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Tax Deductions For Travel Expenses: For Freelancers And Self-Employed

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Tax Deductions For Travel Expenses: For Freelancers And Self-Employed

Traveling for work is a great way to get a change of scenery, and it’s one of the many ways to save on taxes. The IRS allows you to take travel tax deductions for business purposes to save as much as possible. Keeping track of your business-related deductions can be confusing with the 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, including what travel expenses are tax deductible for the self-employed or freelancers and what’s the meal deduction for 2023.

Table of contents

Key takeaways...Read more

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 deduction 2023...Read more

Luggage fees ...Read more

Wi-Fi and internet access ...Read more

The IRS per diem guidelines 2023...Read more

Business calls ...Read more

Shipping costs ...Read more

Nondeductible expenses...Read more

Traveling abroad ...Read more

Bottom line ...Read more

Key takeaways

  • One of the main criteria for claiming travel tax deductions is to leave your home and stay the night at a hotel, Airbnb or motel.
  • Per diem is a set reimbursable rate for business-related expenses.
  • Overseas travel is deductible if it’s for business purposes.
Although travel expenses can be tax-deductible, you need to make sure your trip qualifies as a business trip according to the following criteria:

You need to leave your home

Leaving your home is the first step when going on a business trip and ultimately claiming a travel expense deduction. You will need to leave the general area of your residence and travel to another location that is not the same address you use to file your taxes. So, if you live in a city, you would need to travel outside that city. Also, the trip should include enough travel to stay somewhere to rest or sleep. If you traveled to a location and came back the same day, it can't be considered a travel expense deductible. You can use a freelance tax calculator to check whether your trip counts as a write-off. When it comes to freelancer taxes and deductions, remember if your tax liability is over $1,000, the IRS will expect estimated tax payments from you every quarter. You will report these payments with Form 1040-ES.

Expenses must be ordinary and necessary

The last criterion to qualify as a business trip is that your traveling expenses must be ordinary and necessary, according to the IRS. Your travel expenses must be ordinary and relate to the business. The traveling 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 and travel expenses are necessary, and eating at a restaurant is an ordinary expense. The IRS might raise an eyebrow if you're a freelance consultant trying to write off a three-hour massage or a scuba diving excursion, though. These expenses aren't necessary for your business and will be considered lavish. But flying first-class or staying in a hotel suite can fall into the ordinary category if you can justify why you needed this specifically.
Infographic entitled Types of Business Insurance listing insurance expenses that can be written off from 1099 taxes.

What transportation expenses are tax-deductible?

You can claim business travel tax deductions for travel expenses if you travel for work. Some costs you might have while traveling for business include plane, bus or train tickets, cab fares, parking fees, fuel, Uber or Lyft rides or tolls. You can claim your transportation expenses as travel tax deductions for 2023. If you're trying to deduct Uber rides (or any taxi service), keeping copies of any receipts, tickets, credit or debit card statements or canceled checks is important to show the IRS.
Infographic entitled Types of Business Insurance listing insurance expenses that can be written off from 1099 taxes.

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 need somewhere to sleep, your hotel, Airbnb or guesthouse can be a travel expense deductible. But 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 and incurring a hotel cost. 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 into the ordinary category. If you take a day trip and don’t stay overnight, only transportation expenses count towards a business 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 or the standard mileage deduction. The actual expenses method allows you to deduct 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. Let’s say you need to travel to San Diego for a conference and use a rental car during your trip to travel back and forth to your hotel. Once the conference is over, you drive up to Los Angeles to visit your cousin. The drive to LA isn’t tax deductible since it’s for your personal use, so you’ll need to subtract the percentage you used it from your overall rental car expense.

Meals deduction 2023

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. Business trip meals are eligible for a 50% deduction starting this year. For the 2021 and 2022 tax years, the IRS changed food and beverage deductions to be 100% tax-deductible. But, the agency has switched back to the 50% tax deduction norm for the 2023 tax season. There are three requirements that the IRS has in place for your meal to qualify as a business meal:
  • The cost should not be extravagant
  • The employer, employee or business owner should be the one claiming the deduction
  • The business owner or employer provides the food or beverage to a business associate
So, whether you want to fly solo or eat with business associates, both cases qualify for business expenses tax 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. If you decide to raid the snacks in the hotel mini-fridge, those costs are deductible, too.

