed later in this chapter.

If you used the standard mileage rate in the first year of business use and change to the actual expenses method in a later year, you can’t depreciate your car under the MACRS rules. You must use straight line depreciation over the estimated remaining useful life of the car. The amount you depreciate can’t be more than the depreciation limit that applies for that year. See Depreciation Limits , later.

To figure depreciation under the straight line method, you must reduce your basis in the car (but not below zero) by a set rate per mile for all miles for which you used the standard mileage rate. The rate per mile varies depending on the year(s) you used the standard mileage rate. For the rate(s) to use, see Depreciation adjustment when you used the standard mileage rate under Disposition of a Car , later.

This reduction of basis is in addition to those basis adjustments described later under Unadjusted basis . You must use your adjusted basis in your car to figure your depreciation deduction. For additional information on the straight line method of depreciation, see Pub. 946.

Generally, you must use your car more than 50% for qualified business use (defined next) during the year to use MACRS. You must meet this more-than-50%-use test each year of the recovery period (6 years under MACRS) for your car.

If your business use is 50% or less, you must use the straight line method to depreciate your car. This is explained later under Car Used 50% or Less for Business .

A qualified business use is any use in your trade or business. It doesn’t include use for the production of income (investment use), or use provided under lease to, or as compensation to, a 5% owner or related person. However, you do combine your business and investment use to figure your depreciation deduction for the tax year.

Don’t treat any use of your car by another person as use in your trade or business unless that use meets one of the following conditions.

It is directly connected with your business.

It is properly reported by you as income to the other person (and, if you have to, you withhold tax on the income).

It results in a payment of fair market rent. This includes any payment to you for the use of your car.

If you used your car more than 50% in qualified business use in the year you placed it in service, but 50% or less in a later year (including the year of disposition), you have to change to the straight line method of depreciation. See Qualified business use 50% or less in a later year under Car Used 50% or Less for Business , later.

If you use your car for more than one purpose during the tax year, you must allocate the use to the various purposes. You do this on the basis of mileage. Figure the percentage of qualified business use by dividing the number of miles you drive your car for business purposes during the year by the total number of miles you drive the car during the year for any purpose.

If you change the use of a car from 100% personal use to business use during the tax year, you may not have mileage records for the time before the change to business use. In this case, you figure the percentage of business use for the year as follows.

Determine the percentage of business use for the period following the change. Do this by dividing business miles by total miles driven during that period.

Multiply the percentage in (1) by a fraction. The numerator (top number) is the number of months the car is used for business, and the denominator (bottom number) is 12.

You use a car only for personal purposes during the first 6 months of the year. During the last 6 months of the year, you drive the car a total of 15,000 miles of which 12,000 miles are for business. This gives you a business use percentage of 80% (12,000 ÷ 15,000) for that period. Your business use for the year is 40% (80% (0.80) × 6 / 12 ).

The amount you can claim for section 179, special depreciation allowance, and depreciation deductions may be limited. The maximum amount you can claim depends on the year in which you placed your car in service. You have to reduce the maximum amount if you did not use the car exclusively for business. See Depreciation Limits , later.

You use your unadjusted basis (often referred to as your basis or your basis for depreciation) to figure your depreciation using the MACRS depreciation chart, explained later under Modified Accelerated Cost Recovery System (MACRS) . Your unadjusted basis for figuring depreciation is your original basis increased or decreased by certain amounts.

To figure your unadjusted basis, begin with your car's original basis, which is generally its cost. Cost includes sales taxes (see Sales taxes , earlier), destination charges, and dealer preparation. Increase your basis by any substantial improvements you make to your car, such as adding air conditioning or a new engine. Decrease your basis by any section 179 deduction, special depreciation allowance, gas guzzler tax, and vehicle credits claimed. See Pub. 551, Basis of Assets, for further details.

If you acquired the car by gift or inheritance, see Pub. 551, Basis of Assets, for information on your basis in the car.

A major improvement to a car is treated as a new item of 5-year recovery property. It is treated as placed in service in the year the improvement is made. It doesn’t matter how old the car is when the improvement is added. Follow the same steps for depreciating the improvement as you would for depreciating the original cost of the car. However, you must treat the improvement and the car as a whole when applying the limits on the depreciation deductions. Your car's depreciation deduction for the year (plus any section 179 deduction, special depreciation allowance, and depreciation on any improvements) can’t be more than the depreciation limit that applies for that year. See Depreciation Limits , later.

If you traded one car (the “old car”) for another car (the “new car”) in 2023, you must treat the transaction as a disposition of the old car and the purchase of the new car. You must treat the old car as disposed of at the time of the trade-in. The depreciable basis of the new car is the adjusted basis of the old car (figured as if 100% of the car’s use had been for business purposes) plus any additional amount you paid for the new car. You then figure your depreciation deduction for the new car beginning with the date you placed it in service. You must also complete Form 2106, Part II, Section D. This method is explained later, beginning at Effect of trade-in on basis .

The discussion that follows applies to trade-ins of cars in 2023, where the election was made to treat the transaction as a disposition of the old car and the purchase of the new car. For information on how to figure depreciation for cars involved in a like-kind exchange (trade-in) in 2023, for which the election wasn’t made, see Pub. 946 and Regulations section 1.168(i)-6(d)(3).

Like‐kind exchanges completed after December 31, 2017, are generally limited to exchanges of real property not held primarily for sale. Regulations section 1.168(i)-6 doesn't reflect this change in law.

If you trade in a car you used only in your business for another car that will be used only in your business, your original basis in the new car is your adjusted basis in the old car, plus any additional amount you pay for the new car.

You trade in a car that has an adjusted basis of $5,000 for a new car. In addition, you pay cash of $20,000 for the new car. Your original basis of the new car is $25,000 (your $5,000 adjusted basis in the old car plus the $20,000 cash paid). Your unadjusted basis is $25,000 unless you claim the section 179 deduction, special depreciation allowance, or have other increases or decreases to your original basis, discussed under Unadjusted basis , earlier.

If you trade in a car you used partly in your business for a new car you will use in your business, you must make a “trade-in” adjustment for the personal use of the old car. This adjustment has the effect of reducing your basis in your old car, but not below zero, for purposes of figuring your depreciation deduction for the new car. (This adjustment isn’t used, however, when you determine the gain or loss on the later disposition of the new car. See Pub. 544, Sales and Other Dispositions of Assets, for information on how to report the disposition of your car.)

To figure the unadjusted basis of your new car for depreciation, first add to your adjusted basis in the old car any additional amount you pay for the new car. Then subtract from that total the excess, if any, of:

The total of the amounts that would have been allowable as depreciation during the tax years before the trade if 100% of the use of the car had been business and investment use, over

The total of the amounts actually allowed as depreciation during those years.

MACRS is the name given to the tax rules for getting back (recovering) through depreciation deductions the cost of property used in a trade or business or to produce income.

The maximum amount you can deduct is limited, depending on the year you placed your car in service. See Depreciation Limits , later.

Under MACRS, cars are classified as 5-year property. You actually depreciate the cost of a car, truck, or van over a period of 6 calendar years. This is because your car is generally treated as placed in service in the middle of the year, and you claim depreciation for one-half of both the first year and the sixth year.

For more information on the qualifications for this shorter recovery period and the percentages to use in figuring the depreciation deduction, see chapter 4 of Pub. 946.

You can use one of the following methods to depreciate your car.

The 200% declining balance method (200% DB) over a 5-year recovery period that switches to the straight line method when that method provides an equal or greater deduction.

The 150% declining balance method (150% DB) over a 5-year recovery period that switches to the straight line method when that method provides an equal or greater deduction.

The straight line method (SL) over a 5-year recovery period.

Before choosing a method, you may wish to consider the following facts.

Using the straight line method provides equal yearly deductions throughout the recovery period.

Using the declining balance methods provides greater deductions during the earlier recovery years with the deductions generally getting smaller each year.

A 2023 MACRS Depreciation Chart and instructions are included in this chapter as Table 4-1 . Using this table will make it easy for you to figure the 2023 depreciation deduction for your car. A similar chart appears in the Instructions for Form 2106.

You must use the Depreciation Tables in Pub. 946 rather than the 2023 MACRS Depreciation Chart in this publication if any one of the following three conditions applies to you.

You file your return on a fiscal year basis.

You file your return for a short tax year (less than 12 months).

During the year, all of the following conditions apply.

You placed some property in service from January through September.

You placed some property in service from October through December.

Your basis in the property you placed in service from October through December (excluding nonresidential real property, residential rental property, and property placed in service and disposed of in the same year) was more than 40% of your total bases in all property you placed in service during the year.

If you use the percentages from the chart, you generally must continue to use them for the entire recovery period of your car. However, you can’t continue to use the chart if your basis in your car is adjusted because of a casualty. In that case, for the year of the adjustment and the remaining recovery period, figure the depreciation without the chart using your adjusted basis in the car at the end of the year of the adjustment and over the remaining recovery period. See Figuring the Deduction Without Using the Tables in chapter 4 of Pub. 946.

If you dispose of the car before the last year of the recovery period, you are generally allowed a half-year of depreciation in the year of disposition. This rule applies unless the mid-quarter convention applies to the vehicle being disposed of. See Depreciation deduction for the year of disposition under Disposition of a Car , later, for information on how to figure the depreciation allowed in the year of disposition.

To figure your depreciation deduction for 2023, find the percentage in the column of Table 4-1 based on the date that you first placed the car in service and the depreciation method that you are using. Multiply the unadjusted basis of your car (defined earlier) by that percentage to determine the amount of your depreciation deduction. If you prefer to figure your depreciation deduction without the help of the chart, see Pub. 946.

You bought a used truck in February 2022 to use exclusively in your landscape business. You paid $9,200 for the truck with no trade-in. You didn’t claim any section 179 deduction, the truck didn’t qualify for the special depreciation allowance, and you chose to use the 200% DB method to get the largest depreciation deduction in the early years.

You used the MACRS Depreciation Chart in 2022 to find your percentage. The unadjusted basis of the truck equals its cost because you used it exclusively for business. You multiplied the unadjusted basis of the truck, $9,200, by the percentage that applied, 20%, to figure your 2022 depreciation deduction of $1,840.

In 2023, you used the truck for personal purposes when you repaired your parent’s cabin. Your records show that the business use of the truck was 90% in 2023. You used Table 4-1 to find your percentage. Reading down the first column for the date placed in service and across to the 200% DB column, you locate your percentage, 32%. You multiply the unadjusted basis of the truck, $8,280 ($9,200 cost × 90% (0.90) business use), by 32% (0.32) to figure your 2023 depreciation deduction of $2,650.

Depreciation Limits

There are limits on the amount you can deduct for depreciation of your car, truck, or van. The section 179 deduction and special depreciation allowance are treated as depreciation for purposes of the limits. The maximum amount you can deduct each year depends on the date you acquired the passenger automobile and the year you place the passenger automobile in service. These limits are shown in the following tables for 2023.

Maximum Depreciation Deduction for Passenger Automobiles (Including Trucks and Vans) Acquired Before September 28, 2017, and Placed in Service During 2018–2023

Maximum depreciation deduction for passenger automobiles (including trucks and vans) acquired after september 27, 2017, and placed in service during 2018 or later.

The maximum amount you can deduct each year depends on the year you place the car in service. These limits are shown in the following tables for prior years.

Maximum Depreciation Deduction for Cars Placed in Service Prior to 2018

For tax years prior to 2018, the maximum depreciation deductions for trucks and vans are generally higher than those for cars. A truck or van is a passenger automobile that is classified by the manufacturer as a truck or van and rated at 6,000 pounds gross vehicle weight or less.

Maximum Depreciation Deduction for Trucks and Vans Placed in Service Prior to 2018

The depreciation limits aren’t reduced if you use a car for less than a full year. This means that you don’t reduce the limit when you either place a car in service or dispose of a car during the year. However, the depreciation limits are reduced if you don’t use the car exclusively for business and investment purposes. See Reduction for personal use next.

