Tax Tip Podcast for Real Estate Professionals – Types of Deductible Travel Expenses

Tax Tip Podcasts for Realtors, Brokers, and Real Estate Professionals

Travel expenses that can be deducted generally include the costs of meals and lodging, the costs of transportation between the tax home and business destination (e.g., airplane, train, or bus fare), the local transportation costs between the airport/station and the hotel and between the hotel and the work location (e.g., taxi, Uber, Lyft, airport limousine, commuter bus fare), the costs of operating and maintaining a car used to travel away from home on business, baggage fees, shipping costs, business phone calls, dry cleaning, laundry, tips, and other ordinary and necessary expenses related to the business travel (IRS Pub. 463, Travel, Entertainment, Gift, and Car Expenses).

No deduction is allowed for the travel expenses of a spouse, dependent, or other individual who accompanies the taxpayer on business travel unless that individual is an employee of the taxpayer, has a bona fide business purpose for the travel, and would otherwise be allowed to deduct the travel expenses (Code Section 274(m)(3)). A taxpayer can, however, deduct the travel expenses of a business associate (such as a current or prospective customer, client, supplier, employee, agent, partner, or professional advisor) even though that individual is not an employee of the taxpayer.

For tax years before 2018, an employee was entitled to deduct unreimbursed travel, transportation, meals, entertainment, gifts, and local lodging related to the taxpayer’s work as a miscellaneous itemized deduction to the extent the expenses exceeded 2 percent of the taxpayer’s adjusted gross income (AGI). The Tax Cuts and Jobs Act of 2017 (TCJA) repealed the deduction for miscellaneous itemized deductions subject to the 2-percent of AGI floor for tax years 2018 – 2025 (Code Section 67(g)).

Brenda Fitch Real Estate Professional
Brenda Fitch Real Estate Professional

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(Updated 03/15/2021 08:05)

Published by Don Fitch, CPA

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