Writing off travel expenses as self-employed

Key takeaways

• When you’re self-employed, you can write off many travel expenses and reduce the costs of your business trips.
• Deductible travel expenses include costs related to transportation, lodging, meals, communications, and more.
• Transportation expenses you can write off include flights, trains, buses, car rentals, taxis, ridesharing, parking, tolls, and even the use of your personal vehicle.
• You can write off a variety of accommodation expenses, including hotels, motels, long-term rentals, room service, and more.
• The IRS permits self-employed people to deduct 50% of the cost of meals they’ve consumed while traveling for business purposes.
• It's crucial to keep proper documentation and meticulous records when it comes to writing off travel expenses.
• Work with a Tax Pro who can help you get every deductible travel expense available to you.

What are tax-deductible travel expenses?

When you're self-employed, the costs of traveling for business can add up quite a bit. The good news is that you can write off many of these travel expenses, reducing the overall cost of your trip.

In simple terms, a tax-deductible travel expense is a cost that you can subtract from your total business income to lower the amount of income that you are taxed on. Think of it as a way to save money by spending money on travel for your business.

For people who are self-employed, the range of expenses that qualify can be quite broad, but there's a catch. The travel must be related to your business. This means that your trip should have a clear business purpose, such as meeting clients, attending a conference, or scouting new opportunities.

Understanding what qualifies as a tax-deductible travel expense can help you plan your trips more effectively and ensure that you keep more money in your pocket.

What travel expenses can I deduct?

Here's a general overview of the types of travel expenses you can write off:

• Transportation costs
• Lodging
• Meals
• Extras, like tips or internet fees
• Conference fees
• Communication expenses
• Shipping costs
• Cost of business luggage
• Baggage fees
• Parking and tolls
• Miscellaneous travel costs

Writing off transportation expenses

Here’s a closer look at what you can write off to get you from point A to point B.

Flights, trains, and buses

If you need to fly, take a train, or hop on a bus to get to your business destination, you can deduct the cost of these tickets. Keep all your receipts and make sure the travel is primarily for business purposes. If you mix business and personal activities during travel, you can only write off the portion of your trip related to business.

Car rentals

Renting a car for business travel is another deductible expense. This includes the rental fee, gas, and any additional costs, such as insurance or tolls. It’s important to keep a detailed log of your mileage and the business purpose of each trip to ensure you’re only claiming the business-related portion.

Personal vehicle use

If you use your own car for business travel, you can claim your business deductions for the miles you drive by either choosing the standard mileage rate or the actual expense method.

• Standard mileage rate: The IRS sets a standard rate per mile driven for business purposes. For 2024, the standard mileage rate is 67 cents per mile. You simply multiply the business miles driven by this rate.
• Actual expense method: This involves tracking all your vehicle-related expenses, such as gas, maintenance, insurance, and depreciation, and then deducting the business portion.

Choose the method that gives you the biggest deduction, and make sure to keep a detailed log of your business miles or expenses.

Ride-sharing and taxis

You can deduct the cost of taking a taxi, Uber, Lyft, or other ride-sharing services to and from business meetings or events. Save your receipts and note the business purpose for each ride.

Public transportation

You can also deduct the expenses for public transportation, such as subways, trams, and buses, you use for business purposes.

Parking and tolls

Don’t forget to deduct any parking fees and tolls while traveling for business. Whether it’s parking at the airport or paying tolls on the highway, these expenses add up and you can write them off.

Writing off hotels, motels, and other accommodation expenses

Here’s a look at the accommodation expenses you can write off when you travel for business.

Hotels and motels

Whether it’s a budget motel or a luxury hotel, you can deduct the cost of your stay if the trip is primarily for business purposes. If your trip includes personal activities, you’ll need to divide the expenses and only deduct the portion that applies to business.

Extended stays and long-term rentals

If your business requires an extended stay, such as a week or more, you might choose to rent a furnished apartment or use a service like Airbnb. You can deduct these costs, too, but again, only for the business portion of your stay. Make sure to keep a clear record of the rental agreement and any receipts or invoices.

Additional expenses

When staying at a hotel, you might have additional charges, such as internet fees, parking, and tips for hotel staff. You can also deduct these incidental expenses if they are directly related to your business trip.

Meals and room service

While traveling for business, you can deduct a portion of your meal expenses, including room service. We’ll cover more details about writing off meals a bit later.

Conference and event locations

If you're attending a conference or event that is held at a hotel or resort, the cost of staying at that location is deductible. This can include any special rates or packages that are part of the event. Make sure to keep documentation of the event and your participation.

Sharing accommodations

If you share accommodations with a colleague or another business traveler, you can only deduct your portion of the expenses. Keep a record of the total cost and how it was divided among the parties.

Writing off meals: 50% deductible rule for business-related meals

The IRS permits self-employed people to deduct 50% of the cost of meals they’ve consumed while traveling for business purposes. This rule is in place to ensure that you're not deducting the full cost of your personal consumption but still recognizing the business-related necessity of these expenses.

What qualifies as a business-related meal?

For a meal to qualify as a business-related expense, it must be associated with your business activities. Here are some scenarios where your meal expenses can be deducted:

• Travel meals: Meals while you are away from your tax home overnight for business purposes. Your tax home is the general area of your main place of business.
• Business meetings: Meals with clients, potential clients, or business partners where business discussions take place.
• Conferences and seminars: Meals during business-related conferences, seminars, or training events.