The depreciation limits are reduced based on your percentage of personal use. If you use a car less than 100% in your business or work, you must determine the depreciation deduction limit by multiplying the limit amount by the percentage of business and investment use during the tax year.

The section 179 deduction is treated as a depreciation deduction. If you acquired a passenger automobile (including trucks and vans) after September 27, 2017, and placed it in service in 2023, use it only for business, and choose the section 179 deduction, the special depreciation allowance and depreciation deduction for that vehicle for 2023 is limited to $20,200.

On September 4, 2023, you bought and placed in service a used car for $15,000. You used it 80% for your business, and you choose to take a section 179 deduction for the car. The car isn’t qualified property for purposes of the special depreciation allowance.

Before applying the limit, you figure your maximum section 179 deduction to be $12,000. This is the cost of your qualifying property (up to the maximum $1,160,000 amount) multiplied by your business use ($15,000 × 80% (0.80)).

You then figure that your section 179 deduction for 2023 is limited to $9,760 (80% of $12,200). You then figure your unadjusted basis of $2,440 (($15,000 × 80% (0.80)) − $9,760) for determining your depreciation deduction. You have reached your maximum depreciation deduction for 2023. For 2024, you will use your unadjusted basis of $2,440 to figure your depreciation deduction.

If the depreciation deductions for your car are reduced under the passenger automobile limits (discussed earlier), you will have unrecovered basis in your car at the end of the recovery period. If you continue to use your car for business, you can deduct that unrecovered basis (subject to depreciation limits) after the recovery period ends.

This is your cost or other basis in the car reduced by any clean-fuel vehicle deduction (for vehicles placed in service before January 1, 2006), alternative motor vehicle credit, electric vehicle credit, gas guzzler tax, and depreciation (including any special depreciation allowance , discussed earlier, unless you elect not to claim it) and section 179 deductions that would have been allowable if you had used the car 100% for business and investment use.

For 5-year property, your recovery period is 6 calendar years. A part year's depreciation is allowed in the first calendar year, a full year's depreciation is allowed in each of the next 4 calendar years, and a part year's depreciation is allowed in the 6th calendar year.

Under MACRS, your recovery period is the same whether you use declining balance or straight line depreciation. You determine your unrecovered basis in the 7th year after you placed the car in service.

If you continue to use your car for business after the recovery period, you can claim a depreciation deduction in each succeeding tax year until you recover your basis in the car. The maximum amount you can deduct each year is determined by the date you placed the car in service and your business-use percentage. For example, no deduction is allowed for a year you use your car 100% for personal purposes.

In April 2017, you bought and placed in service a car you used exclusively in your business. The car cost $31,500. You didn’t claim a section 179 deduction or the special depreciation allowance for the car. You continued to use the car 100% in your business throughout the recovery period (2017 through 2022). For those years, you used the MACRS Depreciation Chart (200% DB method), the Maximum Depreciation Deduction for Cars Placed in Service Prior to 2018 table and Maximum Depreciation Deduction for Passenger Automobiles (Including Trucks and Vans) Acquired Before September 28, 2017, and Placed in Service During 2018–2023 table, earlier, for the applicable tax year to figure your depreciation deductions during the recovery period. Your depreciation deductions were subject to the depreciation limits, so you will have unrecovered basis at the end of the recovery period as shown in the following table.

At the end of 2022, you had an unrecovered basis in the car of $14,626 ($31,500 – $16,874). If you continued to use the car 100% for business in 2023 and later years, you can claim a depreciation deduction equal to the lesser of $1,875 or your remaining unrecovered basis.

If your business use of the car was less than 100% during any year, your depreciation deduction would be less than the maximum amount allowable for that year. However, in determining your unrecovered basis in the car, you would still reduce your original basis by the maximum amount allowable as if the business use had been 100%. For example, if you had used your car 60% for business instead of 100%, your allowable depreciation deductions would have been $10,124 ($16,874 × 60% (0.60)), but you still would have to reduce your basis by $16,874 to determine your unrecovered basis.

Table 4-1. 2023 MACRS Depreciation Chart (Use To Figure Depreciation for 2023)

Car used 50% or less for business.

If you use your car 50% or less for qualified business use (defined earlier under Depreciation Deduction ) either in the year the car is placed in service or in a later year, special rules apply. The rules that apply in these two situations are explained in the following paragraphs. (For this purpose, “car” was defined earlier under Actual Car Expenses and includes certain trucks and vans.)

If you use your car 50% or less for qualified business use, the following rules apply.

You can’t take the section 179 deduction.

You can’t take the special depreciation allowance.

You must figure depreciation using the straight line method over a 5-year recovery period. You must continue to use the straight line method even if your percentage of business use increases to more than 50% in a later year.

Instead of making the computation yourself, you can use column (c) of Table 4-1 to find the percentage to use.

In May 2023, you bought and placed in service a car for $17,500. You used it 40% for your consulting business. Because you didn’t use the car more than 50% for business, you can’t take any section 179 deduction or special depreciation allowance, and you must use the straight line method over a 5-year recovery period to recover the cost of your car.

You deduct $700 in 2023. This is the lesser of:

$700 (($17,500 cost × 40% (0.40) business use) × 10% (0.10) recovery percentage (from column (c) of Table 4-1 )), or

$4,880 ($12,200 maximum limit × 40% (0.40) business use).

If you use your car more than 50% in qualified business use in the tax year it is placed in service but the business use drops to 50% or less in a later year, you can no longer use an accelerated depreciation method for that car.

For the year the business use drops to 50% or less and all later years in the recovery period, you must use the straight line depreciation method over a 5-year recovery period. In addition, for the year your business use drops to 50% or less, you must recapture (include in your gross income) any excess depreciation (discussed later). You also increase the adjusted basis of your car by the same amount.

In June 2020, you purchased a car for exclusive use in your business. You met the more-than-50%-use test for the first 3 years of the recovery period (2020 through 2022) but failed to meet it in the fourth year (2023). You determine your depreciation for 2023 using 20% (from column (c) of Table 4-1 ). You will also have to determine and include in your gross income any excess depreciation, discussed next.

You must include any excess depreciation in your gross income and add it to your car's adjusted basis for the first tax year in which you don’t use the car more than 50% in qualified business use. Use Form 4797, Sales of Business Property, to figure and report the excess depreciation in your gross income.

Excess depreciation is:

The amount of the depreciation deductions allowable for the car (including any section 179 deduction claimed and any special depreciation allowance claimed) for tax years in which you used the car more than 50% in qualified business use, minus

The amount of the depreciation deductions that would have been allowable for those years if you hadn’t used the car more than 50% in qualified business use for the year you placed it in service. This means the amount of depreciation figured using the straight line method.

In September 2019, you bought a car for $20,500 and placed it in service. You didn’t claim the section 179 deduction or the special depreciation allowance. You used the car exclusively in qualified business use for 2019, 2020, 2021, and 2022. For those years, you used the appropriate MACRS Depreciation Chart to figure depreciation deductions totaling $13,185 ($3,160 for 2019, $5,100 for 2020, $3,050 for 2021, and $1,875 for 2022) under the 200% DB method.

During 2023, you used the car 30% for business and 70% for personal purposes. Since you didn’t meet the more-than-50%-use test, you must switch from the 200% DB depreciation method to the straight line depreciation method for 2023, and include in gross income for 2023 your excess depreciation determined as follows.

In 2023, using Form 4797, you figure and report the $2,110 excess depreciation you must include in your gross income. Your adjusted basis in the car is also increased by $2,110. Your 2023 depreciation is $1,230 ($20,500 (unadjusted basis) × 30% (0.30) (business-use percentage) × 20% (0.20) (from column (c) of Table 4-1 on the line for Jan. 1–Sept. 30, 2019)). However, your depreciation deduction is limited to $563 ($1,875 x 30% (0.30) business use).

Leasing a Car

If you lease a car, truck, or van that you use in your business, you can use the standard mileage rate or actual expenses to figure your deductible expense. This section explains how to figure actual expenses for a leased car, truck, or van.

If you choose to use actual expenses, you can deduct the part of each lease payment that is for the use of the vehicle in your business. You can’t deduct any part of a lease payment that is for personal use of the vehicle, such as commuting.

You must spread any advance payments over the entire lease period. You can’t deduct any payments you make to buy a car, truck, or van even if the payments are called “lease payments.”

If you lease a car, truck, or van for 30 days or more, you may have to reduce your lease payment deduction by an “inclusion amount,” explained next.

Inclusion Amounts

If you lease a car, truck, or van that you use in your business for a lease term of 30 days or more, you may have to include an inclusion amount in your income for each tax year you lease the vehicle. To do this, you don’t add an amount to income. Instead, you reduce your deduction for your lease payment. (This reduction has an effect similar to the limit on the depreciation deduction you would have on the vehicle if you owned it.)

The inclusion amount is a percentage of part of the fair market value of the leased vehicle multiplied by the percentage of business and investment use of the vehicle for the tax year. It is prorated for the number of days of the lease term in the tax year.

The inclusion amount applies to each tax year that you lease the vehicle if the fair market value (defined next) when the lease began was more than the amounts shown in the following tables.

All vehicles are subject to a single inclusion amount threshold for passenger automobiles leased and put into service in 2023. You may have an inclusion amount for a passenger automobile if:

Passenger Automobiles (Including Trucks and Vans)

For years prior to 2018, see the inclusion tables below. You may have an inclusion amount for a passenger automobile if:

Cars (Except for Trucks and Vans)

Trucks and Vans

Fair market value is the price at which the property would change hands between a willing buyer and seller, neither having to buy or sell, and both having reasonable knowledge of all the necessary facts. Sales of similar property around the same date may be helpful in figuring the fair market value of the property.

Figure the fair market value on the first day of the lease term. If the capitalized cost of a car is specified in the lease agreement, use that amount as the fair market value.

Inclusion amounts for tax years 2018–2023 are listed in Appendices A-1 through A-6 for passenger vehicles (including trucks and vans). If the fair market value of the vehicle is $100,000 or less, use the appropriate appendix (depending on the year you first placed the vehicle in service) to determine the inclusion amount. If the fair market value is more than $100,000, see the revenue procedure(s) identified in the footnote of that year’s appendix for the inclusion amount.

For each tax year during which you lease the car for business, determine your inclusion amount by following these three steps.

Locate the appendix that applies to you. To find the inclusion amount, do the following.

Find the line that includes the fair market value of the car on the first day of the lease term.

Go across the line to the column for the tax year in which the car is used under the lease to find the dollar amount. For the last tax year of the lease, use the dollar amount for the preceding year.

Prorate the dollar amount from (1b) for the number of days of the lease term included in the tax year.

Multiply the prorated amount from (2) by the percentage of business and investment use for the tax year. This is your inclusion amount.

On January 17, 2023, you leased a car for 3 years and placed it in service for use in your business. The car had a fair market value of $62,500 on the first day of the lease term. You use the car 75% for business and 25% for personal purposes during each year of the lease. Assuming you continue to use the car 75% for business, you use Appendix A-6 to arrive at the following inclusion amounts for each year of the lease. For the last tax year of the lease, 2026, you use the amount for the preceding year.

2024 is a leap year and includes an extra calendar day, February 29, 2024.

For each year of the lease that you deduct lease payments, you must reduce your deduction by the inclusion amount figured for that year.

If you lease a car for business use and, in a later year, change it to personal use, follow the rules explained earlier under Figuring the inclusion amount . For the tax year in which you stop using the car for business, use the dollar amount for the previous tax year. Prorate the dollar amount for the number of days in the lease term that fall within the tax year.

