Business Travel Expense
Hey peeps! How’s it going! I can’t believe its been a whole month but here we are! On the last Friday of May! Whoop whoop! And with summer right around the corner we’re going to be discussing one of the most coveted topics: The Business Travel Expense. In this episode you’ll learn: What constitutes business travel? What can you deduct? And how to properly document your trip so you can maximize your deductions and keep more money in your pocket. Exciting right? I know!
Lets start by examining: What exactly is “Business Travel Expense”? If you don’t know the answer that’s ok. When I first heard the term, waaay before I had any inkling about anything tax related, I thought “Wow, these IRS peeps must be really dumb. I’ll just call every trip a business trip and voila! Free trips for life!” Well, as you can imagine, that’s not exactly what it means, and thank goodness I wasn’t cheeky enough to try it then but today? Well, today is a new day!
Business Travel Expense covers any expenses incurred on trips you take that have a specific business purpose, that requires you to be away from your tax home, AND that requires you to get rest or sleep for you to meet the demands of the business purpose while you’re there. I know..that was a mouth-full but, here are three questions that’ll help you determine whether or not your trip qualifies for this deduction:
Does this trip have a business purpose?
Is it 100% necessary to stay away from your tax home? For example: Lets say you’re planning on attending a 3-day convention nearby but you want to stay at the hotel where the convention is being held because it’ll be more convenient. Yeah, that’s not gonna fly. But, if you’re traveling out of state for a 3-day convention...well, that makes sense.
Does the trip require that you get rest or sleep to meet the demands of the business purpose? For example: Needing to stay at the convention all three days to get continuing education credit or some sort of business accreditation.
I guess those IRS peeps did know what they were doing when they set up these parameters so sadly not every trip can be deducted as a business expense but that’s okay! Because you now have a starting point to help you determine whether or not your trip qualifies as a business trip expense.
Now, if your trip does qualify, here are some tasty treats you might be able to deduct:
Expenses paid to travel by airplane, train, bus or car.
Fares for taxis or ubers
Of course, meals and lodging
Really any expense that is ordinary and necessary for the business trip.
Pretty neat huh? Now I’m sure you’re wondering: How do I properly document the expenses to maximize my deductions? Great question!
First you’ll need to have written records. Its not enough to remember and vocalize it at a later date. If there’s one thing I learned in my many years in the industry its that a timely kept record has waaay more power and weight than a statement prepared later.
Make sure you document the date you left, the date you returned and the total number of days you spent there, the name of the city, town or destination traveled to, and the business purpose for the trip. You’ll also need documentation. You can use receipts, canceled checks, or bills that show the amount paid, the date it was paid, the place where the expense was incurred.
Phew! I know that’s a lot to take in but you’re in luck. You won’t need to memorize all of this because I have a free downloadable worksheet you can have; just because I love you. CLICK HERE TO DOWNLOAD THE WORKSHEET.
Now a word from our sponsors:
Ok. Before I start thanking peeps I have to admit something: This is the first year I admitted to myself that I’m not ok on mother’s day. It tends to overwhelm me with sadness but this year, I decided it wasn’t about me. This year, I was going to honor the mothers who are raising the next generation of outstanding men and women destined for greatness...all the while encouraging, educating, and supporting other women through podcasting. So today, my first sponsors are the WOC Podcasting Mommas who shared with me their favorite produced episodes. Thank you for the beautiful work you do and for sharing your gifts with us. Thank you.
My next sponsor is Dominique, host of Yes To You Podcast. A few weeks back, out of the blue, I decided that we needed a special name for us. I mean there’s the hive and swifties...so what to call ourselves? I wasn’t sure because the peeps that listen to this podcast are entrepreneurs and hustlers; which means that you are the leaders in your chosen field. So, I put the question out there and I got some cool suggestions and some nice votes but Dominique wrote, “I love peeps. It’s genuine, friendly, relatable and made me feel like I was part of your tribe the very first time I saw your videos. I hear many people say bosses, or leaders, etc. Your greeting sets you apart”. Wow, words of wisdom. In my excitement, I failed to realize that our greeting already encompasses the feelings I wish to convey because I do want to be genuine, friendly, and relatable, and I want you to feel comfortable when we interact because taxes are already a scary subject so the more at ease we can be, the easier it’ll be for you to know its okay to ask questions, to reach out, and to seek help. I know that’s hard. So thank you Dominique for helping me realize that my greeting is exactly what I intended. Thank you.
And thank you readers. Your love and support make this possible. CLICK HERE if you’re interested in checking out the list of podcasts by WOC Podcasting Mommas or CLICK HERE if you’d like to check out Yes to You Podcast.
Now its time for Tips to Tame your Taxes because life-hacks rock! Listen up:
When determining business versus personal days on a trip remember: If you work both on a Friday and the following Monday, then the weekends count as business days! Yay!
If you’re traveling for business purposes, and the business days are 50% or more of the trip, then 100% of your flight is deductible. However, if the business days are less than 50% then NONE of the flight is deductible.
