Travel, meals and vehicle costs are among the most frequently questioned business expenses, largely because they can also be personal. The IRS covers them in detail in Publication 463, Travel, Gift, and Car Expenses. The key to supporting them is good records made at the time.

What Publication 463 covers

Publication 463 explains that you may be able to deduct the ordinary and necessary business-related expenses you have for travel, non-entertainment-related meals, gifts and transportation. It defines an ordinary expense as one that is common and accepted in your trade or business, and a necessary expense as one that is helpful and appropriate for your business. It also explains limits, special rules for vehicles and the records you need.

The IRS page on deducting business expenses gives a wider overview.

Records to keep for travel

  • Receipts for lodging and transport
  • The dates you left and returned
  • Where you went
  • The business purpose of the trip
  • Who you met, if relevant

A calendar entry or a short note made at the time is much stronger than a reconstruction months later.

Records to keep for meals

  • The receipt, showing the amount, date and place
  • The business purpose
  • Who attended and their business relationship

Limits apply to meal deductions, and rules have changed in past years, so check the current publication rather than relying on older guidance.

Vehicles

For cars and trucks, Publication 463 explains the methods for working out vehicle expenses and the records of business use you need. A mileage log recording the date, destination, purpose and miles of each business trip is the most common record. Commuting between home and a regular workplace is generally not business use.

Reimbursing employees

If you reimburse employees for travel, Publication 463 explains how accountable plans work, including the need for employees to account for expenses. Set up a simple expense claim process with receipts attached.

Bookkeeping tips

  • Use a business card for business travel and meals only
  • Photograph receipts and attach them to the transaction in your bookkeeping software
  • Code travel, meals and vehicle costs to separate accounts
  • Keep the mileage log with the year's records

The IRS explains how long to keep records in how long should I keep records.

Key terms

  • Ordinary expense: one that is common and accepted in your trade or business.
  • Necessary expense: one that is helpful and appropriate for your business.
  • Tax home: generally your regular place of business, which matters for deciding when you are travelling away from home.
  • Accountable plan: an employer reimbursement arrangement under which employees account for expenses and return excess advances.
  • Mileage log: a record of the date, destination, business purpose and miles of each business trip.

A simple habit

At the end of each trip or business meal, add a one-line note to the receipt in your bookkeeping app: who, where and why. It takes seconds then and saves hours later, especially when a trip combines business and personal days and you need to show which costs belonged to the business.

How we help

We keep expense categories and attached receipts in order as part of our bookkeeping services, and our guide to what business records to keep covers other categories.