On August 16, 2022, you leased a car with a fair market value of $64,500 for 3 years. You used the car exclusively in your data processing business. On November 6, 2023, you closed your business and went to work for a company where you aren’t required to use a car for business. Using Appendix A-5 , you figured your inclusion amount for 2022 and 2023 as shown in the following table and reduced your deductions for lease payments by those amounts.

If you lease a car for personal use and, in a later year, change it to business use, you must determine the car's fair market value on the date of conversion. Then figure the inclusion amount using the rules explained earlier under Figuring the inclusion amount . Use the fair market value on the date of conversion.

In March 2021, you leased a truck for 4 years for personal use. On June 1, 2023, you started working as a self-employed advertising consultant and started using the leased truck for business purposes. Your records show that your business use for June 1 through December 31 was 60%. To figure your inclusion amount for 2023, you obtained an appraisal from an independent car leasing company that showed the fair market value of your 2021 truck on June 1, 2023, was $62,650. Using Appendix A-6 , you figured your inclusion amount for 2023 as shown in the following table.

For information on reporting inclusion amounts, employees should see Car rentals under Completing Forms 2106 in chapter 6. Sole proprietors should see the Instructions for Schedule C (Form 1040), and farmers should see the Instructions for Schedule F (Form 1040).

Disposition of a Car

If you dispose of your car, you may have a taxable gain or a deductible loss. The portion of any gain that is due to depreciation (including any section 179 deduction, clean-fuel vehicle deduction (for vehicles placed in service before January 1, 2006), and special depreciation allowance) that you claimed on the car will be treated as ordinary income. However, you may not have to recognize a gain or loss if you dispose of the car because of a casualty or theft.

This section gives some general information about dispositions of cars. For information on how to report the disposition of your car, see Pub. 544.

Like‐kind exchanges completed after December 31, 2017, are generally limited to exchanges of real property not held primarily for sale.

For a casualty or theft, a gain results when you receive insurance or other reimbursement that is more than your adjusted basis in your car. If you then spend all of the proceeds to acquire replacement property (a new car or repairs to the old car) within a specified period of time, you don’t recognize any gain. Your basis in the replacement property is its cost minus any gain that isn’t recognized. See Pub. 547 for more information.

When you trade in an old car for a new one, the transaction is considered a like-kind exchange. Generally, no gain or loss is recognized. (For exceptions, see chapter 1 of Pub. 544.) In a trade-in situation, your basis in the new property is generally your adjusted basis in the old property plus any additional amount you pay. (See Unadjusted basis , earlier.)

If you used the standard mileage rate for the business use of your car, depreciation was included in that rate. The rate of depreciation that was allowed in the standard mileage rate is shown in the Rate of Depreciation Allowed in Standard Mileage Rate table, later. You must reduce your basis in your car (but not below zero) by the amount of this depreciation.

If your basis is reduced to zero (but not below zero) through the use of the standard mileage rate, and you continue to use your car for business, no adjustment (reduction) to the standard mileage rate is necessary. Use the full standard mileage rate (65.5 cents ($0.655) per mile from January 1–December 31 for 2023) for business miles driven.

Rate of Depreciation Allowed in Standard Mileage Rate

In 2018, you bought and placed in service a car for exclusive use in your business. The car cost $25,500. From 2018 through 2023, you used the standard mileage rate to figure your car expense deduction. You drove your car 14,100 miles in 2018, 16,300 miles in 2019, 15,600 miles in 2020, 16,700 miles in 2021, 15,100 miles in 2022, and 14,900 miles in 2023. The depreciation portion of your car expense deduction is figured as follows.

If you deduct actual car expenses and you dispose of your car before the end of the recovery period (years 2 through 5), you are allowed a reduced depreciation deduction in the year of disposition.

Use the depreciation tables in Pub. 946 to figure the reduced depreciation deduction for a car disposed of in 2023.

The depreciation amounts computed using the depreciation tables in Pub. 946 for years 2 through 5 that you own your car are for a full year’s depreciation. Years 1 and 6 apply the half-year or mid-quarter convention to the computation for you. If you dispose of the vehicle in years 2 through 5 and the half-year convention applies, then the full year’s depreciation amount must be divided by 2. If the mid-quarter convention applies, multiply the full year’s depreciation by the percentage from the following table for the quarter that you disposed of the car.

If the car is subject to the Depreciation Limits , discussed earlier, reduce (but do not increase) the computed depreciation to this amount. See Sale or Other Disposition Before the Recovery Period Ends in chapter 4 of Pub. 946 for more information.

5. Recordkeeping

If you deduct travel, gift, or transportation expenses, you must be able to prove (substantiate) certain elements of expense. This chapter discusses the records you need to keep to prove these expenses.

How To Prove Expenses

Table 5-1 is a summary of records you need to prove each expense discussed in this publication. You must be able to prove the elements listed across the top portion of the chart. You prove them by having the information and receipts (where needed) for the expenses listed in the first column.

You should keep adequate records to prove your expenses or have sufficient evidence that will support your own statement. You must generally prepare a written record for it to be considered adequate. This is because written evidence is more reliable than oral evidence alone. However, if you prepare a record on a computer, it is considered an adequate record.

What Are Adequate Records?

You should keep the proof you need in an account book, diary, log, statement of expense, trip sheets, or similar record. You should also keep documentary evidence that, together with your record, will support each element of an expense.

You must generally have documentary evidence such as receipts, canceled checks, or bills, to support your expenses.

Documentary evidence isn’t needed if any of the following conditions apply.

You have meals or lodging expenses while traveling away from home for which you account to your employer under an accountable plan, and you use a per diem allowance method that includes meals and/or lodging. ( Accountable plans and per diem allowances are discussed in chapter 6.)

Your expense, other than lodging, is less than $75.

You have a transportation expense for which a receipt isn’t readily available.

Documentary evidence will ordinarily be considered adequate if it shows the amount, date, place, and essential character of the expense.

For example, a hotel receipt is enough to support expenses for business travel if it has all of the following information.

The name and location of the hotel.

The dates you stayed there.

Separate amounts for charges such as lodging, meals, and telephone calls.

A restaurant receipt is enough to prove an expense for a business meal if it has all of the following information.

The name and location of the restaurant.

The number of people served.

The date and amount of the expense.

A canceled check, together with a bill from the payee, ordinarily establishes the cost. However, a canceled check by itself doesn’t prove a business expense without other evidence to show that it was for a business purpose.

You don‘t have to record information in your account book or other record that duplicates information shown on a receipt as long as your records and receipts complement each other in an orderly manner.

You don’t have to record amounts your employer pays directly for any ticket or other travel item. However, if you charge these items to your employer, through a credit card or otherwise, you must keep a record of the amounts you spend.

You should record the elements of an expense or of a business use at or near the time of the expense or use and support it with sufficient documentary evidence. A timely kept record has more value than a statement prepared later when there is generally a lack of accurate recall.

You don’t need to write down the elements of every expense on the day of the expense. If you maintain a log on a weekly basis that accounts for use during the week, the log is considered a timely kept record.

If you give your employer, client, or customer an expense account statement, it can also be considered a timely kept record. This is true if you copy it from your account book, diary, log, statement of expense, trip sheets, or similar record.

You must generally provide a written statement of the business purpose of an expense. However, the degree of proof varies according to the circumstances in each case. If the business purpose of an expense is clear from the surrounding circumstances, then you don’t need to give a written explanation.

If you are a sales representative who calls on customers on an established sales route, you don’t have to give a written explanation of the business purpose for traveling that route. You can satisfy the requirements by recording the length of the delivery route once, the date of each trip at or near the time of the trips, and the total miles you drove the car during the tax year. You could also establish the date of each trip with a receipt, record of delivery, or other documentary evidence.

You don’t need to put confidential information relating to an element of a deductible expense (such as the place, business purpose, or business relationship) in your account book, diary, or other record. However, you do have to record the information elsewhere at or near the time of the expense and have it available to fully prove that element of the expense.

What if I Have Incomplete Records?

If you don’t have complete records to prove an element of an expense, then you must prove the element with:

Your own written or oral statement containing specific information about the element, and

Other supporting evidence that is sufficient to establish the element.

If the element is the description of a gift, or the cost, time, place, or date of an expense, the supporting evidence must be either direct evidence or documentary evidence. Direct evidence can be written statements or the oral testimony of your guests or other witnesses setting forth detailed information about the element. Documentary evidence can be receipts, paid bills, or similar evidence.

If the element is either the business relationship of your guests or the business purpose of the amount spent, the supporting evidence can be circumstantial rather than direct. For example, the nature of your work, such as making deliveries, provides circumstantial evidence of the use of your car for business purposes. Invoices of deliveries establish when you used the car for business.

Table 5-1. How To Prove Certain Business Expenses

You can keep an adequate record for parts of a tax year and use that record to prove the amount of business or investment use for the entire year. You must demonstrate by other evidence that the periods for which an adequate record is kept are representative of the use throughout the tax year.

You use your car to visit the offices of clients, meet with suppliers and other subcontractors, and pick up and deliver items to clients. There is no other business use of the car, but you and your family use the car for personal purposes. You keep adequate records during the first week of each month that show that 75% of the use of the car is for business. Invoices and bills show that your business use continues at the same rate during the later weeks of each month. Your weekly records are representative of the use of the car each month and are sufficient evidence to support the percentage of business use for the year.

You can satisfy the substantiation requirements with other evidence if, because of the nature of the situation in which an expense is made, you can’t get a receipt. This applies if all the following are true.

You were unable to obtain evidence for an element of the expense or use that completely satisfies the requirements explained earlier under What Are Adequate Records .

You are unable to obtain evidence for an element that completely satisfies the two rules listed earlier under What if I Have Incomplete Records .

You have presented other evidence for the element that is the best proof possible under the circumstances.

If you can’t produce a receipt because of reasons beyond your control, you can prove a deduction by reconstructing your records or expenses. Reasons beyond your control include fire, flood, and other casualties.

Separating and Combining Expenses

This section explains when expenses must be kept separate and when expenses can be combined.

Each separate payment is generally considered a separate expense. For example, if you entertain a customer or client at dinner and then go to the theater, the dinner expense and the cost of the theater tickets are two separate expenses. You must record them separately in your records.

You can make one daily entry in your record for reasonable categories of expenses. Examples are taxi fares, telephone calls, or other incidental travel costs. Nonentertainment meals should be in a separate category. You can include tips for meal-related services with the costs of the meals.

Expenses of a similar nature occurring during the course of a single event are considered a single expense.

You can account for several uses of your car that can be considered part of a single use, such as a round trip or uninterrupted business use, with a single record. Minimal personal use, such as a stop for lunch on the way between two business stops, isn’t an interruption of business use.

You make deliveries at several different locations on a route that begins and ends at your employer's business premises and that includes a stop at the business premises between two deliveries. You can account for these using a single record of miles driven.

You don’t always have to record the name of each recipient of a gift. A general listing will be enough if it is evident that you aren’t trying to avoid the $25 annual limit on the amount you can deduct for gifts to any one person. For example, if you buy a large number of tickets to local high school basketball games and give one or two tickets to each of many customers, it is usually enough to record a general description of the recipients.

If you can prove the total cost of travel or entertainment but you can’t prove how much it costs for each person who participated in the event, you may have to allocate the total cost among you and your guests on a pro rata basis. To do so, you must establish the number of persons who participated in the event.

If your return is examined, you may have to provide additional information to the IRS. This information could be needed to clarify or to establish the accuracy or reliability of information contained in your records, statements, testimony, or documentary evidence before a deduction is allowed.

How Long To Keep Records and Receipts

You must keep records as long as they may be needed for the administration of any provision of the Internal Revenue Code. Generally, this means you must keep records that support your deduction (or an item of income) for 3 years from the date you file the income tax return on which the deduction is claimed. A return filed early is considered filed on the due date. For a more complete explanation of how long to keep records, see Pub. 583, Starting a Business and Keeping Records.

You must keep records of the business use of your car for each year of the recovery period. See More-than-50%-use test in chapter 4 under Depreciation Deduction.

