The thought of an examination of your business income tax return provokes fear and worry. One item almost guaranteed to be on the examiner's list is a review of your travel and entertainment deduction. You can eliminate any worry if you know the rules and keep the required documentation. Deductible travel expenses include transportation, baggage, meals, lodging, cleaning, laundry, telephone calls and related tips. Travel expenses do not include expenses for entertainment, an area with its own set of detailed rules.
Regulations require that business travel expenses be substantiated by records or other evidence.
Records include diaries, logs, receipts, paid bills and expense reports. You must separately report each expense for transportation, lodging and meals. Records should indicate the date you left and returned for each trip and the number of days away spent on business. Note your destination and the business reason for the trip or the nature of business benefit that you gained or expected to gain. Total meals separately in your records because deduction for meal expenses are limited.