Maximizing Travel Tax Benefits for Your Dental Practice
Tax laws allow you to deduct two types of travel expenses related to your business – local and “away from home.” In general, travel expenses may include airplane, taxi, limousine, bagging and shipping, meals and lodging, telephone, tips and any other costs that are reasonable and necessary in conducting your business. To help you understand what expenses are deductible and when you can deduct them to take full advantage of this tax-saving strategy, Doeren Mayhew’s dental CPAs have outlined the basics of what’s allowed, the documentation needed and much more below.
If you are traveling locally for the purpose of business you can deduct any transportation expenses. This may include public transportation, rental cars or costs related to your own car, such as mileage or gas, repairs, tires, parking, etc. You should discuss with your dental CPA which auto-related deduction strategies work best for your situation.
What is considered away from home travel? Generally, you must stay somewhere overnight to deduct the cost of lodging, transportation and meals. In other words, away from your regular place of business longer than an ordinary day's work and you need to sleep or rest to meet the demands of your work while away from home. Otherwise, your costs are considered local transportation costs and the costs of lodging and meals are not deductible. Here is a list of some deductible away-from-home travel expenses:
- Meals while traveling are limited to 50 percent and are subject to entertainment expense rules, if applicable.
- Lodging while traveling or once you get to your away-from-home business destination.
- The cost of having your clothes cleaned and pressed away from home.
- Costs for telephone usage.
- The costs of transportation to and from hotels, terminals, restaurants, etc.
- Airfare, bus fare, rail fare and charges related to shipping baggage or taking it with you.
- The cost of bringing or sending samples or displays, and of renting sample display rooms.
- The costs of keeping and operating a car, including garaging costs.
- The cost of keeping and operating an airplane, including hangar costs.
- Tips related to the above.
If you’re considering bringing your spouse with you or tagging on some personal time to a business trip, there are some additional rules to play by. For example, you can’t deduct your spouse’s travel costs unless you can show that their presence had a bona fide business purpose. If your trip is part business, part personal, expenses attributed to your personal activities are not deductible.
The Internal Revenue Service imposes strict travel documentation guidelines to be able to deduct business travel expenses. In addition to having receipts for each expense, you must also prove the following:
- The amount of each separate expense
- The dates of departure and return, as well as the number of days away on business
- The destination of travel
- The business reason for the travel
If you have questions regarding travel-related deductions, contact Doeren Mayhew’s dental CPAs. They have the answers!