Employees who give their records and documentation to their employers and are reimbursed for their expenses generally don’t have to keep copies of this information. However, you may have to prove your expenses if any of the following conditions apply.

You claim deductions for expenses that are more than reimbursements.

Your expenses are reimbursed under a nonaccountable plan.

Your employer doesn’t use adequate accounting procedures to verify expense accounts.

You are related to your employer as defined under Per Diem and Car Allowances in chapter 6.

Table 5-2 and Table 5-3 are examples of worksheets that can be used for tracking business expenses.

Table 5-2. Daily Business Mileage and Expense Log

Table 5-3. Weekly Traveling Expense Record

6. How To Report

This chapter explains where and how to report the expenses discussed in this publication. It discusses reimbursements and how to treat them under accountable and nonaccountable plans. It also explains rules for independent contractors and clients, fee-basis officials, certain performing artists, Armed Forces reservists, and certain disabled employees. The chapter ends with illustrations of how to report travel, gift, and car expenses on Forms 2106.

Where To Report

This section provides general information on where to report the expenses discussed in this publication.

You must report your income and expenses on Schedule C (Form 1040) if you are a sole proprietor, or on Schedule F (Form 1040) if you are a farmer. You don’t use Form 2106.

If you claim car or truck expenses, you must provide certain information on the use of your vehicle. You provide this information on Schedule C (Form 1040) or Form 4562.

If you file Schedule C (Form 1040):

Report your travel expenses, except meals, on line 24a;

Report your deductible non-entertainment-related meals (actual cost or standard meal allowance) on line 24b;

Report your gift expenses and transportation expenses, other than car expenses, on line 27a; and

Report your car expenses on line 9. Complete Part IV of the form unless you have to file Form 4562 for depreciation or amortization.

If you file Schedule F (Form 1040), do the following.

Report your car expenses on line 10. Attach Form 4562 and provide information on the use of your car in Part V of Form 4562.

Report all other business expenses discussed in this publication on line 32. You can only include 50% of your non-entertainment-related meals on that line.

If you are both self-employed and an employee, you must keep separate records for each business activity. Report your business expenses for self-employment on Schedule C (Form 1040), or Schedule F (Form 1040), as discussed earlier. Report your business expenses for your work as an employee on Form 2106, as discussed next.

If you are an employee, you must generally complete Form 2106 to deduct your travel and transportation expenses.

You are an employee deducting expenses attributable to your job.

You weren’t reimbursed by your employer for your expenses (amounts included in box 1 of your Form W-2 aren’t considered reimbursements).

If you claim car expenses, you use the standard mileage rate.

For more information on how to report your expenses on Form 2106, see Completing Form 2106 , later.

If you didn’t receive any reimbursements (or the reimbursements were all included in box 1 of your Form W-2), the only business expense you are claiming is for gifts, and the special rules discussed later don’t apply to you, don’t complete Form 2106.

If you received a Form W-2 and the “Statutory employee” box in box 13 was checked, report your income and expenses related to that income on Schedule C (Form 1040). Don’t complete Form 2106.

Statutory employees include full-time life insurance salespersons, certain agent or commission drivers, traveling salespersons, and certain homeworkers.

If your employer reimburses you for nondeductible personal expenses, such as for vacation trips, your employer must report the reimbursement as wage income in box 1 of your Form W-2. You can’t deduct personal expenses.

If you have travel or transportation expenses related to income-producing property, report your deductible expenses on the form appropriate for that activity.

For example, if you have rental real estate income and expenses, report your expenses on Schedule E (Form 1040), Supplemental Income and Loss. See Pub. 527, Residential Rental Property, for more information on the rental of real estate.

Vehicle Provided by Your Employer

If your employer provides you with a car, you may be able to deduct the actual expenses of operating that car for business purposes. The amount you can deduct depends on the amount that your employer included in your income and the business and personal miles you drove during the year. You can’t use the standard mileage rate.

Your employer can figure and report either the actual value of your personal use of the car or the value of the car as if you used it only for personal purposes (100% income inclusion). Your employer must separately state the amount if 100% of the annual lease value was included in your income. If you are unsure of the amount included on your Form W-2, ask your employer.

You may be able to deduct the value of the business use of an employer-provided car if your employer reported 100% of the value of the car in your income. On your 2023 Form W-2, the amount of the value will be included in box 1, Wages, tips, other compensation; and box 14, Other.

To claim your expenses, complete Form 2106, Part II, Sections A and C. Enter your actual expenses on line 23 of Section C and include the entire value of the employer-provided car on line 25. Complete the rest of the form.

If less than the full annual lease value of the car was included on your Form W-2, this means that your Form W-2 only includes the value of your personal use of the car. Don’t enter this value on your Form 2106 because it isn’t deductible.

If you paid any actual costs (that your employer didn’t provide or reimburse you for) to operate the car, you can deduct the business portion of those costs. Examples of costs that you may have are gas, oil, and repairs. Complete Form 2106, Part II, Sections A and C. Enter your actual costs on line 23 of Section C and leave line 25 blank. Complete the rest of the form.

Reimbursements

This section explains what to do when you receive an advance or are reimbursed for any of the employee business expenses discussed in this publication.

If you received an advance, allowance, or reimbursement for your expenses, how you report this amount and your expenses depends on whether your employer reimbursed you under an accountable plan or a nonaccountable plan.

This section explains the two types of plans, how per diem and car allowances simplify proving the amount of your expenses, and the tax treatment of your reimbursements and expenses. It also covers rules for independent contractors.

You aren’t reimbursed or given an allowance for your expenses if you are paid a salary or commission with the understanding that you will pay your own expenses. In this situation, you have no reimbursement or allowance arrangement, and you don’t have to read this section on reimbursements. Instead, see Completing Form 2106 , later, for information on completing your tax return.

A reimbursement or other expense allowance arrangement is a system or plan that an employer uses to pay, substantiate, and recover the expenses, advances, reimbursements, and amounts charged to the employer for employee business expenses. Arrangements include per diem and car allowances.

A per diem allowance is a fixed amount of daily reimbursement your employer gives you for your lodging and M&IE when you are away from home on business. (The term “incidental expenses” is defined in chapter 1 under Standard Meal Allowance. ) A car allowance is an amount your employer gives you for the business use of your car.

Your employer should tell you what method of reimbursement is used and what records you must provide.

If you are an employer and you reimburse employee business expenses, how you treat this reimbursement on your employee's Form W-2 depends in part on whether you have an accountable plan. Reimbursements treated as paid under an accountable plan, as explained next, aren’t reported as pay. Reimbursements treated as paid under nonaccountable plans , as explained later, are reported as pay. See Pub. 15 (Circular E), Employer's Tax Guide, for information on employee pay.

Accountable Plans

To be an accountable plan, your employer's reimbursement or allowance arrangement must include all of the following rules.

Your expenses must have a business connection—that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer.

You must adequately account to your employer for these expenses within a reasonable period of time.

You must return any excess reimbursement or allowance within a reasonable period of time.

Adequate accounting and returning excess reimbursements are discussed later.

An excess reimbursement or allowance is any amount you are paid that is more than the business-related expenses that you adequately accounted for to your employer.

The definition of reasonable period of time depends on the facts and circumstances of your situation. However, regardless of the facts and circumstances of your situation, actions that take place within the times specified in the following list will be treated as taking place within a reasonable period of time.

You receive an advance within 30 days of the time you have an expense.

You adequately account for your expenses within 60 days after they were paid or incurred.

You return any excess reimbursement within 120 days after the expense was paid or incurred.

You are given a periodic statement (at least quarterly) that asks you to either return or adequately account for outstanding advances and you comply within 120 days of the statement.

If you meet the three rules for accountable plans, your employer shouldn’t include any reimbursements in your income in box 1 of your Form W-2. If your expenses equal your reimbursements, you don’t complete Form 2106. You have no deduction since your expenses and reimbursements are equal.

Even though you are reimbursed under an accountable plan, some of your expenses may not meet all three rules. All reimbursements that fail to meet all three rules for accountable plans are generally treated as having been reimbursed under a nonaccountable plan (discussed later).

If you are reimbursed under an accountable plan, but you fail to return, within a reasonable time, any amounts in excess of the substantiated amounts, the amounts paid in excess of the substantiated expenses are treated as paid under a nonaccountable plan. See Reasonable period of time , earlier, and Returning Excess Reimbursements , later.

You may be reimbursed under your employer's accountable plan for expenses related to that employer's business, some of which would be allowable as employee business expense deductions and some of which would not. The reimbursements you receive for the nondeductible expenses don’t meet rule (1) for accountable plans, and they are treated as paid under a nonaccountable plan.

Your employer's plan reimburses you for travel expenses while away from home on business and also for meals when you work late at the office, even though you aren’t away from home. The part of the arrangement that reimburses you for the nondeductible meals when you work late at the office is treated as paid under a nonaccountable plan.

One of the rules for an accountable plan is that you must adequately account to your employer for your expenses. You adequately account by giving your employer a statement of expense, an account book, a diary, or a similar record in which you entered each expense at or near the time you had it, along with documentary evidence (such as receipts) of your travel, mileage, and other employee business expenses. (See Table 5-1 in chapter 5 for details you need to enter in your record and documents you need to prove certain expenses.) A per diem or car allowance satisfies the adequate accounting requirement under certain conditions. See Per Diem and Car Allowances , later.

You must account for all amounts you received from your employer during the year as advances, reimbursements, or allowances. This includes amounts you charged to your employer by credit card or other method. You must give your employer the same type of records and supporting information that you would have to give to the IRS if the IRS questioned a deduction on your return. You must pay back the amount of any reimbursement or other expense allowance for which you don’t adequately account or that is more than the amount for which you accounted.

Per Diem and Car Allowances

If your employer reimburses you for your expenses using a per diem or a car allowance, you can generally use the allowance as proof for the amount of your expenses. A per diem or car allowance satisfies the adequate accounting requirements for the amount of your expenses only if all the following conditions apply.

Your employer reasonably limits payments of your expenses to those that are ordinary and necessary in the conduct of the trade or business.

The allowance is similar in form to and not more than the federal rate (defined later).

You prove the time (dates), place, and business purpose of your expenses to your employer (as explained in Table 5-1 ) within a reasonable period of time.

You aren’t related to your employer (as defined next). If you are related to your employer, you must be able to prove your expenses to the IRS even if you have already adequately accounted to your employer and returned any excess reimbursement.

You are related to your employer if:

Your employer is your brother or sister, half brother or half sister, spouse, ancestor, or lineal descendant;

Your employer is a corporation in which you own, directly or indirectly, more than 10% in value of the outstanding stock; or

Certain relationships (such as grantor, fiduciary, or beneficiary) exist between you, a trust, and your employer.

The federal rate can be figured using any one of the following methods.

For per diem amounts:

The regular federal per diem rate.

The high-low rate.

For car expenses:

A fixed and variable rate (FAVR).

The regular federal per diem rate is the highest amount that the federal government will pay to its employees for lodging and M&IE (or M&IE only) while they are traveling away from home in a particular area. The rates are different for different localities. Your employer should have these rates available. You can also find federal per diem rates at GSA.gov/travel/plan-book/per-diem-rates .

The standard meal allowance is the federal M&IE rate. For travel in 2023, the rate for most small localities in the United States is $59 per day. Most major cities and many other localities qualify for higher rates. You can find this information at GSA.gov/travel/plan-book/per-diem-rates .

You receive an allowance only for M&IE when your employer does one of the following.

Provides you with lodging (furnishes it in kind).

Reimburses you, based on your receipts, for the actual cost of your lodging.

Pays the hotel, motel, etc., directly for your lodging.

Doesn’t have a reasonable belief that you had (or will have) lodging expenses, such as when you stay with friends or relatives or sleep in the cab of your truck.