Luggage fees

Are you an over-packer? Your excess baggage fee is tax-deductible, so go ahead and pack all your favorite shoes. If you need to purchase additional baggage or pay for excessive baggage that’s over the weight limit, those costs are deductible, too.

Wi-Fi and internet access

Wi-Fi or any other internet expenses, like a hotspot or internet package on the plane, are completely deductible from your self-employment taxes when traveling for work.
Infographic entitled Types of Business Insurance listing insurance expenses that can be written off from 1099 taxes.

The IRS per diem guidelines 2023

First, let’s clear up what we mean by per diem. Per diem is a Latin word meaning “for the day.” It’s a fixed rate set that’s reimbursable. It covers costs related to business travel, lodging, meals and other expenses. The IRS per diem guidelines 2023 are broken down into two categories: meals/incidentals and lodging. The per diem 2023 meals category includes breakfast, lunch and dinner, dry cleaning and room service. It also includes any tips paid. The standard meal allowance 2023 rate depends on the city, but most major cities have a cap of $79. Lodging covers places to stay, including hotels, motels, Airbnb and resorts. The per diem 2023 allowance for lodging varies by city and is based on the area’s cost of living. A hotel in Chicago won’t cost the same as one in a small town like Elverson.

Business calls

Sometimes you might need to use the phone in your hotel room to receive a business call. In this case, you can write off the hotel charge for the phone call.

Shipping costs

In certain circumstances, you might need to ship certain items to your business destination. Shipping costs can count as a travel business expense if you need to ship your luggage ahead of time for a specific reason or to send items needed at a conference that can’t be carried in your suitcase.

Nondeductible expenses

Unfortunately, not every expense can be classified as business travel, and some can’t be written off. These expenses include:
  • A personal vacation
  • Lavish and extravagant expenses
  • Expenses for your dependents, family members, spouses
  • Entertainment (sporting events, concerts, shows, etc.)
So, if you go to Hawaii to travel for business and take your spouse along, only your costs will be covered. And any sightseeing or excursion expenses or fancy meals will need to come from your own pocket.

Traveling abroad

Pack your bags and get your passport ready. Traveling abroad for business also qualifies as a business trip. The IRS finally cut taxpayers some slack when going overseas on business trips, so now you only need to spend 25% of your time on business. 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 can write off business travel expenses, and the rest of the trip is yours to spend however you want. So, your overseas trip may count as both a business trip and a vacation. You might even be able to deduct your vacation.

Bottom line

In conclusion, understanding travel expenses tax deductions as a freelancer can help you save money and maximize your earnings. By meeting the criteria for a business trip, you can deduct various business travel expenses, such as transportation, lodging and meals. It's crucial to keep proper documentation of your business travel expenses and ensure that they are ordinary and necessary for your business. You can always use A.I. tools like FlyFin to find all your deductions. With a better understanding of which travel business travel expenses are tax-deductible for freelancers in 2023, you can make the most of your business travels while minimizing your tax liability and saving the most possible.

Office Supplies Tax Deduction

Office supplies are tax deductible for self-employed individuals and can be reported under the office expenses category on Schedule C.

Phone Tax Deduction

Cell phones can be a business tax deduction for self-employed individuals if it is an ordinary and necessary expense. A separate business cell phone can be fully written off.

Advertising Tax Deduction

Ordinary and necessary promotion expenses and marketing expenses are tax-deductible for self-employed individuals. They should be claimed on Schedule C when filing 1099 tax.

Business Insurance Tax Deduction

Self-employed individuals can deduct business insurance expenses from their 1099 taxes. Sole proprietors and single-member LLCs can claim it on Schedule C.

Meals Tax Deduction

The meals and entertainment deduction in 2023 allows 1099 workers to deduct 50% of business meal costs. Certain meal and entertainment expenses are still fully deductible.

