2022 brought with it hopes and expectations of getting back to normal after two years of a pandemic and other hurdles that we have had to navigate. That includes more employees working from home and less business travel. But with a sense of normalcy returning, more workers are back out traveling for business. And what could be more normal than that dreaded “T” word, taxes?
To help you navigate this often-confusing topic, here are our best tax tips for travel managers.
What is Travel and Expense Management
Travel and Expense Management (T&E) is a critical process in which companies collect and organize all travel-related expenses so they can then write them off at the end of the fiscal year. Travel-related expenses include things like hotels and lodging, flights, car rentals, and meals. To lower your company’s tax liability and save money, it is essential that you and your employees accurately track all travel-related expenses as you go.
How to Prepare Travel Expense Reports
If you are a veteran travel manager, you know the hassle and frustration that comes with requiring your employees to fill in expense reports by hand. Inaccurate expense report submissions are the bane of any TM’s existence. Luckily, those days are gone if you want them to be. Automation is the way forward when it comes to submitting expense reports.
Travel Reimbursement Policies
Your company’s travel policy should clearly spell out what is required for reimbursing employees for their travel expenses. Many companies opt for a company credit card or virtual credit card employees can use to pay for expenses while traveling. This is especially useful for big-ticket items like flights and rental cars which can be quite expensive, and unfair to expect employees to pay out of pocket and then get reimbursed.
The process of reimbursing employees can become complicated, time-consuming, and frustrating, so the more you can reduce the need for reimbursements, the better.
Benefits of Home-Based Advisors
If your company still hasn’t transitioned back to the office, you may have home-based advisors on your payroll. A home-based advisor works out of an office in their place of residence and has the option to deduct reasonable expenses on their taxes for the use of said office. Keep in mind that the portion of your space you write off for office use must be used for business. You can also write off as a depreciable asset any furniture, equipment, and technology that is used in your home office for business.
However, it behooves you not to be over-aggressive with your write-offs. It may be tempting to write off about anything, including your vehicle. A better option is to write off things like mileage when you are driving to the airport or another business activity.
Tax Credit for Travel
Many travel expenses can be written off and received as a tax credit. These include things like transportation, lodging, meals, business calls, tips, and other incidental expenses.
The IRS website is a wonderful, user-friendly tool that can help you navigate what travel expenses can and cannot be written off for tax purposes. If your company is working with a financial advisor or has a finance team, it is wise to seek their advice on how to proceed.
Can You Write Off Your Vacations
The answer in a word – maybe. The IRS does allow for some leeway in terms of combining a personal vacation with a business trip. The trip must be primarily for business, and you should keep meticulous notes and receipts of business-related and non-business-related expenses. But you can write off the portion of the trip, including lodging, meals, and transportation, in which you were conducting business. Just be cautious that you are not including non-business-related activities and expenses when filling out your taxes.
How Travel Management Software Makes Your Tax Season Easy
If this all sounds complicated and overwhelming to you, you are not alone. The key is to invest in a great travel management software like CLC that will help you consolidate documents and records and streamline the everyday travel management aspect.
Join CLC today and discover how we can help save you time and make this tax season and all future tax seasons a breeze.
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