Figures the allowance on a basis similar to that used in figuring your compensation, such as number of hours worked or miles traveled.

This is a simplified method of figuring the federal per diem rate for travel within the continental United States. It eliminates the need to keep a current list of the per diem rates for each city.

Under the high-low method, the per diem amount for travel during January through September of 2023 is $297 (which includes $74 for M&IE) for certain high-cost locations. All other areas have a per diem amount of $204 (which includes $64 for M&IE). For more information, see Notice 2022-44, which can be found at IRS.gov/irb/2022-41_IRB#NOT-2022-44 .

Effective October 1, 2023, the per diem rate for certain high-cost locations increased to $309 (which includes $74 for M&IE). The rate for all other locations increased to $214 (which includes $64 for M&IE). For more information, see Notice 2023-68, which can be found at IRS.gov/irb/2023-41_IRB#NOT-2023-68 , and Revenue Procedure 2019-48 at IRS.gov/irb/2019-51_IRB#REV-PROC-2019-48 .

The standard meal allowance is for a full 24-hour day of travel. If you travel for part of a day, such as on the days you depart and return, you must prorate the full-day M&IE rate. This rule also applies if your employer uses the regular federal per diem rate or the high-low rate.

You can use either of the following methods to figure the federal M&IE for that day.

For the day you depart, add 3 / 4 of the standard meal allowance amount for that day.

For the day you return, add 3 / 4 of the standard meal allowance amount for the preceding day.

Method 2: Prorate the standard meal allowance using any method you consistently apply in accordance with reasonable business practice. For example, an employer can treat 2 full days of per diem (that includes M&IE) paid for travel away from home from 9 a.m. of one day to 5 p.m. of the next day as being no more than the federal rate. This is true even though a federal employee would be limited to a reimbursement of M&IE for only 1½ days of the federal M&IE rate.

This is a set rate per mile that you can use to figure your deductible car expenses. For 2023, the standard mileage rate for the cost of operating your car for business use is 65.5 cents ($0.655) per mile.

This is an allowance your employer may use to reimburse your car expenses. Under this method, your employer pays an allowance that includes a combination of payments covering fixed and variable costs, such as a cents-per-mile rate to cover your variable operating costs (such as gas, oil, etc.) plus a flat amount to cover your fixed costs (such as depreciation (or lease payments), insurance, etc.). If your employer chooses to use this method, your employer will request the necessary records from you.

If your reimbursement is in the form of an allowance received under an accountable plan, the following facts affect your reporting.

Whether the allowance or your actual expenses were more than the federal rate.

If your allowance is less than or equal to the federal rate, the allowance won’t be included in box 1 of your Form W-2. You don’t need to report the related expenses or the allowance on your return if your expenses are equal to or less than the allowance.

However, if your actual expenses are more than your allowance, you can complete Form 2106. If you are using actual expenses, you must be able to prove to the IRS the total amount of your expenses and reimbursements for the entire year. If you are using the standard meal allowance or the standard mileage rate, you don’t have to prove that amount.

In April, a member of a reserve component of the Armed Forces takes a 2-day business trip to Denver. The federal rate for Denver is $278 ($199 lodging + $79 M&IE) per day. As required by their employer's accountable plan, they account for the time (dates), place, and business purpose of the trip. Their employer reimburses them $278 a day ($556 total) for living expenses. Their living expenses in Denver aren’t more than $278 a day.

Their employer doesn’t include any of the reimbursement on their Form W-2 and they don’t deduct the expenses on their return.

In June, a fee-basis local government official takes a 2-day business trip to Boston. Their employer uses the high-low method to reimburse employees. Because Boston is a high-cost area, they are given an advance of $297 (which includes $74 for M&IE) a day ($594 total) for their lodging and M&IE. Their actual expenses totaled $700.

Since their $700 of expenses are more than their $594 advance, they include the excess expenses when they itemize their deductions. They complete Form 2106 (showing all of their expenses and reimbursements). They must also allocate their reimbursement between their meals and other expenses as discussed later under Completing Form 2106 .

A fee-basis state government official drives 10,000 miles during 2023 for business. Under their employer's accountable plan, they account for the time (dates), place, and business purpose of each trip. Their employer pays them a mileage allowance of 40 cents ($0.40) a mile.

Because their $6,550 expense figured under the standard mileage rate (10,000 miles x 65.5 cents ($0.655) per mile) is more than their $4,000 reimbursement (10,000 miles × 40 cents ($0.40)), they itemize their deductions to claim the excess expense. They complete Form 2106 (showing all their expenses and reimbursements) and enter $2,550 ($6,550 − $4,000) as an itemized deduction.

If your allowance is more than the federal rate, your employer must include the allowance amount up to the federal rate under code L in box 12 of your Form W-2. This amount isn’t taxable. However, the excess allowance will be included in box 1 of your Form W-2. You must report this part of your allowance as if it were wage income.

If your actual expenses are less than or equal to the federal rate, you don’t complete Form 2106 or claim any of your expenses on your return.

However, if your actual expenses are more than the federal rate, you can complete Form 2106 and deduct those excess expenses. You must report on Form 2106 your reimbursements up to the federal rate (as shown under code L in box 12 of your Form W-2) and all your expenses. You should be able to prove these amounts to the IRS.

Sasha, a performing artist, lives and works in Austin. In July, the employer sent Sasha to Albuquerque for 4 days on business. The employer paid the hotel directly for Sasha’s lodging and reimbursed $80 a day ($320 total) for M&IE. Sasha’s actual meal expenses weren’t more than the federal rate for Albuquerque, which is $69 per day.

The employer included the $44 that was more than the federal rate (($80 − $69) × 4) in box 1 of Sasha’s Form W-2. The employer shows $276 ($69 a day × 4) under code L in box 12 of Form W-2. This amount isn’t included in income. Sasha doesn’t have to complete Form 2106; however, Sasha must include the $44 in gross income as wages (by reporting the total amount shown in box 1 of their Form W-2).

Another performing artist, Ari, also lives in Austin and works for the same employer as in Example 1 . In May, the employer sent Ari to San Diego for 4 days and paid the hotel directly for the hotel bill. The employer reimbursed Ari $75 a day for M&IE. The federal rate for San Diego is $74 a day.

Ari can prove that actual non-entertainment-related meal expenses totaled $380. The employer's accountable plan won’t pay more than $75 a day for travel to San Diego, so Ari doesn’t give the employer the records that prove that the amount actually spent was $380. However, Ari does account for the time (dates), place, and business purpose of the trip. This is Ari’s only business trip this year.

Ari was reimbursed $300 ($75 × 4 days), which is $4 more than the federal rate of $296 ($74 × 4 days). The employer includes the $4 as income on the employee’s Form W-2 in box 1. The employer also enters $296 under code L in box 12 of the employee’s Form W-2.

Ari completes Form 2106 to figure deductible expenses and enters the total of actual expenses for the year ($380) on Form 2106. Ari also enters the reimbursements that weren’t included in income ($296). Ari’s total deductible meals and beverages expense, before the 50% limit, is $96. Ari will include $48 as an itemized deduction.

Palmer, a fee-basis state government official, drives 10,000 miles during 2023 for business. Under the employer's accountable plan, Palmer gets reimbursed 70 cents ($0.70) a mile, which is more than the standard mileage rate. The total reimbursement is $7,000.

The employer must include the reimbursement amount up to the standard mileage rate, $6,550 (10,000 miles x 65.5 cents ($0.655) per mile), under code L in box 12 of the employee’s Form W-2. That amount isn’t taxable. The employer must also include $450 ($7,000 − $6,550) in box 1 of the employee's Form W-2. This is the reimbursement that is more than the standard mileage rate.

If the expenses are equal to or less than the standard mileage rate, Palmer wouldn’t complete Form 2106. If the expenses are more than the standard mileage rate, Palmer would complete Form 2106 and report total expenses and reimbursement (shown under code L in box 12 of their Form W-2). Palmer would then claim the excess expenses as an itemized deduction.

Returning Excess Reimbursements

Under an accountable plan, you are required to return any excess reimbursement or other expense allowances for your business expenses to the person paying the reimbursement or allowance. Excess reimbursement means any amount for which you didn’t adequately account within a reasonable period of time. For example, if you received a travel advance and you didn’t spend all the money on business-related expenses or you don’t have proof of all your expenses, you have an excess reimbursement.

Adequate accounting and reasonable period of time were discussed earlier in this chapter.

You receive a travel advance if your employer provides you with an expense allowance before you actually have the expense, and the allowance is reasonably expected to be no more than your expense. Under an accountable plan, you are required to adequately account to your employer for this advance and to return any excess within a reasonable period of time.

If you don’t adequately account for or don't return any excess advance within a reasonable period of time, the amount you don’t account for or return will be treated as having been paid under a nonaccountable plan (discussed later).

If you don’t prove that you actually traveled on each day for which you received a per diem or car allowance (proving the elements described in Table 5-1 ), you must return this unproven amount of the travel advance within a reasonable period of time. If you don’t do this, the unproven amount will be considered paid under a nonaccountable plan (discussed later).

If your employer's accountable plan pays you an allowance that is higher than the federal rate, you don’t have to return the difference between the two rates for the period you can prove business-related travel expenses. However, the difference will be reported as wages on your Form W-2. This excess amount is considered paid under a nonaccountable plan (discussed later).

Your employer sends you on a 5-day business trip to Phoenix in March 2023 and gives you a $400 ($80 × 5 days) advance to cover your M&IE. The federal per diem for M&IE for Phoenix is $69. Your trip lasts only 3 days. Under your employer's accountable plan, you must return the $160 ($80 × 2 days) advance for the 2 days you didn’t travel. For the 3 days you did travel, you don’t have to return the $33 difference between the allowance you received and the federal rate for Phoenix (($80 − $69) × 3 days). However, the $33 will be reported on your Form W-2 as wages.

Nonaccountable Plans

A nonaccountable plan is a reimbursement or expense allowance arrangement that doesn’t meet one or more of the three rules listed earlier under Accountable Plans .

In addition, even if your employer has an accountable plan, the following payments will be treated as being paid under a nonaccountable plan.

Excess reimbursements you fail to return to your employer.

Reimbursement of nondeductible expenses related to your employer's business. See Reimbursement of nondeductible expenses , earlier, under Accountable Plans.

If you aren’t sure if the reimbursement or expense allowance arrangement is an accountable or nonaccountable plan, ask your employer.

Your employer will combine the amount of any reimbursement or other expense allowance paid to you under a nonaccountable plan with your wages, salary, or other pay. Your employer will report the total in box 1 of your Form W-2.

You must complete Form 2106 and itemize your deductions to deduct your expenses for travel, transportation, or non-entertainment-related meals. Your meal and entertainment expenses will be subject to the 50% Limit discussed in chapter 2.

Your employer gives you $1,000 a month ($12,000 total for the year) for your business expenses. You don’t have to provide any proof of your expenses to your employer, and you can keep any funds that you don’t spend.

You are a performing artist and are being reimbursed under a nonaccountable plan. Your employer will include the $12,000 on your Form W-2 as if it were wages. If you want to deduct your business expenses, you must complete Form 2106 and itemize your deductions.

You are paid $2,000 a month by your employer. On days that you travel away from home on business, your employer designates $50 a day of your salary as paid to reimburse your travel expenses. Because your employer would pay your monthly salary whether or not you were traveling away from home, the arrangement is a nonaccountable plan. No part of the $50 a day designated by your employer is treated as paid under an accountable plan.

Rules for Independent Contractors and Clients

This section provides rules for independent contractors who incur expenses on behalf of a client or customer. The rules cover the reporting and substantiation of certain expenses discussed in this publication, and they affect both independent contractors and their clients or customers.

You are considered an independent contractor if you are self-employed and you perform services for a customer or client.