Charitable Contribution Tax Deduction

If you make a charitable donation to an organization, it might count as a tax deduction. Not all charitable donations count as a write-off.

Clothing And Accessories Tax Deduction

Self-employed individuals can take the clothing tax deduction if their clothes cannot be worn outside the work environment.

Commission And Fees Tax Deduction

Self-employed individuals can claim certain commissions and fees as tax deductions if they are related to their business and are ordinary and necessary.

Contract Labor Tax Deduction

If you do any contract labor, you will have to pay contract labor taxes, also known as SE tax. Estimated payments quarterly need to be made for tax liabilities over $1,000.

Internet and WiFi Tax Deduction

Self-employed individuals can deduct some of their internet bills if they work from home as part of the home office deduction. Internet costs can also be reported on Schedule C.

Medical and Dental Tax Deduction

Certain dental and medical costs can be claimed as a medical tax deduction if itemized when paying income taxes. Expenses have to be more than 7.5% of AGI.

Rent Tax Deduction

Rent is tax deductible for self-employed individuals who work from home or have a separate office space. Some states offer renters tax credits to lower state taxes.

Repair and Maintenance Tax Deduction

Capital improvements can be claimed as a tax deduction through depreciation. Repairs to rental properties can be claimed as a business expense.

Professional and Legal Services Tax Deduction

Legal fees are tax deductible from 1099 taxes under the legal and professional fees category on Schedule C. The category also includes consultant and tax prep fees.

Shipping Tax Deduction

Business-related shipping expenses are tax-deductible. Shipping supplies and the cost of shipping are included as write-offs.

Software Tax Deduction

Software depreciation can be claimed with the straight-line method, Section 179 or through amortization. Report software depreciation on Form 4562.

Student Loan Payment Tax Deduction

Student loan interest paid is tax-deductible, and every type of education loan qualifies for the deduction.

Taxes and Licenses Tax Deduction

Self-employed individuals can take the license fee tax deduction on taxes and licenses that are ordinary and necessary business expenses.

Training and Education Tax Deduction

The educator expenses tax deduction allows eligible educators to deduct $300 of unreimbursed expenses from their taxes. Use education tax credits to lower tax liability.

Utilities Tax Deduction

Utilities are tax deductible when they are an ordinary and necessary business expense. They can be claimed with the home office deduction or as a rental property deduction.

Vehicle Insurance Tax Deduction

Interest on a car loan is tax deductible if it is used for business. Choose between the standard and actual method when claiming the vehicle deduction.

Vehicle Purchase Tax Deduction

You can claim the vehicle tax write-off if you’re self-employed and use your vehicle for business. It can also be taken if you lease your vehicle.

Mortgage Interest Tax Deduction

The mortgage interest deduction can be claimed by homeowners who itemize their expenses. You could claim the mortgage interest tax credit if you’re in a lower tax bracket.

Office Supplies Tax Deduction

Office supplies are tax deductible for self-employed individuals and can be reported under the office expenses category on Schedule C.

Phone Tax Deduction

Cell phones can be a business tax deduction for self-employed individuals if it is an ordinary and necessary expense. A separate business cell phone can be fully written off.

Advertising Tax Deduction

Ordinary and necessary promotion expenses and marketing expenses are tax-deductible for self-employed individuals. They should be claimed on Schedule C when filing 1099 tax.

Business Insurance Tax Deduction

Self-employed individuals can deduct business insurance expenses from their 1099 taxes. Sole proprietors and single-member LLCs can claim it on Schedule C.

What’s FlyFin?

FlyFin caters to the tax needs of freelancers, gig workers, independent contractors and sole proprietors. But anyone can file taxes through FlyFin! FlyFin tracks all your business expenses automatically using A.I. technology. Then, our CPA team files a guaranteed 100% accurate tax return for you – to save you a couple thousand dollars and a ton of time on your taxes. In addition, you can download the FlyFin app and have your taxes filed in less than fifteen minutes, saving time and money.
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