A big hiccup in our audit came when we had to look over our travel expenses. I am still a little confused over the difference between travel and entertainment. But, here are the things I KNOW beyond a doubt:
- You must keep a mileage log if you will be claiming mileage for medical or business. The log needs to be in an Excel format, because if it is not and you get audited, guess what you will be doing at the wee small hours of the morning! Have your starting mileage and ending mileage as well as the date, destination and REASON. Oh what fun I had figuring out all the random number we had scrawled on receipts and in spiral notebooks.
- If you are traveling out of town on business and your spouse is traveling with you, you can only claim 50% of hotel, dining and airfare. If your spouse has business at the same destination but under a different Schedule C, they can claim 50% as a deduction under their business. Neither of you can claim 100% even if the other does not claim anything. Clear as mud? Thought so.
- If you travel out of town on business, you must be able to produce proof that it was a business trip ESPECIALLY if it is a popular tourist destination. I had to produce my daily agenda for the conference I attended, receipts, awards and explanations. Any days that are unaccounted for on your proven agenda are NOT tax deductible. (Thank goodness that I kept a ton of stuff just in case I ever decided to scrapbook!)
If you have any questions, I can try to answer them but I encourage you to contact a CPA (Accountant) or the IRS directly.
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