Accounting to Your Client

If you received a reimbursement or an allowance for travel, or gift expenses that you incurred on behalf of a client, you should provide an adequate accounting of these expenses to your client. If you don’t account to your client for these expenses, you must include any reimbursements or allowances in income. You must keep adequate records of these expenses whether or not you account to your client for these expenses.

If you don’t separately account for and seek reimbursement for meal and entertainment expenses in connection with providing services for a client, you are subject to the 50% limit on those expenses. See 50% Limit in chapter 2.

As a self-employed person, you adequately account by reporting your actual expenses. You should follow the recordkeeping rules in chapter 5 .

For information on how to report expenses on your tax return, see Self-employed at the beginning of this chapter.

Required Records for Clients or Customers

If you are a client or customer, you generally don’t have to keep records to prove the reimbursements or allowances you give, in the course of your business, to an independent contractor for travel or gift expenses incurred on your behalf. However, you must keep records if:

You reimburse the contractor for entertainment expenses incurred on your behalf, and

The contractor adequately accounts to you for these expenses.

If the contractor adequately accounts to you for non-entertainment-related meal expenses, you (the client or customer) must keep records documenting each element of the expense, as explained in chapter 5 . Use your records as proof for a deduction on your tax return. If non-entertainment-related meal expenses are accounted for separately, you are subject to the 50% limit on meals. If the contractor adequately accounts to you for reimbursed amounts, you don’t have to report the amounts on an information return.

If the contractor doesn’t adequately account to you for allowances or reimbursements of non-entertainment-related meal expenses, you don’t have to keep records of these items. You aren’t subject to the 50% limit on meals in this case. You can deduct the reimbursements or allowances as payment for services if they are ordinary and necessary business expenses. However, you must file Form 1099-MISC to report amounts paid to the independent contractor if the total of the reimbursements and any other fees is $600 or more during the calendar year.

How To Use Per Diem Rate Tables

This section contains information about the per diem rate substantiation methods available and the choice of rates you must make for the last 3 months of the year.

The Two Substantiation Methods

IRS Notices list the localities that are treated under the high-low substantiation method as high-cost localities for all or part of the year. Notice 2022-44, available at IRS.gov/irb/2022-41_IRB#NOT-2022-44 , lists the high-cost localities that are eligible for $297 (which includes $74 for meals and incidental expenses (M&IE)) per diem, effective October 1, 2022. For travel on or after October 1, 2022, all other localities within the continental United States (CONUS) are eligible for $204 (which includes $64 for M&IE) per diem under the high-low method.

Notice 2023-68, available at IRS.gov/irb/2023-41_IRB#NOT-2023-68 , lists the high-cost localities that are eligible for $309 (which includes $74 for M&IE) per diem, effective October 1, 2023. For travel on or after October 1, 2023, the per diem for all other localities increased to $214 (which includes $64 for M&IE).

Regular federal per diem rates are published by the General Services Administration (GSA). Both tables include the separate rate for M&IE for each locality. The rates listed for FY2023 at GSA.gov/travel/plan-book/per-diem-rates are effective October 1, 2022, and those listed for FY2024 are effective October 1, 2023. The standard rate for all locations within CONUS not specifically listed for FY2023 is $157 ($98 for lodging and $59 for M&IE). For FY2024, this rate increases to $166 ($107 for lodging and $59 for M&IE).

Transition Rules

The transition period covers the last 3 months of the calendar year, from the time that new rates are effective (generally, October 1) through December 31. During this period, you may generally change to the new rates or finish out the year with the rates you had been using.

If you use the high-low substantiation method, when new rates become effective (generally, October 1), you can either continue with the rates you used for the first part of the year or change to the new rates. However, you must continue using the high-low method for the rest of the calendar year (through December 31). If you are an employer, you must use the same rates for all employees reimbursed under the high-low method during that calendar year.

The new rates and localities for the high-low method are included each year in a notice that is generally published in mid to late September. You can find the notice in the weekly Internal Revenue Bulletin (IRB) at IRS.gov/IRB , or visit IRS.gov and enter “Special Per Diem Rates” in the search box.

New CONUS per diem rates become effective on October 1 of each year and remain in effect through September 30 of the following year. Employees being reimbursed under the per diem rate method during the first 9 months of a year (January 1–September 30) must continue under the same method through the end of that calendar year (December 31). However, for travel by these employees from October 1 through December 31, you can choose to continue using the same per diem rates or use the new rates.

The new federal CONUS per diem rates are published each year, generally early in September. Go to GSA.gov/travel/plan-book/per-diem-rates .

Completing Form 2106

For tax years beginning after 2017, the Form 2106 will be used by Armed Forces reservists, qualified performing artists, fee-basis state or local government officials, and employees with impairment-related work expenses. Due to the suspension of miscellaneous itemized deductions subject to the 2% floor under section 67(a), employees who do not fit into one of the listed categories may not use Form 2106.

This section briefly describes how employees complete Forms 2106. Table 6-1 explains what the employer reports on Form W-2 and what the employee reports on Form 2106. The instructions for the forms have more information on completing them.

Table 6-1. Reporting Travel, Nonentertainment Meal, Gift, and Car Expenses and Reimbursements

If you used a car to perform your job as an employee, you may be able to deduct certain car expenses. These are generally figured on Form 2106, Part II, and then claimed on Form 2106, Part I, line 1, column A.

If you claim any deduction for the business use of a car, you must answer certain questions and provide information about the use of the car. The information relates to the following items.

Date placed in service.

Mileage (total, business, commuting, and other personal mileage).

Percentage of business use.

After-work use.

Use of other vehicles.

Whether you have evidence to support the deduction.

Whether or not the evidence is written.

If you claim a deduction based on the standard mileage rate instead of your actual expenses, you must complete Form 2106, Part II, Section B. The amount on line 22 (Section B) is carried to Form 2106, Part I, line 1. In addition, on Part I, line 2, you can deduct parking fees and tolls that apply to the business use of the car. See Standard Mileage Rate in chapter 4 for information on using this rate.

If you claim a deduction based on actual car expenses, you must complete Form 2106, Part II, Section C. In addition, unless you lease your car, you must complete Section D to show your depreciation deduction and any section 179 deduction you claim.

If you are still using a car that is fully depreciated, continue to complete Section C. Since you have no depreciation deduction, enter zero on line 28. In this case, don’t complete Section D.

If you claim car rental expenses on Form 2106, line 24a, you may have to reduce that expense by an inclusion amount , as described in chapter 4. If so, you can show your car expenses and any inclusion amount as follows.

Figure the inclusion amount without taking into account your business-use percentage for the tax year.

Report the inclusion amount from (1) on Form 2106, Part II, line 24b.

Report on line 24c the net amount of car rental expenses (total car rental expenses minus the inclusion amount figured in (1)).

Show your transportation expenses that didn’t involve overnight travel on Form 2106, line 2, column A. Also include on this line business expenses you have for parking fees and tolls. Don’t include expenses of operating your car or expenses of commuting between your home and work.

Show your other employee business expenses on Form 2106, lines 3 and 4, column A. Don’t include expenses for nonentertainment meals on those lines. Line 4 is for expenses such as gifts, educational expenses (tuition and books), office-in-the-home expenses, and trade and professional publications.

Show the full amount of your expenses for nonentertainment business-related meals on Form 2106, line 5, column B. Include meals while away from your tax home overnight and other business meals. Enter 50% of the line 8, column B, meal expenses on line 9, column B.

If you are subject to the Department of Transportation's “hours of service” limits (as explained earlier under Individuals subject to hours of service limits in chapter 2), use 80% instead of 50% for meals while away from your tax home.

Enter on Form 2106, line 7, the amounts your employer (or third party) reimbursed you that weren’t reported to you in box 1 of your Form W-2. This includes any amount reported under code L in box 12 of Form W-2.

If you were reimbursed under an accountable plan and want to deduct excess expenses that weren’t reimbursed, you may have to allocate your reimbursement. This is necessary when your employer pays your reimbursement in the following manner.

Pays you a single amount that covers non-entertainment-related meals and/or entertainment, as well as other business expenses.

Doesn’t clearly identify how much is for deductible non-entertainment-related meals.

Your employer paid you an expense allowance of $12,000 this year under an accountable plan. The $12,000 payment consisted of $5,000 for airfare and $7,000 for non-entertainment-related meals, and car expenses. Your employer didn’t clearly show how much of the $7,000 was for the cost of deductible non-entertainment-related meals. You actually spent $14,000 during the year ($5,500 for airfare, $4,500 for non-entertainment-related meals, and $4,000 for car expenses).

Since the airfare allowance was clearly identified, you know that $5,000 of the payment goes in column A, line 7, of Form 2106. To allocate the remaining $7,000, you use the worksheet from the Instructions for Form 2106. Your completed worksheet follows.

Reimbursement Allocation Worksheet (Keep for your records.)

If you are a government official paid on a fee basis, a performing artist, an Armed Forces reservist, or a disabled employee with impairment-related work expenses, see Special Rules , later.

Your employee business expenses may be subject to either of the limits described next. They are figured in the following order on the specified form.

Certain non-entertainment-related meal expenses are subject to a 50% limit. Generally, entertainment expenses are nondeductible if paid or incurred after December 2017. If you are an employee, you figure this limit on line 9 of Form 2106. (See 50% Limit in chapter 2.)

Limitations on itemized deductions are suspended for tax years beginning after 2017 and before tax year January 2026, per section 68(g).

Special Rules

This section discusses special rules that apply only to Armed Forces reservists, government officials who are paid on a fee basis, performing artists, and disabled employees with impairment-related work expenses. For tax years beginning after 2017, they are the only taxpayers who can use Form 2106.

Armed Forces Reservists Traveling More Than 100 Miles From Home

If you are a member of a reserve component of the Armed Forces of the United States and you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you can deduct your travel expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. The amount of expenses you can deduct as an adjustment to gross income is limited to the regular federal per diem rate (for lodging and M&IE) and the standard mileage rate (for car expenses) plus any parking fees, ferry fees, and tolls. See Per Diem and Car Allowances , earlier, for more information.

You are a member of a reserve component of the Armed Forces of the United States if you are in the Army, Navy, Marine Corps, Air Force, or Coast Guard Reserve; the Army National Guard of the United States; the Air National Guard of the United States; or the Reserve Corps of the Public Health Service.

If you have reserve-related travel that takes you more than 100 miles from home, you should first complete Form 2106. Then include your expenses for reserve travel over 100 miles from home, up to the federal rate, from Form 2106, line 10, in the total on Schedule 1 (Form 1040), line 12.

You can’t deduct expenses of travel that doesn’t take you more than 100 miles from home as an adjustment to gross income.

Certain fee-basis officials can claim their employee business expenses on Form 2106.

Fee-basis officials are persons who are employed by a state or local government and who are paid in whole or in part on a fee basis. They can deduct their business expenses in performing services in that job as an adjustment to gross income rather than as a miscellaneous itemized deduction.

If you are a fee-basis official, include your employee business expenses from Form 2106, line 10, in the total on Schedule 1 (Form 1040), line 12.

Expenses of Certain Performing Artists

If you are a performing artist, you may qualify to deduct your employee business expenses as an adjustment to gross income. To qualify, you must meet all of the following requirements.

During the tax year, you perform services in the performing arts as an employee for at least two employers.

You receive at least $200 each from any two of these employers.

Your related performing-arts business expenses are more than 10% of your gross income from the performance of those services.

Your adjusted gross income isn’t more than $16,000 before deducting these business expenses.

If you are married, you must file a joint return unless you lived apart from your spouse at all times during the tax year. If you file a joint return, you must figure requirements (1), (2), and (3) separately for both you and your spouse. However, requirement (4) applies to your and your spouse's combined adjusted gross income.

If you meet all of the above requirements, you should first complete Form 2106. Then you include your performing-arts-related expenses from Form 2106, line 10, in the total on Schedule 1 (Form 1040), line 12.

