As a business owner, if you’ve ever packed a suitcase for a vacation, you might have wondered, “If I do a little work on this trip, can I write it off on my taxes?”

Unfortunately, you can’t deduct a trip that’s mainly for personal purposes—even if you bring your laptop along or meet with a client while you’re there. However, deducting business travel expenses is possible as long as you follow the rules.

Fear not, as we’re here to unpack (pun intended) this topic, ensuring you don’t leave any valuable tax deductions on the conveyor belt of missed opportunities.

What qualifies as a business trip?

First things first, let’s define a business trip. In the eyes of the Internal Revenue Service (IRS), a business trip is one you take for work-related purposes. This doesn’t mean you can’t enjoy a cup of local coffee or enjoy yourself, but the primary reason for your travel should be business-related. Think attending conferences, client meetings, or scouting new locations—not a sneaky vacation disguised as a business trip. When in doubt, go with a gut-check. Did you originally plan the trip for business and also want to enjoy yourself? Or did you book the trip for pleasure and are only now trying to masquerade it as a business trip to get a write-off? 

To ensure your trip is tax deductible, you should meet these three qualifiers:

1. You travel away from your “tax home”

Your tax home is wherever your regular place of business is, regardless of where you live. For example, if you live in Hoboken but your main place of business is located in Manhattan, Manhattan is your tax home for business purposes. Your trip has to take you away from Manhattan substantially longer than an ordinary day’s work, requiring you to sleep or rest to meet the demands of your work.

2. The trip is an ordinary and necessary business expense

All business expenses must be “ordinary and necessary” to be deductible. Ordinary expenses are common and acceptable in your field, and necessary expenses are helpful and appropriate for your business.

Traveling to Florida for a trade show might be ordinary and necessary. Traveling to France to buy a ream of copy paper? Not so much.

3. Your trip is mostly business-related

The IRS measures your time away in days, so you need to spend the majority of days on the trip conducting business. For example, if you travel to a client’s headquarters in Santa Monica and spend Monday through Friday consulting with them on how to restructure their customer service department. Then you spend Saturday on the beach before flying home. Since you spent the majority of your trip doing business, it qualifies as a business trip.

Fortunately, the days you spend traveling to and from the business destination are counted as work days, so that gives you a little more wiggle room.

Document your plans in writing before your trip, including where you’ll be each day and which customers or prospects you’ll meet with. This helps ensure your tax deduction passes muster in the event of an IRS audit.

Which business travel expenses are deductible?

Now, onto the exciting part: what can you actually deduct? Here are a few common examples:

• Transportation costs. This includes airfare, train tickets, rental cars, and even the cost of driving your own car. Remember, it’s about getting you from point A (work) to point B (more work), not a detour via point C (the beach).
• Lodging. Hotel and Airbnb expenses are deductible and they should be reasonable. 
• Meals. Normally, meals on your own aren’t deductible, but 50% of your meal expenses during business travel are deductible—whether on your own or with a client or colleague. This means you can enjoy that extra side of fries, but only half the cost is on Uncle Sam.
• Incidental expenses. Think baggage fees, Wi-Fi on the plane, tips, shipping conference materials, parking fees, laundry or dry cleaning, and taxi fares. If it’s related to your business travel, it’s likely deductible.

Which travel expenses aren’t deductible?

You can’t deduct travel expenses for your spouse or child if you bring them on a business trip. The cost of bringing family members on a business trip is considered a personal expense. So if you buy airfare for you and your spouse, only the cost of your ticket is deductible.

Of course, there are exceptions. For example, if your spouse or child is an employee and has a bona fide business purpose for coming on the trip, their travel expenses are tax deductible.

Also, some travel costs aren’t deductible, even if your trip is entirely business-related. This includes things like paying fitness center fees or movie or game rental fees to the hotel, entertainment expenses, and buying souvenirs to take home to family and friends.

Mixing business with pleasure: The part business/part personal trip

Here’s where it gets a bit more complex. If your trip is both business and personal, you can still deduct your business-related expenses. The key is to keep them separate from your personal fun. For instance, if you fly to Chicago for a four-day conference and then spend three days sightseeing, your flight to and from New York is deductible. So are your hotel charges, meals, and incidental expenses on the conference dates and while traveling to and from your destination.

However, you can’t deduct expenses for your hotel room, meals, and incidental expenses during the sightseeing days. Those are considered personal expenses.

Of course, like so many tax rules, there are exceptions.

Wrapping a weekend

If you take a business trip and work both Friday AND the following Monday, then the Saturday and Sunday in between count as business days. This means you can deduct your hotel stay and 50% of your meals during the weekend, even if you spend those days sightseeing or visiting friends.

International travel

When you travel outside of the United States, a “majority” of your days don’t have to be spent on business-related activities. You only have to spend 25% of your time outside the country doing business for it to count as a business trip. 

So go ahead and book that trip to Europe for a client meeting. As long as you conduct business for the better part of 25 percent of your days overseas, you can claim your travel expenses as tax deductions.

Tips for deducting travel expenses

The IRS tends to scrutinize some business expense categories because they’re prone to abuse. Travel expenses fall into this category. To ensure your business trip deductions hold up in an audit, follow these best practices:

• Understand the rules. We’ve tried to simplify the rules for deducting business travel, but there are always gray areas. When in doubt, consult a tax professional.
• Keep records. We can’t stress this enough: keep receipts, logs, and detailed notes. In the world of tax deductions, documentation is your best friend.
• Be reasonable. There’s a saying in the tax world: pigs get fat; hogs get slaughtered. In other words, take the deductions you’re entitled to, but don’t get greedy or aggressive. Keep your business travel deductions reasonable and necessary for your business.

If you need help figuring out what’s deductible or getting your books in order, please reach out. While business travel deductions might seem as daunting as a packed airport during the holidays, with a bit of knowledge and organization, you can navigate it like a pro. Safe travels!