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What are Business Travel Expenses?

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  • Written By: Mary McMahon
  • Edited By: Kristen Osborne
  • Last Modified Date: 03 November 2016
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Business travel expenses are costs a person incurs while traveling for work-related reasons. These can include transportation expenses like fuel, mileage, and plane tickets, along with tips to service providers, food, and related expenses. When people incur business travel expenses on behalf of an employer, they are compensated. Self-employed people and independent contractors can claim business travel expenses as a tax deduction when they file taxes at the end of the year.

In order to qualify as business travel expenses, costs must be associated with a trip someone is taking for work reasons. While people may mix pleasure into business travel, the bulk of the travel must be for work. Precise laws vary, depending on the nation. Generally, as long as people can show a trip was taken specifically for work and would not have been taken otherwise, as when someone is ordered to go somewhere or needs to travel for professional advancement or client meetings, most expenses from the trip will count as business travel expenses.

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Business travel expenses can be broken into actual travel costs, including bridge tolls, rental car fees, and so forth, along with housing, food, and other basic needs met during the trip. Conference fees and similar expenses can also be claimed on a different area of the tax return. People cannot claim presents or recreational items purchased during a trip; pool fees, for example, do not count as a business expense, nor do gifts bought at the duty free shop, unless they are being purchased for work reasons like presents for clients.

Some employers provide their staff members with credit cards they can use for work-related expenses. People must keep receipts and documentation. The credit card can be canceled if an employee uses it for unauthorized purposes. Other employers may provide employers with cash or checks to use while traveling. Another option for handling travel expenses is asking employees to pay them up front and providing travel reimbursements later. For reimbursement, employees must fill out forms documenting their expenses, attaching their receipts to show how and where the money was spent. The employer may cap reimbursement with per diem limits.

People claiming travel expenses on their taxes should maintain careful records so they can provide information if tax authorities decide to conduct an audit. Travel and entertainment expenses are two commonly inflated areas on tax returns and people should be aware of this when filing their deductions; very high expenses can look suspicious and may trigger interest on the part of tax authorities. It is not wrong to spend a lot of money on work-related travel, but it helps to have very strong supporting documentation to back up the deduction claim.

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clintflint
Post 3

I don't know how often companies give out credit cards but that can really backfire. I remember when I was working at a convenience store as a student when someone came in and started buying dozens of boxes of cigarettes and bottles of wine with a company card linked to the store.

Even though he was pretty calm about it, I didn't think it was a good idea to let him do this without calling my boss, so I did it and my boss called the company. It turned out that he was absolutely not supposed to be buying cigarettes with the card and he had gone around all the stores in town to do it in order to resell them, thinking that because he was on a trip no one would notice. It's people like that who spoil things for everyone else.

browncoat
Post 2

@croydon - She's lucky to have a company that is willing to pay for travel expenses. I've worked for companies that either had a certain per diem that you couldn't go over, or who put you through the wringer for every cent to the point where you didn't want to spend anything.

I actually think it's counter productive, because worrying about that kind of thing makes me less likely to work well in a strange environment. Travel and expense management is a fine art within a company and you have to find the right one to see it done well.

croydon
Post 1

One of my friends has a lot of travel with her work and for a while she felt bad about charging anything to the company while she was working. Then someone at the company told her that her travel expense reports were always much lower than everyone elses' and that she ought to be charging them more. They are able to write off some of it for taxes and things anyway and it wasn't actually impressing anyone that she wasn't spending much on her trips (which wasn't her intention, I think she just felt weird about charging her company for food and things).

She's pretty blase about it now, although she does keep good records about what she spends.

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