Expenses and Deductions on Schedule C: Travel, Meals & Entertainment 2011, 2012

For many small business owners, travel, meals and entertainment expenses are the lifeblood of the business. Many business owners rely on visiting clients, attending conferences and being on the road for a wide variety of reasons, to keep sales and operations of their businesses moving. Schedule C tax form

While on the road, owners and their employees incur a variety of expenses and deductions for air fare, auto rentals, hotels, meals, taxis, parking, tips and many other expenses that are ordinary, necessary incidents of traveling away from home on business.

Here is a quick look at two of the most common issues that arise when considering the travel and entertainment expenses you are entitled to deduct:

Tax Deductible Business Travel:

Travel expenses are deductible for the ordinary costs associated with travel for business purposes when the person or employee is traveling away from his or her tax home.

The tax home is defined as your regular place of business or post for your duties. Rather than being identified as a residence or even an office – your tax home is the entire metropolitan area where you normally conduct your primary work or maintain your office.

Tax Deductible Business Meals:

Meals are deductible expenses provided they are business related entertainment, or while traveling away from home. The business meal deduction is generally limited to 50% of the cost of the meal. There are two methods of calculating the deduction for meals – actual costs, or the standard meal allowance.

However, if you are a self-employed person, the 50% limit will not apply if (1) you incur these expenses as an independent contractor; (2) your customer or client reimburses or provides an allowance for meals in connection with your services, and (3) you provide a record of your expenses to the customer or client.

There are many more issues to be considered when accounting for business travel and entertainment expenses as a tax deduction. Use TurboTax 2011 to claim all to the tax deductions you are entitled to.