If you don’t meet all of the above requirements, you don’t qualify to deduct your expenses as an adjustment to gross income.

If you are an employee with a physical or mental disability, your impairment-related work expenses aren’t subject to the 2%-of-adjusted-gross-income limit that applies to most other employee business expenses. After you complete Form 2106, enter your impairment-related work expenses from Form 2106, line 10, on Schedule A (Form 1040), line 16, and identify the type and amount of this expense on the line next to line 16.

Impairment-related work expenses are your allowable expenses for attendant care at your workplace and other expenses in connection with your workplace that are necessary for you to be able to work.

You are disabled if you have:

A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed; or

A physical or mental impairment (for example, a sight or hearing impairment) that substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, or working.

You can deduct impairment-related expenses as business expenses if they are:

Necessary for you to do your work satisfactorily;

For goods and services not required or used, other than incidentally, in your personal activities; and

Not specifically covered under other income tax laws.

You are blind. You must use a reader to do your work. You use the reader both during your regular working hours at your place of work and outside your regular working hours away from your place of work. The reader's services are only for your work. You can deduct your expenses for the reader as business expenses.

You are deaf. You must use a sign language interpreter during meetings while you are at work. The interpreter's services are used only for your work. You can deduct your expenses for the interpreter as business expenses.

How To Get Tax Help

If you have questions about a tax issue; need help preparing your tax return; or want to download free publications, forms, or instructions, go to IRS.gov to find resources that can help you right away.

After receiving all your wage and earnings statements (Forms W-2, W-2G, 1099-R, 1099-MISC, 1099-NEC, etc.); unemployment compensation statements (by mail or in a digital format) or other government payment statements (Form 1099-G); and interest, dividend, and retirement statements from banks and investment firms (Forms 1099), you have several options to choose from to prepare and file your tax return. You can prepare the tax return yourself, see if you qualify for free tax preparation, or hire a tax professional to prepare your return.

Your options for preparing and filing your return online or in your local community, if you qualify, include the following.

Free File. This program lets you prepare and file your federal individual income tax return for free using software or Free File Fillable Forms. However, state tax preparation may not be available through Free File. Go to IRS.gov/FreeFile to see if you qualify for free online federal tax preparation, e-filing, and direct deposit or payment options.

VITA. The Volunteer Income Tax Assistance (VITA) program offers free tax help to people with low-to-moderate incomes, persons with disabilities, and limited-English-speaking taxpayers who need help preparing their own tax returns. Go to IRS.gov/VITA , download the free IRS2Go app, or call 800-906-9887 for information on free tax return preparation.

TCE. The Tax Counseling for the Elderly (TCE) program offers free tax help for all taxpayers, particularly those who are 60 years of age and older. TCE volunteers specialize in answering questions about pensions and retirement-related issues unique to seniors. Go to IRS.gov/TCE or download the free IRS2Go app for information on free tax return preparation.

MilTax. Members of the U.S. Armed Forces and qualified veterans may use MilTax, a free tax service offered by the Department of Defense through Military OneSource. For more information, go to MilitaryOneSource ( MilitaryOneSource.mil/MilTax ).

Also, the IRS offers Free Fillable Forms, which can be completed online and then e-filed regardless of income.

Go to IRS.gov/Tools for the following.

The Earned Income Tax Credit Assistant ( IRS.gov/EITCAssistant ) determines if you’re eligible for the earned income credit (EIC).

The Online EIN Application ( IRS.gov/EIN ) helps you get an employer identification number (EIN) at no cost.

The Tax Withholding Estimator ( IRS.gov/W4App ) makes it easier for you to estimate the federal income tax you want your employer to withhold from your paycheck. This is tax withholding. See how your withholding affects your refund, take-home pay, or tax due.

The First Time Homebuyer Credit Account Look-up ( IRS.gov/HomeBuyer ) tool provides information on your repayments and account balance.

The Sales Tax Deduction Calculator ( IRS.gov/SalesTax ) figures the amount you can claim if you itemize deductions on Schedule A (Form 1040).

Go to IRS.gov/Help : A variety of tools to help you get answers to some of the most common tax questions.

Go to IRS.gov/ITA : The Interactive Tax Assistant, a tool that will ask you questions and, based on your input, provide answers on a number of tax topics.

Go to IRS.gov/Forms : Find forms, instructions, and publications. You will find details on the most recent tax changes and interactive links to help you find answers to your questions.

You may also be able to access tax information in your e-filing software.

There are various types of tax return preparers, including enrolled agents, certified public accountants (CPAs), accountants, and many others who don’t have professional credentials. If you choose to have someone prepare your tax return, choose that preparer wisely. A paid tax preparer is:

Primarily responsible for the overall substantive accuracy of your return,

Required to sign the return, and

Required to include their preparer tax identification number (PTIN).

The Social Security Administration (SSA) offers online service at SSA.gov/employer for fast, free, and secure W-2 filing options to CPAs, accountants, enrolled agents, and individuals who process Form W-2, Wage and Tax Statement, and Form W-2c, Corrected Wage and Tax Statement.

Go to IRS.gov/SocialMedia to see the various social media tools the IRS uses to share the latest information on tax changes, scam alerts, initiatives, products, and services. At the IRS, privacy and security are our highest priority. We use these tools to share public information with you. Don’t post your social security number (SSN) or other confidential information on social media sites. Always protect your identity when using any social networking site.

The following IRS YouTube channels provide short, informative videos on various tax-related topics in English, Spanish, and ASL.

Youtube.com/irsvideos .

Youtube.com/irsvideosmultilingua .

Youtube.com/irsvideosASL .

The IRS Video portal ( IRSVideos.gov ) contains video and audio presentations for individuals, small businesses, and tax professionals.

You can find information on IRS.gov/MyLanguage if English isn’t your native language.

The IRS is committed to serving taxpayers with limited-English proficiency (LEP) by offering OPI services. The OPI Service is a federally funded program and is available at Taxpayer Assistance Centers (TACs), most IRS offices, and every VITA/TCE tax return site. The OPI Service is accessible in more than 350 languages.

Taxpayers who need information about accessibility services can call 833-690-0598. The Accessibility Helpline can answer questions related to current and future accessibility products and services available in alternative media formats (for example, braille, large print, audio, etc.). The Accessibility Helpline does not have access to your IRS account. For help with tax law, refunds, or account-related issues, go to IRS.gov/LetUsHelp .

Form 9000, Alternative Media Preference, or Form 9000(SP) allows you to elect to receive certain types of written correspondence in the following formats.

Standard Print.

Large Print.

Audio (MP3).

Plain Text File (TXT).

Braille Ready File (BRF).

Go to IRS.gov/DisasterRelief to review the available disaster tax relief.

Go to IRS.gov/Forms to view, download, or print all the forms, instructions, and publications you may need. Or, you can go to IRS.gov/OrderForms to place an order.

Download and view most tax publications and instructions (including the Instructions for Form 1040) on mobile devices as eBooks at IRS.gov/eBooks .

IRS eBooks have been tested using Apple's iBooks for iPad. Our eBooks haven’t been tested on other dedicated eBook readers, and eBook functionality may not operate as intended.

Go to IRS.gov/Account to securely access information about your federal tax account.

View the amount you owe and a breakdown by tax year.

See payment plan details or apply for a new payment plan.

Make a payment or view 5 years of payment history and any pending or scheduled payments.

Access your tax records, including key data from your most recent tax return, and transcripts.

View digital copies of select notices from the IRS.

Approve or reject authorization requests from tax professionals.

View your address on file or manage your communication preferences.

With an online account, you can access a variety of information to help you during the filing season. You can get a transcript, review your most recently filed tax return, and get your adjusted gross income. Create or access your online account at IRS.gov/Account .

This tool lets your tax professional submit an authorization request to access your individual taxpayer IRS online account. For more information, go to IRS.gov/TaxProAccount .

The safest and easiest way to receive a tax refund is to e-file and choose direct deposit, which securely and electronically transfers your refund directly into your financial account. Direct deposit also avoids the possibility that your check could be lost, stolen, destroyed, or returned undeliverable to the IRS. Eight in 10 taxpayers use direct deposit to receive their refunds. If you don’t have a bank account, go to IRS.gov/DirectDeposit for more information on where to find a bank or credit union that can open an account online.

Tax-related identity theft happens when someone steals your personal information to commit tax fraud. Your taxes can be affected if your SSN is used to file a fraudulent return or to claim a refund or credit.

The IRS doesn’t initiate contact with taxpayers by email, text messages (including shortened links), telephone calls, or social media channels to request or verify personal or financial information. This includes requests for personal identification numbers (PINs), passwords, or similar information for credit cards, banks, or other financial accounts.

Go to IRS.gov/IdentityTheft , the IRS Identity Theft Central webpage, for information on identity theft and data security protection for taxpayers, tax professionals, and businesses. If your SSN has been lost or stolen or you suspect you’re a victim of tax-related identity theft, you can learn what steps you should take.

Get an Identity Protection PIN (IP PIN). IP PINs are six-digit numbers assigned to taxpayers to help prevent the misuse of their SSNs on fraudulent federal income tax returns. When you have an IP PIN, it prevents someone else from filing a tax return with your SSN. To learn more, go to IRS.gov/IPPIN .

Go to IRS.gov/Refunds .

Download the official IRS2Go app to your mobile device to check your refund status.

Call the automated refund hotline at 800-829-1954.

Payments of U.S. tax must be remitted to the IRS in U.S. dollars. Digital assets are not accepted. Go to IRS.gov/Payments for information on how to make a payment using any of the following options.

IRS Direct Pay : Pay your individual tax bill or estimated tax payment directly from your checking or savings account at no cost to you.

Debit Card, Credit Card, or Digital Wallet : Choose an approved payment processor to pay online or by phone.

Electronic Funds Withdrawal : Schedule a payment when filing your federal taxes using tax return preparation software or through a tax professional.

Electronic Federal Tax Payment System : Best option for businesses. Enrollment is required.

Check or Money Order : Mail your payment to the address listed on the notice or instructions.

Cash : You may be able to pay your taxes with cash at a participating retail store.

Same-Day Wire : You may be able to do same-day wire from your financial institution. Contact your financial institution for availability, cost, and time frames.

Note. The IRS uses the latest encryption technology to ensure that the electronic payments you make online, by phone, or from a mobile device using the IRS2Go app are safe and secure. Paying electronically is quick, easy, and faster than mailing in a check or money order.

Go to IRS.gov/Payments for more information about your options.

Apply for an online payment agreement ( IRS.gov/OPA ) to meet your tax obligation in monthly installments if you can’t pay your taxes in full today. Once you complete the online process, you will receive immediate notification of whether your agreement has been approved.

Use the Offer in Compromise Pre-Qualifier to see if you can settle your tax debt for less than the full amount you owe. For more information on the Offer in Compromise program, go to IRS.gov/OIC .

Go to IRS.gov/Form1040X for information and updates.

Go to IRS.gov/WMAR to track the status of Form 1040-X amended returns.

Go to IRS.gov/Notices to find additional information about responding to an IRS notice or letter.

You can now upload responses to all notices and letters using the Document Upload Tool. For notices that require additional action, taxpayers will be redirected appropriately on IRS.gov to take further action. To learn more about the tool, go to IRS.gov/Upload .

You can use Schedule LEP (Form 1040), Request for Change in Language Preference, to state a preference to receive notices, letters, or other written communications from the IRS in an alternative language. You may not immediately receive written communications in the requested language. The IRS’s commitment to LEP taxpayers is part of a multi-year timeline that began providing translations in 2023. You will continue to receive communications, including notices and letters, in English until they are translated to your preferred language.

Keep in mind, many questions can be answered on IRS.gov without visiting a TAC. Go to IRS.gov/LetUsHelp for the topics people ask about most. If you still need help, TACs provide tax help when a tax issue can’t be handled online or by phone. All TACs now provide service by appointment, so you’ll know in advance that you can get the service you need without long wait times. Before you visit, go to IRS.gov/TACLocator to find the nearest TAC and to check hours, available services, and appointment options. Or, on the IRS2Go app, under the Stay Connected tab, choose the Contact Us option and click on “Local Offices.”

