Claiming Work Travel Expenses: Your Rights Before Quitting

Employees can claim travel expenses, including the cost of travel by bus, car, train, or plane, meals, accommodation, and laundry, as long as they are travelling outside their designated 'tax home'. This tax home is usually the entire city or area in which the employee works. However, there are some restrictions on what can be claimed. For example, travel to and from a permanent place of work from an employee's residence is non-claimable. Additionally, travel expenses are only deductible if they are deemed ''ordinary and necessary,' meaning that lavish or extravagant expenses cannot be claimed.

Travel expenses must be 'ordinary and necessary'

When it comes to claiming unpaid work travel expenses, there are a few things to keep in mind. Firstly, you must be traveling outside of your "tax home" area, which is usually the city or region where your primary workplace or business is located. This excludes your daily commute. Secondly, the trip must be longer than a typical workday and require rest to meet work demands.

Now, let's delve into the concept of "ordinary and necessary" in the context of travel expenses.

Ordinary and Necessary Expenses:

• Ordinary: This means that the trip makes sense and is customary within your industry. For example, attending a conference related to your field or visiting a client site would be considered ordinary. However, if there are two conferences, one local and one in a different country, choosing the latter would not qualify as an ordinary expense.
• Necessary: The trip must be undertaken for the purpose of conducting business activities. It should be essential for your work and directly contribute to carrying out your business responsibilities.

• Transportation Costs: This includes airfare, train tickets, bus fares, taxi rides, and car mileage. You can also claim costs for transporting baggage and any display or sample materials needed for your work.
• Lodging and Meals: You can claim accommodation costs and meals (usually 50% deductible) during your work trip. However, ensure these are not extravagant or for entertainment purposes.
• Laundry and Dry Cleaning: Expenses for laundry and dry cleaning services during your work trip are typically considered ordinary and necessary.
• Business Calls and Communications: Costs associated with business calls, faxes, and other communication devices used for work purposes during your trip are generally deductible.
• Tips: Tips paid for services related to your acceptable expenses, such as dining or transportation, are usually considered ordinary and necessary.
• Rental Car and Parking Fees: If you use your car for business purposes during your trip, you can claim the standard mileage rate or actual expenses, along with parking fees and business-related tolls. If you rent a car, only the portion used for business purposes is deductible.

Remember, it's important to maintain good records of your expenses, such as receipts and logs, as they will be essential when claiming these deductions. Additionally, these expenses must be directly related to conducting business activities, and any lavish or extravagant spending will not be considered ordinary and necessary.

You can't claim travel to/from your residence from your permanent workplace

When it comes to claiming work-related travel expenses, there are a few important things to keep in mind. Firstly, it's essential to understand the concept of a "tax home". According to the IRS, your tax home is typically the entire city or general area where your main place of business is located, regardless of where your family home is. For example, if you live in Chicago but work in Milwaukee during the week, staying in hotels and eating out, your tax home is considered Milwaukee. This means that any travel, meals, or lodging expenses in Milwaukee cannot be deducted because it is your primary place of work.

Now, let's focus on the specific scenario where you want to claim travel expenses for your daily commute to and from your permanent workplace. Unfortunately, this type of travel expense is generally not eligible for a tax deduction. Whether you're driving your car, taking public transportation, or even walking, the cost of travelling between your residence and your everyday place of work is not considered a deductible expense. This also applies if you work overtime or outside of regular hours. The key distinction here is that your permanent workplace is considered your tax home, and travelling to and from your tax home is not considered a business-related travel expense.

However, there are certain scenarios where you may be able to claim travel expenses related to your job. If you work from home for part of the day and then travel to a separate workplace for the same employer, you can claim those travel costs. Additionally, if you work at multiple locations for the same employer, you can claim the cost of travelling between those different work locations. It's important to note that these exceptions only apply if you are travelling for work purposes and not for your regular commute to a permanent workplace.

Furthermore, if you incur travel expenses for attending off-site meetings, events, or conferences related to your work, these may be deductible. For example, if you need to travel to attend a trade conference or meet with clients in another city, you can claim transportation costs, meals, accommodation, and other related expenses. However, it's important to remember that the primary purpose of the trip must be work-related, and any leisure activities or personal detours cannot be included in your expense claim.

Lastly, it's crucial to maintain detailed records of your travel expenses and retain all relevant receipts. This is essential for supporting your expense claims and providing evidence if required by the tax authorities.

You can claim travel between two separate workplaces

If you work at more than one location for the same employer, you can claim the cost of travelling between the two separate workplaces. This is the case even if you work from home for part of the day and then travel to your workplace. However, it is important to note that you cannot claim travel expenses from your home to your everyday place of work and back.

Transport costs are one of the most common travel tax deductions. Generally, you can claim work-related travel in your car or on public transport. If you pay for parking to attend an out-of-office company meeting or event and use your own car to get there, you can claim the trip and parking costs. However, you cannot claim the cost of normal, everyday parking if you drive to your everyday workplace and pay for parking nearby.

If you are away from home or your regular workplace for more than six consecutive nights, it is recommended that you keep a travel diary to record your locations, the start and end times of your activities, and what you were doing. This will help you to track and recall incidental expenses such as road tolls and meals.

You can't claim travel expenses if reimbursed by your employer

If you are reimbursed by your employer for travel expenses, you cannot claim these expenses as a tax deduction. This is the case even if you were reimbursed under an accountable plan, where you are required to return any excess reimbursement.

If you are reimbursed for travel expenses, you may still be able to claim a deduction for any expenses related to your travel that were not covered by your employer. However, this will depend on the tax laws in your country or state, so be sure to check with a tax professional or government resource for the specific rules that apply to you.

You can't claim travel expenses if your trip is primarily personal in nature

When it comes to claiming travel expenses, the primary purpose of your trip is crucial. If the trip is primarily personal, you cannot claim any travel expenses, even if you engage in some business activities during the trip.

For example, if you travel to Phoenix, Arizona, to visit a friend for two weeks and meet with two customers over lunch to discuss business contracts, you cannot deduct the cost of the trip. However, you may be able to deduct the cost of the business lunches, subject to the limitations on meal expenses.

To be considered a business trip, the primary purpose of your trip must be business-related. This means that if you spend more days on personal activities than on business activities, your trip is considered a vacation and you cannot deduct travel expenses.

Additionally, when combining business and pleasure, you must allocate your travel expenses accordingly. If your trip is primarily for business, you can deduct all of your business-related travel expenses. However, if your trip is primarily for vacation purposes, the entire cost of the trip is a non-deductible personal expense. In this case, you can only deduct expenses directly related to incidental business conducted during the trip.

It is important to note that travel expenses must also meet the criteria of being "ordinary and necessary" for your business. This means that the expenses should be typical for a business in your industry and essential for carrying out business activities.

Frequently asked questions