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Travel Expenses

Travel Expenses

In order for travel expenses to be tax deductible to individuals, the expenses must be both ordinary and necessary. According to the IRS website, an ordinary expense is an expense “that is common and accepted in [the relevant] trade or business.” A necessary expense is an expense “that is helpful and appropriate in [the relevant] trade or business.”
For example, assume a salesperson from New Jersey needs to meet a client in California. Reasonable travel expenses would be tax deductible for the salesperson. However, if we were to further assume the salesperson decided to bring his or her spouse on the trip and make the trip part vacation and part business, then the vacation portion and the spouse’s expenses would not be deductible.
Please note, there is currently no federal law which requires employers to pay employees’ travel expenses (some states do have requirements), with limited exceptions, including, not limited to:

Discrimination — treating employees differently based on a protected characteristic (i.e. race, religion, disability, etc.);

If by incurring such expense(s), the employee would drop below the minimum wage threshold; or

A contract requires payment of the same.

DISCLAIMER: THE ABOVE IS NOT INTENDED AS LEGAL OR TAX ADVICE. ANY QUESTION REGARDING THE ABOVE OR ANY OTHER LEGAL OR TAX ISSUE SHOULD BE DIRECTED TO YOUR ATTORNEY OR ACCOUNTANT.

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