Business travel can be exciting, new places, new opportunities, maybe even a decent hotel breakfast. But if you want to claim tax deductions for your trip, you need to play by the IRS’s rules when documenting your expenses.
Here’s what to know to keep your records airtight (and your deductions safe).
Corporation vs. Sole Proprietor: Who Pays?
If you operate as a corporation, have the corporation either:
- Pay for your travel expenses directly, or
- Reimburse you under an IRS-compliant “accountable plan.”
Why? Because the Tax Cuts and Jobs Act (2018–2025) eliminated employee business expense deductions on your personal tax return (Form 1040). If you pay personally without reimbursement, you lose the deduction.
Keep a Business Travel Diary
While not legally required, keeping a timely, detailed record is your best defense in case of an audit. Your log should show:
- Amount of each expense
- Date and place of the expense
- Business purpose for each item
The IRS considers a weekly or more frequent log “timely.” The more details, the better.
Separate Travel Meals from Other Expenses
Travel meals are only 50% deductible due to specific IRS rules. Keep them in a separate category from other travel costs like airfare, lodging, or ground transportation.
Keep All the Right Receipts
You must have receipts for:
- All lodging expenses (no matter the amount)
Any other travel expense over $75
A valid receipt must show the amount, date, place, and nature of the expense.
Note: Credit card statements or canceled checks alone won’t cut it, they prove payment but not what you purchased. You need both proof of payment and the original receipt.
The $75 Rule Isn’t a Free Pass
While expenses under $75 don’t require a receipt by IRS rules, keeping one anyway strengthens your documentation and avoids headaches later.
What Counts as Travel Expenses?
Travel expenses include:
- Transportation to and from your business destination
- Lodging
- Meals (subject to 50% deduction)
- Communication costs (phone, Wi-Fi, etc.)
- Laundry while away
- Other costs necessary to “sustain life” while traveling for business
Submitting Expenses to Your Corporation
If you run your business as a corporation, submit an expense report with supporting receipts for reimbursement under an accountable plan. This keeps everything IRS-compliant and ensures you get your deduction without creating taxable income.
When it comes to business travel, the difference between a smooth deduction and a denied one comes down to documentation. Keep your receipts, log your trips, and separate meal expenses. Done right, your next business trip can help your bottom line not hurt it.
If you want help setting up a foolproof expense documentation system, contact us we’ll make sure your deductions are maximized and compliant.