The Taxpayer Advocate Service (TAS) Is Here To Help You

TAS is an independent organization within the IRS that helps taxpayers and protects taxpayer rights. TAS strives to ensure that every taxpayer is treated fairly and that you know and understand your rights under the Taxpayer Bill of Rights .

The Taxpayer Bill of Rights describes 10 basic rights that all taxpayers have when dealing with the IRS. Go to TaxpayerAdvocate.IRS.gov to help you understand what these rights mean to you and how they apply. These are your rights. Know them. Use them.

TAS can help you resolve problems that you can’t resolve with the IRS. And their service is free. If you qualify for their assistance, you will be assigned to one advocate who will work with you throughout the process and will do everything possible to resolve your issue. TAS can help you if:

Your problem is causing financial difficulty for you, your family, or your business;

You face (or your business is facing) an immediate threat of adverse action; or

You’ve tried repeatedly to contact the IRS but no one has responded, or the IRS hasn’t responded by the date promised.

TAS has offices in every state, the District of Columbia, and Puerto Rico . To find your advocate’s number:

Go to TaxpayerAdvocate.IRS.gov/Contact-Us ;

Download Pub. 1546, The Taxpayer Advocate Service Is Your Voice at the IRS, available at IRS.gov/pub/irs-pdf/p1546.pdf ;

Call the IRS toll free at 800-TAX-FORM (800-829-3676) to order a copy of Pub. 1546;

Check your local directory; or

Call TAS toll free at 877-777-4778.

TAS works to resolve large-scale problems that affect many taxpayers. If you know of one of these broad issues, report it to TAS at IRS.gov/SAMS . Be sure to not include any personal taxpayer information.

LITCs are independent from the IRS and TAS. LITCs represent individuals whose income is below a certain level and who need to resolve tax problems with the IRS. LITCs can represent taxpayers in audits, appeals, and tax collection disputes before the IRS and in court. In addition, LITCs can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Services are offered for free or a small fee. For more information or to find an LITC near you, go to the LITC page at TaxpayerAdvocate.IRS.gov/LITC or see IRS Pub. 4134, Low Income Taxpayer Clinic List , at IRS.gov/pub/irs-pdf/p4134.pdf .

Appendices A-1 through A-6 show the lease inclusion amounts that you may need to report if you first leased a passenger automobile (including a truck and van) in 2018 through 2023 for 30 days or more.

If any of these apply to you, use the appendix for the year you first leased the car. (See Leasing a Car in chapter 4.)

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A comprehensive guide to corporate travel allowances in the Netherlands

What are the mileage allowance rates in the netherlands for 2023, how does mileage allowance work, employees driving their personal car, employees driving a company van or car, electric vehicles, taxi, boat, or airplane.

Get your team road ready with this free, practical mileage and car allowance policy template.

Travelling by public transport.

Employees must travel more than 10 kilometres each way to reach their place of work from home
Staff must commute to the same workplace at least one day a week and for at least 40 days each year. Each journey must be completed within 24 hours to count towards their total.

What additional tax implications are there?

Additional reimbursements, employees driving their own vehicles.

(number of kilometres travelled one way 2) €0.21 * 214 working travel days / 12 months = your tax-free travel allowance per month

Company vehicles

Parking expenses, public transport users.

The distance travelled between the employee's home and their work location
The number of days the employee travels into the office

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COMMENTS

The Murky Waters of Tax Deductions for Travel Bloggers
At the standard mileage rate of 57.5 cents per mile, that means we "spent" $345 to drive down there. Note that if you use the standard mileage rate, you can't deduct the cost of gas. Gas is computed in the standard mileage rate. $8.00 in tolls. $110.00 for a hotel stay at Dawson Inn. $25.17 for dinner at Wendy's.
Everything you need to know about tax deductions for travel bloggers
Generally, any expense that is deemed ordinary and necessary for your trade or business is considered a legitimate deduction. As a travel blogger, Kelly can claim a couple of deductions like-. Start-up costs. Website and hosting expenses. Content-related expenses. A home office. Marketing costs.
The Tax Details Travel Bloggers Need to Know
As a self-employed travel blogger, you'll need to pay your taxes quarterly through estimated tax payments. Using the previous year's financial information and Form 1040-ES, you can figure out your estimated tax payments for each deadline: April 15, June 15, September 15, and January 15.
How to Deduct Business Travel Expenses: Do's, Don'ts, Examples
To be able to claim all the possible travel deductions, your trip should require you to sleep somewhere that isn't your home. 2. You should be working regular hours. In general, that means eight hours a day of work-related activity. It's fine to take personal time in the evenings, and you can still take weekends off.
Guide to Expense Deductions for Travel Bloggers
Business Expense Deductions for Travelers and Travel Bloggers. These deductions are pretty self explanatory, but basically, if the expenses are directly related to the business, like for you and people who work in the business, then they are deductible. When you start including other people, like family, partners and friends, those costs are ...
Understanding business travel deductions
Business travel deductions are available when employees must travel away from their tax home or main place of work for business reasons. A taxpayer is traveling away from home if they are away for longer than an ordinary day's work and they need to sleep to meet the demands of their work while away. Travel expenses must be ordinary and ...
Topic no. 511, Business travel expenses
Topic no. 511, Business travel expenses. Travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job. You can't deduct expenses that are lavish or extravagant, or that are for personal purposes. You're traveling away from home if your duties require you to be away from the general ...
How to write off travel expenses
For self-employed travel expenses, you will list travel write-offs on Schedule C Form 1040. Businesses must claim travel expenses on Form 2106 and report them on Form 1040 or Form 1040-SR as an adjustment to their total income. While there's no annual travel deduction limit, the IRS scrutinizes higher write-offs.
Top Tax Deductions and Tips for All Bloggers
Job-related travel expenses: This includes any expenses incurred during business trips, such as airfare, gas, rental vehicles, bus and train fares, and local transportation. Note that travel must be overnight and away from your primary residence or place of business to qualify. And you can only write off 50 percent of meals on business trips.
Travel Blog Tax Deductions: Your Ultimate Guide
Tax Deductions Associated with Travel Blogging. Here's a detailed breakdown of the various deductions that travel bloggers can claim: Start-Up Costs: Start-up costs, or capital expenses, are deductible only if the business owner chooses to do so. The IRS states that up to $5,000 in business start-up costs can be deducted.
Best Advice About Tax Deductions for Bloggers and Influencers to Save
Travel. As a travel blogger, travel is an ordinary and necessary part of my business. Thus, I expense everything related to travel that helps me make content. You can even expense travel if you are not a travel blogger but do work while you are traveling. These tax deductions for bloggers include are not limited to: airfare or train costs, car ...
33 Tax Write-Offs for Bloggers (2024)
33 Tax Write-Offs for Bloggers. Whether you write about fashion, travel, or finance, find out what you can write off as a blogger. Blogging is a popular way to share your thoughts, ideas, and expertise with the world. However, creating and distributing quality content does cost money. Thankfully, the IRS lets you deduct all ordinary and ...
How to Deduct Travel Expenses (with Examples)
For example, let's say a hotel room for one person costs $100, but a hotel room that can accommodate your family costs $150. You can rent the $150 option and deduct $100 of the cost as a business expense—because $100 is how much you'd be paying if you were staying there alone.
Tax Deductions for Business Travelers
You can deduct business travel expenses when you are away from both your home and the location of your main place of business (tax home). Deductible expenses include transportation, baggage fees, car rentals, taxis and shuttles, lodging, tips, and fees. You can also deduct 50% of either the actual cost of meals or the standard meal allowance ...
Can travel bloggers write off exotic vacations and fancy meals?
Content-related expenses. This expense will depend on the type of blog you run. If your blog is related to traveling you can deduct expenses incurred in connection with travel. Home office. Most bloggers run their blogs out of their homes. You can claim the home office deduction by setting up your business premises at your home.
27 Tax Write-Offs for Bloggers
Wi-Fi bill. Write it off using: Schedule C, Box 25. Your Comcast bill is a tax write-off. You need internet to do your job! You can write off lots of expenses to keep more of your blogging income in your pocket. Here are the details.
Writing off travel expenses for new travel blogger? : r ...
The answer is no. Your accountant is correct about not being able to write off travel expenses if you do not have a "tax home". You are only able to write off travel expenses if you are traveling away from your tax home and the travel is necessary for your business.
What Can I Deduct on My Taxes?
The IRS increased the amount you can contribute to a 401 (k), 403 (b), and most 457 plans to $19,000 in 2019, up from $18,500 the year before. Traditional IRA contributions, which may also be ...
The Best Way To Travel For Free And Lower Your Taxable Income
Other similar ordinary and necessary expenses related to your business travel. (These expenses might include transportation to and from a business meal, public stenographer's fees, computer rental fees, and operating and maintaining a house trailer.) Good records are essential. Refer to Topic 305 for information on record-keeping.
Can I deduct expenses as a new travel blogger : r/tax
We initially planned to write off some of our expenses that were related to any content we created for the blog like travel blogging course~$300, laptop~$1000, camera~$500, flights~$3000, lodging~$5000-10000 (nothing extravagant), but after doing some research online I am unsure if we can do this. It seems during that time frame we can meet ...
The Ultimate Small Business Tax Deductions Checklist
21. Business travel. Business trips can be a complicated process when it comes to tax deductions. Simply put, the business expenses on a trip are tax deductible. The IRS has strict rules about who can claim this deduction—to qualify, your trip must meet the following criteria: The trip was overnight; You traveled at least 100 miles from home
Here's what taxpayers need to know about business related travel
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 or farmers with travel deductions. Those who are self-employed can deduct travel expenses on Schedule C (Form 1040), Profit or Loss From Business (Sole ...
Business tourism 101: All you need to know
Business travel helps employees be more productive, too: More than half of 16-24-year-olds say they have the best business ideas while travelling. ... to advice on setting up a business travel policy, and managing your expenses. Our latest e-books. and . blog posts. have you covered. Never miss another update. Stay in touch with us . on social.
Checklists For Your First Corporate Managed Travel Program
Managed travel systematizes a company's business travel, giving it the tools and structure to run the program efficiently and effectively. It enables companies to set policies for their traveling employees, provides data and reporting tools, helps maintain duty of care, and much more.
Unleashing the Data Revolution in Corporate Travel
The global business travel industry is rising, with expenditures projected to hit $1316 billion by 2028—nearly double the $700 billion spent in 2020. However, this growth also brings the challenge of managing travel expenses effectively.
Can You Deduct Your Trip From Your Taxes? Experts Weigh In
Travel expenses are only deductible on the days in which the work-related event occurs. "For example, a taxi ride to the meeting, train to a conference, or plane ride to the event [are deductible ...
Publication 463 (2023), Travel, Gift, and Car Expenses
You can deduct the cost of your non-entertainment-related meals (subject to the 50% Limit), lodging, and other business-related travel expenses while in Paris. You can't deduct your expenses while in Dublin. You also can't deduct 7 / 18 of what it would have cost you to travel round trip between New York and Dublin.
Top 5 Corporate Travel Booking Websites in 2024
If you're a travel manager or admin, you'll know how complicated booking business travel can get. From finding the best deals and enforcing company policy to getting VAT refunds and filing expense reports, the process can be extremely time-consuming—so it's no surprise many travel managers choose to call in outside help.
Independent MP Fraser Ellis guilty of deception over his misuse of
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Business travel allowances in the Netherlands
Any expenses an organisation pays employees above the €0.21 business travel and commuting allowance are deemed part of an employee's salary and subject to their income tax rate. This includes any money received for tolls, depreciation for wear and tear or personal vehicle damage.