This is How to Maximize Discounts on Business Travel Expenses
Unfortunately, when you start a business, you aren’t handed a manual for saving money. For many companies, travel costs are a major financial liability. At the end of the year, you may be able to write off some of your business travel expenses, but which costs can you deduct and how can you save in the meantime?
According to Runzheimer’s 2019 Cost of Business Travel Report, average travel expenses for a small business trip cost $1,293. But, if you know where to find savings, you can get more for much less.
Here, you’ll learn where to find discounts for business travelers.
- Tax deductions for business travel expenses
- Associations with discounts for business travelers
- How to optimize work-related travel savings
Keep reading to leverage the maximum tax deductions and discounts for business travelers.
First, Which Travel Expenses Can You Write-Off on Your Federal Taxes?
For most companies and their workers, taxes are one of the biggest liabilities and stressors faced each year. If you know which travel-related expenses you’re able to write off before you plan your business trips, you can experience immense savings in this realm.
What Business Travel Expenses are Deductible?
According to the IRS, these are the business travel expenses you can and can’t deduct.
When working away from your home city, you can deduct the following expenses:
- Transportation fares including air, bus, taxi, tolls, parking, & fuel
- Hotel and other lodging costs
- Travel-related office, workspace, or conference room rental fees
- Shipping of baggage, displays, or sample material
- Non-entertainment related meals
- Laundry & dry cleaning
- Business communication including calls & fax
- Tips provided for travel expense related services (taxi, cleaning, meals, etc.)
- Outsourced services and equipment rental
But, you can not deduct any of these:
- Lavish, extravagant, or personal expenses
- Travel expenses for any indefinite work assignment away from your home
- Entertainment while traveling for business
NOTE: The above is subject to change with occasional tax reform, so make sure to check the Internal Revenue Service website for updated information. Also, check with your CPA and/or your state’s Department of Revenue to find out which travel-related expenses you can write-off on your state taxes.
Tips to Maximize Business Travel Tax Deductions
There are at least a few things you can do to maximize deductions on business-related travel costs.
1. Make sure business is your primary purpose for traveling. While it’s okay to have fun on your work trips, the IRS only wants you to write off travel when business is the primary purpose. If pleasure is your main purpose, yet you work while away, out-of-town excursions cannot be considered business write-offs.
2. For economical vehicles, take the current standard mileage rate deduction instead of deducting actual costs. Many modern vehicles cost less to drive than the standard allowance (currently 57.5 cents per mile). In this case, opt for a standard allowance on mileage costs.
3. For inexpensive meals, use the standard GSA per diem allowance instead of deducting actual costs. You may spend less on meals than the standard allowance for your travel location. In this case, you can use the standard allowance for higher deductions.
Should Employers Pay Employees’ Business Travel Expenses?
Expense reimbursement is best practice for companies that require employees to travel for work. It should go without saying that if travel costs are related to work, they should be repaid to the employee. However, sometimes, tax issues arise when employers pay employee business travel expenses.
The most common travel expense reimbursement problem is that if an employee chooses to live away from their primary place of work (the location where they earn the most money for more than one year), it is the employee’s choice, not the employer’s. In this case, the IRS does not consider travel expenses deductible.
Hence, if an employee lives away from the location where they are required to work for more than one year, it is not the employer’s responsibility to pay expenses. Make sure you research and understand what this means for you.
Tip for employers: If you opt to provide expense reimbursement, devise a business travel expenses policy for employees that is based on the current year’s deductible business travel expenses according to the IRS and your state’s Department of Revenue. Require that employees provide receipts and accounting for all travel expenses.
Tip for employees: If your employer does not provide expense reimbursement for business travel, speak to a CPA to help you maximize your personal tax deductions each year.
Next, Which Associations Offer Discounts for Business Travelers?
You can find global, local, and private associations and agencies dedicated to business travel savings, and there are a ton out there. One thing you may not know is that you might be missing out on perks offered by memberships you already have.
Your bank or credit union, credit card issuer, insurance provider, or worker’s union may have existing discounts arranged with travel-related service providers. So, do some digging.
