Work-related travel expenses: how to track them and what to claim for your business

Many business owners and employees travel, so you’ll likely need to record work-related travel expenses. The good news is that business travel expenses are often tax deductible, so tracking them can help you save money on taxes. Tax deductions can lower your taxable income, so you could pay less in taxes overall.

In this post, we’ll cover what businesses need to know to track, record, and claim work-related travel expenses under the IRS rules, including:

• What are work-related travel expenses?
• Business travel expenses you can deduct
• What you can’t deduct
• Records you need to support business travel expenses
• How to track work-related travel expenses

What are work-related travel expenses?

Work-related travel expenses may include costs for business travel, lodging, or meals. However, not all travel expenses qualify as work-related.

One of the key issues employers run into is understanding the line that separates personal and business expenses. The IRS sets out the rules in Publication 463, Travel, Gift, and Car Expenses¹. The edition current at the time of writing covers the 2025 tax year.

Business travel expenses you can deduct

Under Publication 463, you are traveling away from home if:

• Your duties require you to be away from the general area of your tax home substantially longer than an ordinary day’s work, and
• You need to sleep or rest to meet the demands of your work while away from home.

Expenses must also be ordinary and necessary for your business. The IRS lists the travel expenses you can deduct, including:

• Airfare, train, bus, or car travel between your home and your business destination
• Taxi, commuter bus, and airport limousine fares, for example between the airport and your hotel
• Sending baggage and sample or display material
• Operating your own car on the trip, or the business-use portion of a rental car, plus business-related tolls and parking
• Lodging, and meals that aren’t entertainment, when the trip is overnight or long enough that you need to stop for sleep or rest
• Dry cleaning and laundry
• Business calls while on the trip
• Tips you pay for any of these expenses

Meals come with a limit: you can generally deduct only 50% of the unreimbursed cost of your meals.

What you can’t deduct

You can’t deduct travel expenses that aren’t necessary for conducting business, so you can’t deduct your vacation. However, you can deduct the travel costs to go to another city and meet with a customer. In that case, you may deduct transportation, lodging, and some meal costs.

If you combine a business trip with a vacation inside the United States, the IRS looks at the main purpose of the trip. If the trip was primarily for business and you extended your stay for a vacation, you can deduct only your business-related travel expenses, including the cost of getting to and from your business destination. If the trip was primarily for personal reasons, the entire cost of the trip is a nondeductible personal expense, although expenses at your destination that are directly related to your business can still be deducted.

For example, if you live in Chicago and attend a work conference in Denver, you can deduct those costs. If you then stay in Denver for a few extra days to sightsee, the extra days and the money you spend on them don’t qualify. To claim part of a mixed trip, you’ll need to show how you separated the work costs from the personal ones.

Records you need to support business travel expenses

To deduct travel expenses, you’ll need to keep records. Publication 463 says you should keep the proof you need in an account book, diary, log, statement of expense, trip sheets, or similar record, together with documentary evidence such as receipts, canceled checks, or bills.

A few rules from the same publication are worth knowing:

• Documentary evidence is generally not needed for an expense, other than lodging, of less than $75.
• You must generally provide a written statement of the business purpose of an expense, unless the purpose is clear from the circumstances.
• You should record each expense at or near the time it happens. A log kept weekly counts as a timely kept record.
• Generally, you keep the records that support a deduction for 3 years from the date you file the return on which you claim it.

You may be able to show that something is a work-related travel expense through:

• Signed contracts
• Meetings with documentation
• Proposals
• Email confirmations

How to track work-related travel expenses

Businesses can cover work-related travel expenses for employees and track them. To do this, you generally have three options:

• Pay for expenses directly with a company card or business bank account
• Set up a reimbursement program for travel expenses
• Pay employees a travel allowance

How you set up reimbursements matters. Under an IRS accountable plan, expenses must have a business connection, employees must adequately account for them within a reasonable period of time, and they must return any excess reimbursement or allowance within a reasonable period of time. When an employee meets those three rules, the reimbursements aren’t included in their income in box 1 of their Form W-2. Reimbursements that fail the rules are generally treated as paid under a nonaccountable plan.

Businesses need to keep accurate records on those travel expenses. Here are some tips to help you track work-related travel expenses.

1. Educate employees on what they can claim

You can reduce errors and missing records by training employees on how to track travel expenses before they go on a trip. Even a simple checklist of what travel expenses you cover and don’t will be helpful.

If you pay a per diem allowance, tell employees the daily amounts for lodging, meals, and incidental expenses. The rates differ by location: Publication 463 explains the federal per diem rate, which is the highest amount the federal government pays its own employees for lodging and meals while they travel in a particular area.

Additionally, your employees should keep all of their receipts and documents while traveling on business.

2. Track expenses and keep records

Keep the records behind every travel deduction for as long as the IRS may need them, generally 3 years from the date you file the return. Expense tracking apps make it easier to save receipts and other documents, and accounting software like Xero and QuickBooks also has expense tracking features.

3. Keep a travel log

A log is the record the IRS expects to see beside your receipts. It can be an account book, diary, trip sheet, or similar record, and for travel, Publication 463 says it should show:

• The cost of each separate expense for travel, lodging, and meals
• The dates you left and returned, and the number of days spent on business
• The destination or area of your travel
• The business purpose of the expense

These entries should all line up with the receipts you keep, so the log becomes an activity timeline with records. If you ask traveling employees to keep one too, you’ll have an extra way to verify their claimed expenses.

4. Track expenses with a bookkeeper

The IRS is particular about what you can and can’t deduct for travel, and it can be costly if you track expenses incorrectly. At the same time, business travel expenses can become complicated to track, deduct, and report, especially when your business is growing and more of your team travels.

Online bookkeeping services like Visory can help you track, record, and report your travel expenses. When it is time to file your business taxes, you’ll have organized books with the documents behind every expense.

To learn how Visory can help you manage work-related travel expenses, and all your back-office finance needs, book a discovery call. We’ll get to know your business and the services that fit it.