What Travel Expenses Can Freelancers Write Off?
No one understands the need to save like freelancers. Saving money on your business expenses is the best way to improve your bottom line. If you are a freelancer and find yourself traveling for any reason, you may be able to write off some of the costs. Depending on what you are doing while away from home, you may be able to write off plane tickets, hotel rooms, meals, coffee, and more. Continue on to learn what you can write off when traveling as a freelancer.
The Purpose of Your Trip
To decide what you can write off, you first have to look at the primary purpose of the trip. If you are traveling for a conference or primarily for a work-related purpose, you can write off the biggest travel related expenses without worry.
If the primary purpose of your trip is work, you can write off your plane ticket, hotel, rental car, and other major expenses. Having your business pay for the expense means your net income is lower, and therefore your taxes are lower. For most small business owners, your tax bill will go down by 25% or 28% of the cost you wrote off.
Any Business Meetings Along the Way?
Even if your trip is not primarily for business, you may be able to write off some parts of your travels. For example, I recently took a trip to Austin to visit family and friends. One of the friends I saw is a member of my mastermind group and we talked business while hanging out.
During our time together, we went for dinner. Because we discussed business strategy during dinner, I was able to write off the cost of that meal. Because you have to eat anyway, you can’t deduct 100% of the cost of the meal according to IRS rules. Only 50% is deductible. But I’ll take 50% over 0% any day!
Are You Working While Traveling?
If you are traveling for pleasure but working along the way, you may still have some write offs in your future. If you pay for a day pass to a co-working space, you can write it off. If you pay for a cup of coffee to have a place to work, you can write it off. After all, that cup of coffee also came with a table to work on and an internet connection. But if you are just watching cat videos on your laptop, Uncle Sam won’t let that write off slide. If you took the coffee to go, the tax man won’t let you off the hook.
Remember, the overall rule is the primary purpose of what you’re doing. If your family comes along, their expenses are generally not deductible. If you are playing and having fun: not deductible. If it is all about business, then you can write it off.
If it is Related to Business, You Can Write it Off!
Whether you are at home or on the road, taking advantage of business write offs is an important part of your business financial management. Get educated about how business write offs work to ensure you keep as many dollars as possible.
Business taxes can be confusing, so if you are in doubt, it is best to work with a tax professional. If you write off too much, you could find yourself on the wrong side of an IRS audit. But if you do everything on the up and up, you should not have anything to worry about aside from how much money you can save on your taxes.