You can’t deduct the cost of plane tickets if they’re purchased with frequent flyer miles. For example, if you book a trip for $350 and you used frequent flyer miles for $300 of the cost, you can only deduct $50 as a business expense.
You can deduct per-diems set by the IRS rather than deduct your actual meal expense if you’re traveling for business.
That was Tips to Tame Your Taxes!
And with that we get to move on to one of my favorite segments: Shocking Scandals & Dirty Deeds - Tax Edition. Now, I do have to warn you we will be talking about abortion; not because I think you’ll change your mind but because the financial aspect doesn’t get discussed much. So, today we’re going to look at it from a different perspective...a financial one. And before I get into why limiting choice this is a shocking scandal and dirty deed, I’d like to share my abortion story with you.
Before I was married to Ed I was married to another man. For reasons I won’t get into today, that relationship ended but the last time we had intercourse left me pregnant. I found out two weeks after I missed my period... at exactly six weeks of pregnancy for my friends in Georgia who like to keep count.
I was...young...undocumented...uneducated... without a partner to help... and I didn’t even have an apartment. I was renting a room in WLA. So, I thought long and hard about my options. I could choose to go to full term or I could choose to end the pregnancy.
If I chose to go to full term, I would need to make changes immediately. In addition to the emotional and physical responsibilities there would be a major financial shift too. So before I could get excited about the possibility of a child I needed to figure out whether or not I would be able to successfully deliver on my new responsibilities. I started to write down all the expenses I would incur; nothing fancy, just the basics: rent, food, clothing and health care. Seems doable, right? No frills; just the basics and this is what I found.
Rent for a 1 bedroom apartment was approximately $1,422.00 a month, and yes I made sure to do my research and this was the median in LA back then.
Food...for the sake of argument lets take the IRS standard for a family of two since most of my clients can agree the standards are stringent: $685
Clothing...again, lets take the IRS standard for a family of two: $159
Health care...would’ve been around $956 for a family plan
Per month, if I bought nothing else, like toys or books or school supplies, and if I paid for nothing else like art classes, sports camps or music lessons, that would’ve been $3,222 a month or $38,664 per year. If I got a full time job it would’ve had to pay at least $18.50 for me to make ends meet...IF they didn’t withhold taxes...but since I was undocumented getting a job wasn’t an option so I would’ve had to come up with this money, cold hard cash. I would’ve had to come up with thousands of dollars while being legally denied the opportunity to work under threat of exile.
I would have had to quit school. Which means my earning potential would stagnate at a near zero, and this would in turn decrease any opportunity I had of upward mobility. I know, I know...there’s many strong women out there that are doing exactly this but they are not me. I had unimaginable trauma I hadn’t deal with so I would not have been one of these strong women. I would’ve succumbed to these new circumstances of undeniable and unbreakable severe financial hardship that would’ve created an environment of stress, frustration, hopelessness and an overwhelming sense of guilt since I wouldn’t be able to provide anything better.
And if by some miracle I managed to find public resources that would help, I would immediately be branded a mooching immigrant who is just here to have an anchor baby.
If I chose to end the pregnancy I could continue with my schooling, work hard to get ahead and cling to the glimmer of hope for a happy life.
So, I assessed my options, I chose hope and I ended the pregnancy. If I had gone through with the pregnancy, my child would’ve grown up in a toxic environment, in poverty, and with a high likelihood of turning to a life of crime because they wouldn’t have received the attention, love and energy they deserve.
And here is the shocking scandal and dirty deed: This my friends, is how you ensure that poor, uneducated and underserved communities are systematically and ruthlessly kept in a continuous cycle of poverty, misery and cruelty. By criminalizing the hardest choice a person has to make. By robbing us of agency and demanding that we acquiesce to their demands without giving us the tools or skills we need to succeed; and by shaming us when we do find those resources and make use of them.
Now, there’s a myriad of literature and research on how laws like these affect our communities so I won’t get into that today. What I will do is share one of my favorite quotes. Its from Ender by Orson Scott Card...
“If only we could have talked to you, the hive-queen said... it would have been the miracle to make us human in each other's eyes.”
In the book, an entire race of aliens has been exterminated. One theory is that it happened because the aliens and the humans couldn’t figure out how to communicate with each other before it was too late...but its not too late for us. We can still communicate with those we don’t quite understand and with those who don’t quite understand us. There is hope for us to unite and see each other as human and kin but that can only happen if we get to know each other...and we can start right here...because in a tribe there is a place for everyone. So if you know someone who would be a great addition to our tribe make sure to share this with them...and if you’ve enjoyed this episode please make sure to rate and review...wherever you listen to podcasts, so others can find out about the show too!
As always, sending you love and happiness, I’m Wendy Uken, have a wonderful day.
P.S. This is not advice specific to you or your situation, and you should consult a professional to determine what is right for you and your business.