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How to Appropriately Deduct Travel and Entertainment Expenses


If you are a small business owner, you will find that the travel and entertainment expenses that you spend on business trips affect your profit a great deal. For businesses that involve a lot of travel, travel expenses could also lead to losses. Hence, it is always desirable to know how and when to deduct travel and entertainment expenses from you taxes.

Deductibles Available to Tax Payers

If you are a frequent business traveler, there are a number of different deductibles that are available to you. You are allowed to deduct up to 100 percent of your trip expenses no matter whether your travel is by land or by air, 50 percent of your accommodation expenses and 50 percent of your meals and entertainment expenses. However, if you take your spouse along with you, you are not eligible for any deductions on their stay or travel.

Expenses That Cannot Be Deducted

Though a major portion of all your travel and entertainment expenses can be deducted from your tax amounts, there are some expenses that do not qualify for deductions. Cruises and family expenses do not fall under the category of expenses that can be deducted. Moreover, you cannot deduct expenses caused by extensions to your trip and accommodation expenses for trips that do not require your overnight stay.

The Necessary Documentation

When you deduct your travel and entertainment expenses from your tax amount, you are expected to provide a record of all the evidences for every expense you claim. As a tax payer, you are not allowed to claim any expenses for which you have no proof. Even if you use your own vehicle for your travel, you are expected to provide proof of the mileage and the fuel costs.

Knowing how to appropriately deduct your travel and entertainment expenses can be a real benefit because you can take good advantage of the deductibles available to you and use them to increase your profits.

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