Chapter 20

Travel and Entertainment Expense Deductions

Unreimbursed employee travel expenses are deductible but are subject to the 2% of adjusted gross income (AGI) floor on Schedule A. If you are self-employed, the 2% floor does not apply to travel expenses claimed on Schedule C. The types of deductible travel expenses are highlighted in Table 20-1. Generally, you must be away from home to deduct travel expenses on overnight business trips, but local lodging costs to attend a business meeting or training required by an employer may also be deductible. Meals and entertainment costs are subject to restrictions, including a 50% deduction limit (20.15) that applies to employees prior to the 2% floor (20.29). On one-day business trips within the general area of your employment, only transportation costs may be deducted; meals may not.

Table 20-1 Deductible Travel and Transportation Expenses

Your Travel Status— Tax Rule—
Local trips to see customers and client You may deduct your transportation expenses but not the cost of personal meals on one-day business trips within the general area of your tax home.
Local lodging necessary to participate in employer meeting. Lodging costs are generally deductible only on business trips “away from home” (20.7). However, the IRS allows an employee to deduct local lodging costs (not away from home) if the lodging is necessary on a temporary basis for the employee to participate in a bona fide business meeting or function of the employer ...

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