Documenting Your Travel Expenses

Travel expenses are a high priority issue on IRS audits.  As such, as you go through the year, be sure to keep complete records for all of your business related travel, whether it is to attend seminars, conventions, trade events, or a general business meeting. Complete records include all receipts, hotel charges, airline ticket receipts, a log of any car mileage incurred and event flyers or promotional material showing that there was an actual event that took place.  The IRS wants to be sure the travel expense was tied to a trip or event.

If the travel was not related to an event, it is imperative that you document who you met with and why.  A complete file for each business trip will simplify your life when it comes time to file your return. Your file and documentation should always answer the questions five Ws, who, what, where, when, and most importantly why the travel expense was incurred.

It will not take the IRS auditor very long to ask for your mileage logs.  IRS rules require that all business mileage be documented and explain, again, who, what, where, when, and most importantly why the travel expense was incurred.

Keep in mind that you should have a log documenting the travel and mileage deductions that relate to medical treatments, volunteer charitable work, and moving expenses for which you want to claim a tax deduction for.  These expenses must be documented.

While you are pulling together your 2015 tax records, it is an excellent time to take a few minutes and close up any gaps in your travel records and make sure the five Ws are answered.  For your 2016 travel expenses, take a few extra minutes and document everything as soon as you return from any business related travel.

Please note that there is NO PRESCRIBED FORM for recording travel costs.  Any method can be used so long as the required information is recorded.  Unless you have documentation, you will not be entitled to a deduction.  Not having a log is generally enough of a reason by itself to cause you to lose your travel deductions.  Also, not having travel documentation can cause you to incur a negligence penalty in addition to the tax on the disallowed travel expenses.

Posted in: IRS, Tax Returns

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