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Business Travel Expenses

By: Paige Rubino, CPA

Most business people know that many of the costs associated with work-related travel – air fares, mileage, tolls, hotels, some entertainment and 50 percent of your meals – are usually tax-deductible. But you don’t have to rely on tax breaks from Uncle Sam to tame your travel costs. There are many ways to complete essential projects without having to hit the road.

At the start of any new business relationship, face-to-face contact is essential. If you’re giving a sales pitch or making a presentation, you will make a better connection if you do it in person. Also, the best way to learn about your new partner is to visit the site, take a tour, meet the key people in the operation and see first-hand how they go about their work.

Once you have established the relationship, you can significantly reduce your travel time – and expenses. Phone calls are easy to make; video conferences are easy to arrange and give you a face-to-face presence. Most documents can easily be transmitted through email, preferably before they’re needed during your conference. Such conveniences permit you to save the in-person meetings for when they’re really needed.

When you must travel to see a client, consider arranging a meeting at a midway point. It will give both of you a break from your offices, and it will reduce overall travel time. If your business has multiple offices, or you have team members who live in different areas, assign one who works or lives closest to the client to handle the meeting. If two or more people must attend the meeting, carpool. You can iron out details of your presentation on the way over and do a debriefing as you drive back to the office.

For many businesses, the most significant travel expenses are incurred when employees must go out of town for training or conferences. Airfare or mileage, lodging and meals can add up quickly, potentially costing thousands of dollars for each employee. If air travel is a must, book early and try to fly at off-peak hours. Also, check fare calendars. Sometimes you can generate a net savings by spending an extra night in a hotel to get a lower fare. Don’t automatically book rooms at the conference venue. There may be a hotel nearby that offers lower rates.

With the expansion of online learning opportunities, it may be possible for employees to secure the training they need through webinars and teleconferences. Many companies that offer these online courses will offer package deals – allowing individuals to take as many classes as they would like for a fixed price, or offering businesses a package that would make the classes available to all their employees. Another advantage of online offerings: many classes can be taken at the user’s convenience and at their own pace – on their lunch hours, after work or on weekends.

If travel is unavoidable, it is important to save your receipts and keep detailed records – whether it’s for claiming a tax deduction, a reimbursement from your employer or billing a client for your expenses. No matter what the purpose, documentation requirements are similar.

Reimbursement standards, however, will vary. While the IRS permits only a 50 percent deduction for business meals, your employer may reimburse you in full. Remember that you cannot claim a tax deduction for business expenses reimbursed by your employer. However, if your travel expenses total $1,000, and your employer reimburses only $800, then you can claim a tax deduction for the remaining $200. Even so, claiming the deduction isn’t automatic. You would have to itemize your deductions and your total travel expenses would have to exceed 2 percent of your adjusted gross income before qualifying for a deduction.

Making good use of the latest advances in communication can really pay off for you and your business – saving time and money, boosting your productivity and strengthening your bottom line.