Deducting Travel Expenses

Travel expenses can be deductible if they are incurred while conducting business. Typical travel expenses include automobile, airfare, lodging, and meals and entertainment. For these expenses to be deductible, they must be ordinary and necessary.

Auto expenses can either be calculated by tracking all of the costs of using the vehicle (gas, repairs, maintenance, depreciation, etc.) or by using the number of business miles and multiplying the miles times the mileage rate for the year ($0.555 for tax year 2012.) 

Business meals are deductible but only at 50% of the actual cost. This applies whether you have a business meal while traveling away from home overnight or while in your tax home.

The method used to deduct expenses depends on whether you are self employed or are employed by someone else. Self employed individuals generally take their travel expenses as a deduction against self employment income while those who are employed by others take their unreimbursed employee expenses as an itemized deduction on Schedule A, subject to 2% of Adjusted Gross Income (AGI).

This article, Taking Business Tax Deductions, provides some guidance on deducting self employed expenses and the article, Employees Can Deduct Workplace Expenses, explains how employees can deduct their unreimbursed expenses.

IRS Publication 463, Travel, Entertainment, Gift, and Car Expenses, provides all of the ins and outs of deducting your expenses.Whether you are self employed or work for someone else, TurboTax will guide you through the process of deducting your travel expenses.