What Tax Deductions Do Tax Accountants Advise for Frequent Business Travelers?

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    What Tax Deductions Do Tax Accountants Advise for Frequent Business Travelers?

    When it comes to maximizing tax deductions, frequent business travelers often miss out on substantial savings. In this article, seasoned accounting professionals reveal their top six recommendations. Learn how to make the most of your vehicle expense allowance and why maintaining detailed travel expense records is crucial. Discover all six insights to ensure you're not leaving money on the table.

    • Maximize Vehicle Expense Allowance
    • Track Lodging and Meal Deductions
    • Deduct Client Entertainment Expenses
    • Leverage Industry Conference Deductions
    • Explore Home Office Expense Deductions
    • Maintain Detailed Travel Expense Records

    Maximize Vehicle Expense Allowance

    Vehicle expense allowance is a hidden goldmine if you pick the right one. Unfortunately, clients often pick the wrong one.

    The two options are:

    1. Claiming the standard mileage rates as allowed by the IRS (Guidance link here https://www.irs.gov/tax-professionals/standard-mileage-rates) or

    2. Claiming the usual vehicle running costs, including gas, repairs, insurance, lease payments, and registration.

    Unless you run a super-expensive vehicle that breaks down a lot, the standard mileage rate (67 cents-per-mile option) will always yield two or three times more expense allowance than using the usual vehicle running costs. So why claim $1,000 when you can claim $3,000 as an expense?

    For business-related mileage that is not regular commuting from work to home, I advise that clients keep a worksheet, diary, or even a phone app to record the business.

    Many of our clients use Xero Cloud Accounting Software, and we recommend the apps Triplog, CaptureExpense, and Veryfi for this (Link given here: https://apps.xero.com/us/search?q=mileage) to simplify mileage tracking.

    A good accountant or tax advisor will always compare the two options above and advise the client on which one to use before a client even has to ask them. Wink, wink.

    Buhir Rafiq
    Buhir RafiqCPA - Managing Director of an Accounting Practice, Total Books Accountants

    Track Lodging and Meal Deductions

    Frequent business travelers are often advised to maximize deductions for lodging, meals, and incidentals. These costs can quickly add up during trips, making it beneficial to carefully track each expense. By doing so, travelers can reduce their taxable income significantly.

    Proper documentation of receipts and clear records are crucial for claiming these deductions. Next time you travel, keep organized records to save on taxes.

    Deduct Client Entertainment Expenses

    Tracking and deducting expenses related to client entertainment is another key piece of advice given by tax accountants. Engaging with clients often involves meals, events, or other social activities that can be costly. Ensuring these expenses are well-documented makes it easier to justify the deductions during tax filing.

    These interactions not only build business relationships but also provide financial relief through tax deductions. Make sure to document all entertainment expenses to benefit from these deductions.

    Leverage Industry Conference Deductions

    Leveraging deductions for expenses incurred at industry conferences is a frequent recommendation for business travelers. Conferences often require costs for registration, travel, lodging, and meals, all of which can be deductible. Participating in these events is essential for professional development and networking.

    By keeping detailed records of these expenses, travelers can claim substantial deductions. Record every conference expense to maximize your tax savings.

    Explore Home Office Expense Deductions

    For business travelers who use part of their home as an office, exploring deductions for home office expenses can be advantageous. Even when traveling frequently, having a dedicated workspace at home can lead to significant tax breaks. Expenses related to the maintenance and operation of this space can reduce taxable income.

    Ensuring the home office meets the IRS requirements is essential for claiming these deductions. Set up and maintain a qualified home office to benefit from these deductions.

    Maintain Detailed Travel Expense Records

    Maintaining meticulous records of all travel-related expenditures is a foundational practice advised by tax accountants. Detailed records ensure that all deductible expenses are accurately captured and justified. This includes saving receipts and keeping a log of expenses categorized by their nature.

    Effective record-keeping simplifies the tax filing process and minimizes the risk of errors. Start keeping detailed records of every business travel expense to ensure you capture all possible deductions.