For example, AAA members can leverage discounts on Hertz car rentals and savings on parking with The Parking Spot. Another example is Love My Credit Union’s discounts of up to 60% on resort and hotel stays among other awesome perks. Look into what unknown travel savings you might be able to leverage through the companies and associations you already do business with.
Now, How to Get Even More Savings on Business Travel
Now that you’ve discovered some of the ways you can save when traveling for work, let’s dive in.
1. Leverage Flexible Dates When Scheduling Flights
One of the first ways you can save when booking travel, is to leverage “flexible dates” on airfare. By departing or arriving a couple of days before or after your intended travel dates, sometimes you can save hundreds on plane tickets. Keep in mind that you will need to consider the costs of lodging, meals, and ground transportation to ensure that the savings will actually pencil-out.
2. Use a VPN or Delete Your Cookies When Booking Online
Some travel websites keep track of your visits to their site through cookies on your web browser. They then use information about how many times you’ve visited or conducted a specific search and increase their prices accordingly. So, when booking your flights, use a virtual private network (VPN) to keep your browsing information private or delete your cookies right before you book.
3. Research Travel Bundles
Many third-party websites and travel agencies offer bundles on flights, hotel stays, and car rentals. With these deals, you can often save a tremendous amount of money compared to when you book each need separately. So, be sure to shop around and look for package deals.
4. Don’t Check Your Bags
Depending on which airline you travel with, it can cost hundreds of dollars to check multiple bags for a flight, not to mention the return costs. So, if you can get away with it, bring carry-on luggage only. In the case that you must take product samples or displays with you, it might cost less to ship them via FedEx or UPS before you head to your destination.
5. Join Frequent Flyer Programs & Memberships
If you plan to travel often, airline frequent flyer programs and other memberships enable you to earn points, savings, and even gifts. At The Parking Spot, we created The Spot Club to give our members the ability to earn free parking, waived reservation fees, and other deals and discounts.
6. Pick up the Phone to Negotiate Discounts
Sometimes, if you pick up the phone to call a company directly, you can find better discounts than what’s advertised. So, first of all, ask hotels and rental companies (or even dry cleaners) about any specials they can offer. Sometimes it’s effective to “start a bidding war,” so to speak. For example, you can let the support agent know that you’ve found a competitor who quoted you a certain price and ask if they can match or even beat it. Human-to-human communication is powerful.
7. Take Advantage of Coupons
Groupon and RetailMeNot are your friends. You can find amazing deals on accommodations, rental cars, and more. Sometimes the deals you find can be up to 90% off normal retail prices. There are many other coupon websites, so don’t limit yourself to just these two -- shop around for the best bargains.
8. Buy Groceries and Leverage Free Hotel Meals
Many hotels offer free continental breakfast and meal vouchers for nearby restaurants. Leverage this. Rather than eating out, shopping for groceries when you arrive at your business travel destination can save you a ton of money. Buy snacks and foods that you don’t have to cook and can carry with you like protein bars or fruits and veggies.
9. Consider Airbnb or VRBO for Accommodations
Vacation rentals hosted by private parties tend to be more cost-effective than hotels or short-term rentals managed by companies. While many people think of Airbnb and VRBO as personal travel destinations, discount-savvy business travelers know better. In some cases, you can rent a room, apartment, or home for less than $50 per night. These rental marketplaces are worth considering.
10. Carry Snacks When You Fly
A huge air travel expense is food and drinks at airports, where even a bottle of water can cost $10 or more. So, carry dry snacks with you to avoid dining and shopping at the airport. A candy bar might cost 3X as much at an airport or on a plane as it would in the grocery store.
11. Don’t Park at the Airport
Parking at an airport can cost up to $60 per day, depending on which airport you fly from. Avoid these costs by utilizing an off-site parking garage or other alternative and take a quick shuttle ride to get to your terminal. The business travel savings are tremendous.
Apply this advice the next time you need to work away from home. At The Parking Spot, we know that you want to find the best business travel deals at the best locations. That’s why we currently have 37 near-airport parking locations at 22 airports across the country. Think of us the next time you leave town for work and download our mobile app for complete control over your airport parking experience.