Keeping accurate records

To ensure you can claim your meal deductions, it's essential to keep detailed records. Here’s what you should document:

• Receipts: Keep all receipts for meals, regardless of the amount. Make sure the receipts include the date, location, and the amount you spent.
• Business purpose: Note the business purpose of each meal. This could be a brief description such as "meeting with client" or "conference lunch."
• Attendees: Record the names of the people you dined with and their relationship to your business.

Using the per diem method

The IRS also offers a per diem rate for meal expenses, which is a daily allowance you can use instead of tracking actual meal costs. The per diem rates vary by location and are updated annually. Using the per diem method can simplify record-keeping, but make sure you follow the IRS guidelines.

Combining meals with other expenses

Sometimes, meal expenses are part of a larger event or package, such as a conference fee that includes meals. In these cases, you'll need to allocate the portion of the fee related to meals and apply the 50% deduction rule to that amount.

Additional deductible travel expenses include:

When traveling for business, there are several additional expenses you can deduct beyond transportation and accommodations. Here’s a detailed breakdown of these deductible travel expenses:

• Shipping costs: If you need to ship baggage or materials related to your business, such as samples or display materials, you can deduct those shipping costs. This applies to shipping between your regular work location and a temporary business site. Keep detailed records of shipping invoices and the business necessity for these shipments.
• Dry cleaning and laundry: For longer business trips, you can deduct costs for any dry cleaning and laundry services you need during your stay. Save all receipts and note that these services were necessary for maintaining your business attire while traveling.
• Business calls and communication: You can deduct expenses for business calls you’ve made while traveling, including phone calls and internet access fees. This also includes any charges for using hotel phones or internet services. Keep records of your phone bills and internet usage to substantiate these costs.
• Tips for services: Any tips you pay for services related to your business travel are deductible. This includes tips for hotel staff, taxi or ride-sharing drivers, and restaurant servers. Document the amount and purpose of each tip to ensure you can accurately claim these expenses.

Documentation and record-keeping

Proper documentation and meticulous record-keeping are crucial when it comes to writing off travel expenses. Not only does this ensure you claim all the deductions you're entitled to, but it also helps you stay compliant with IRS requirements. Here are some tips, tricks, and best practices to keep your records in top shape.

Keep all receipts

Always save receipts for any expense you plan to deduct. This includes transportation, lodging, meals, and incidental expenses. Store physical receipts in an envelope or folder labeled with the date and purpose of the trip. You could also use a receipt scanning app to digitize and organize your receipts.

Maintain a travel log

Keep a travel log that includes a detailed record of your trips, including dates, destinations, purposes, and expenses. Use a notebook, spreadsheet, or a mobile app to track:

• Dates of travel
• Destinations (both the city and specific locations)
• Purpose of the trip (meetings, conferences, client visits)
• Detailed list of expenses with amounts and business reasons

This log will serve as a comprehensive record if you ever need to provide proof of your business travel activities.

Consider using a business credit card

Paying for travel expenses with a business credit card can simplify your record-keeping. Most business credit cards provide detailed statements that categorize your spending, making it easier to track and verify your expenses. Additionally, using a business card helps separate personal and business expenses.

Don’t wait to record expenses

To avoid losing track of your expenses, record them as soon as you can. This habit ensures accuracy and reduces the chances of missing deductions. Whether you use a paper log or a digital app, updating your records in real-time keeps your documentation organized.

Categorize your expenses

Organize your expenses into categories, such as transportation, lodging, meals, and incidentals. This makes it easier to review and total your deductions at the end of the year. Most accounting software and apps allow you to create custom categories for better organization.

Use expense tracking apps

There are numerous apps available designed to help you track business expenses. Apps like Expensify, QuickBooks, and FreshBooks allow you to photograph receipts, log expenses, and even integrate with your accounting software. These tools can streamline your record-keeping process and reduce manual data entry.

Note the business purpose

For each expense, include a brief note about the business purpose. You can write the business purpose directly on the receipt or in your log. For example, if you take a client to dinner, note “Dinner with client to discuss project.” Keeping clear documentation of the business purpose supports your deduction claim.

Regularly review your records

Periodically review your travel expense records to ensure they are complete and accurate. Set aside time each month or quarter to reconcile your receipts and logs with your credit card statements and bank records. This practice helps catch any missing documentation or discrepancies early.

Store records safely

Keep your records in a secure and organized location. For digital records, back them up regularly to avoid data loss. Store any physical receipts in a safe place, away from potential damage. The IRS recommends keeping records for at least three years in case of an audit.

Reporting travel expenses on your tax return

When it comes time to report your travel expenses on your tax return, following a few key steps can help ensure you maximize your deductions and stay compliant with tax regulations.

• Use the appropriate tax forms: Based on your business structure, you’ll need to use the correct tax forms to report your travel expenses. These forms will have sections specifically for business expenses, including travel.
• Categorize your expenses: Accurately categorize your travel expenses when you report them.
• Choose the right method for meals: For meal expenses, you can either deduct a portion of the actual meal costs or apply the IRS per diem rate for meals and incidental expenses, which simplifies record-keeping and can sometimes be more beneficial.

If you have any doubts or want to ensure that you're optimizing your deductions, consider working with a Jackson Hewitt Tax Pro. We can provide personalized advice and help you navigate the complexities of writing off your travel expenses.

About the Author

Mark Steber is Senior Vice President and Chief Tax Officer for Jackson Hewitt. With over 30 years of experience, he oversees tax service delivery, quality assurance and tax law adherence. Mark is Jackson Hewitt’s national spokesperson and liaison to the Internal Revenue Service and other government authorities. He is a Certified Public Accountant (CPA), holds registrations in Alabama and Georgia, and is an expert on consumer income taxes including electronic tax and tax data protection.

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