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Travel Tax Deductions for Freelancers

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results found for 1.5 million freelancers in the US

Travel Tax Deductions for Freelancers

Traveling for work is a great way to get a change of scenery, and to score tax savings at the same time. The Internal Revenue Service (IRS) allows you to take travel tax deductions for business purposes. It can be confusing to keep track of your business-related deductions with many rules and regulations the IRS has established. Rest assured, this guide will help you understand all the possible travel-related tax deductions and questions like What travel expenses are tax deductible for self employed or freelancers? However, although travel expenses can be tax-deductible, you need to make sure your trip qualifies as a business trip by the following criteria:

Table of contents

You need to leave your home...Read more

The trip must be business-related...Read more

Expenses must be ordinary and necessary...Read more

What transportation expenses are tax deductible?...Read more

Hotels and other lodging expenses...Read more

Dry cleaning...Read more

Using a rental car...Read more

Meals...Read more

Luggage fees...Read more

Wi-Fi and internet access...Read more

Traveling abroad...Read more

You need to leave your home

Leaving your home is the first step when going on a business trip. You will need to leave the general area of your tax home and travel to another location. So if you live in a city, you would need to travel outside the city. Also, the trip should include enough travel that you need to stay somewhere to rest or sleep.

Expenses must be ordinary and necessary

The last criteria for your trip to qualify as a business trip is that your expenses must be ordinary and necessary, according to the IRS. Your expenses must be ordinary relating to the business and not something over-the-top or, well, out-of-the-ordinary. The expenses must also be necessary, in the sense that there is a need for the expense. For example, you need to eat on your trip, so your food travel expenses are necessary, and eating at a restaurant is an ordinary expense. The IRS might raise an eyebrow if you try to write off a 3-hour massage or a scuba diving excursion, since these expenses are lavish. But flying first-class or staying in a hotel suite can fall into the ordinary category.

Expenses must be <span style="background: linear-gradient(101.76deg, #19ACA4 1.98%, #3563CD 100.59%);
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What transportation expenses are tax deductible?

You can claim tax deductions for travel expenses if you’re traveling for work. Some costs you might have while traveling for business include plane, bus or train tickets, cab fares, parking fees, fuel, Uber rides or tolls. You can claim your transportation expenses as tax write-offs. It’s important to keep copies of any receipts, tickets, credit or debit card statements or canceled checks to show as proof of your travel expenses to the IRS.

What transportation expenses <span style="background: linear-gradient(101.76deg, #19ACA4 1.98%, #3563CD 100.59%);
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Hotels and other lodging expenses

When traveling for business, you usually need to stay overnight since you're far away from your own bed. Since you will need somewhere to sleep, your hotel, Airbnb or guesthouse can count as a travel tax deduction. Renting an expensive suite in a hotel doesn’t count! The IRS does have some requirements in place for lodging when it comes to travel tax write-offs. You must be self-employed, and it must be necessary to stay overnight to conduct business, including going to a conference or attending a meeting when traveling away from your tax home. In addition, you can deduct $5 per day for incidental expenses, such as tipping the hotel staff or valet staff. Also, your hotel, Airbnb or guesthouse shouldn’t be too fancy and must fall in the ordinary category. If you take a day trip and don’t stay overnight, only transportation expenses count towards a travel tax deduction. So you can deduct your driving costs but not meals or other expenses.

Dry cleaning

It’s important to look good while on your trip. Fortunately, laundry and dry-cleaning services count as travel expenses. No more excuses for wrinkled clothes!

Using a rental car

Renting a car for a business trip is tax-deductible. If you drive your own vehicle, you can either use the actual expenses like gas receipts or the standard mileage deduction. This includes expenses for gas, oil, car washes, repairs, vehicle parts, tires, supplies, parking fees and tolls. But think again if you’re using the rental car for personal use. The IRS will not accept this as tax deductible for travel expenses. Instead, you’ll need to subtract the percentage for personal use from the deduction. The expenses of operating and maintaining a trailer are also deductible, but using one must be ordinary and necessary for your business.

Meals

Being on the road means no more cooking or dishes. Since eating out is a must, or something necessary, the IRS considers business trip meals to be tax-deductible. Usually, business trip meals are eligible for a 50% deduction. For the 2021 and 2022 tax years, the IRS changed food and beverage deductions to be 100% tax deductible. So now’s the time to bust out the Yelp bucket list and satisfy those taste buds. There are three requirements our friend the IRS has in place for your meal to qualify as a business meal:

The cost is not extravagant
The employer, employee or business owner is present
The business owner or employer provides the food or beverage to a business associate

So whether you want to fly solo or eat with some business associates, both cases qualify for deductions. But if your spouse, friend or dependent tags along for the meal, their portion is not tax-deductible. If you don’t feel like leaving your hotel room, ordering take-out will suffice as a tax deduction, as long as it’s from an actual restaurant and not a grocery store, convenience store, vending machine or liquor store.

How to deduct meal expenses?

There are two different ways to deduct your meal expenses. Your first option is to deduct the exact cost for each meal, including the actual cost and the tip. Do you love saving receipts and keeping track of expenses? If yes, this option is definitely for you! Following the 2021 and 2022 tax year changes, you can deduct 100% of your meals costs and report them as itemized deductions. The second option is opting for a standard meal allowance. Instead of keeping track of your expenses for each meal, you can set an allowance for the day. Where you go and the time of travel will impact your daily allowance rate. A tuna sandwich in New York City is definitely going to cost you more than it would in small-town West Virginia. There’s a catch though. If you decide to take the standard meal allowance route, you have to stick with this option for the entire tax year. So there’s no changing your mind at this point. Also, the standard allowance amount (surprise, surprise) usually isn’t very much money. So it won’t go very far unless you’re an expert penny pincher or traveling somewhere cheap. It’s always a good idea to use the standard vs. itemized calculator to help you decide whether you should take a standard deduction or itemize your deductions.

Luggage fees

Are you an over-packer? Your excess baggage fee is tax-deductible, so go ahead and pack your favorite ten pairs of shoes.

Wi-Fi and internet access

Wi-Fi or any other internet expenses, whether on a plane or at a hotel, are completely deductible when you’re traveling for work.

Wi-Fi and <span style="background: linear-gradient(101.76deg, #19ACA4 1.98%, #3563CD 100.59%);
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Traveling abroad

Pack your bags and get your passport ready. Traveling abroad for business still qualifies as a business trip. The IRS finally cut taxpayers some slack when traveling overseas, and you only need to spend 25% of your time on business. So, let’s say you have a business proposal in London and you’ll be gone for four days. As long as you spend one day conducting business, you write off travel expenses, and the rest of the trip is yours to spend however you want. So your dream overseas trip may count as both a business trip and vacation. Better yet, you might be able to deduct your vacation.

Rent Tax Deduction

If you're self-employed, there are few ways you can write off your rent, and if you know how to use them, they can be among the most important ways to save money on taxes each year.

Travel Tax Deductions for Freelancers

You need to leave your home

The trip must be business-related

Expenses must be ordinary and necessary

What transportation expenses are tax deductible?

Hotels and other lodging expenses

Dry cleaning

Using a rental car

Meals

How to deduct meal expenses?

Luggage fees

Wi-Fi and internet access

Traveling abroad

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