Throughout your career as a dentist, you will have to do some traveling for conferences and other crucial meetings.
Some dentists neglect to maximize their travel expenses for their end-of-year tax returns. Below are some helpful tips for writing off your travel expenses.
Please note that we are not tax professionals and this should not be taken as professional tax advice. Make sure to speak about the details with an accountant or tax professional.
Local vs. “Away From Home” Deductions
First, it’s vital to grasp which expenses you’re entitled to write off as a dentist. There are two types of travel-related expenses: local and “away from home.”
Local transportation refers to anything that gets you to and from a location that is specifically intended for business. This can include such items as:
- Local taxis or ride shares
- Public transportation
- Parking meters or fares
- Car mileage
- Vehicle repairs
- New tires for your car
“Away from home” deductions involve expenses that are specifically generated during travel out of your region for work reasons. This can sometimes be more confusing than local expenses because there are many more areas in which you may have an opportunity to write things off.
Types of Travel Expenses to Document
The key to successfully writing off travel expenses is to preserve clear documentation of everything you’ve spent money on during your business journeys. This will protect you in the case of an IRS audit.
You should have clear documentation of travel dates, locations, and receipts. We’ll go into greater detail below about the various types of travel expenses and certain details you ought to know.
To get to the airport for a business trip, you’re either going to require someone to drive you, or you’ll have to pay for parking your car for a number of days. Any cost related to airport transfers is eligible for tax write-off.
Airfare and Lodging
The cost of airfare and lodging are typically among the more expensive travel items. If you or your dental practice had to cover your ticket and hotel, you’re eligible to write off your airfare come tax season.
If you’re bringing along a spouse or friend to accompany you, their airfare and lodging do not qualify to be deducted because they’re not acting as an employee of the company.
Rental Car and Gas
Once you arrive at your destination, you may require the use of a rental car to get around. This includes both the fees for use of the vehicle as well as the gas or mileage.
To keep proper track of vehicle use, make sure you save clear documentation of:
- Your dates of travel
- Purpose of travel
- Location at the beginning of the trip
- Odometer reading at the beginning of the trip
- Location at the end of the trip
- Odometer reading at the end of the trip
Typically, the rental company can provide these details for you. Make sure they give you a copy of a detailed receipt that cites all of the above for you.
When tax season comes around, you’ll notice that there are two categories for meals that can be deducted. One is for regular business meals (travel included) which typically have a 50% limitation on deduction.
In other words, they can only be written off if you or another employee/coworker is present during the meal. Alcohol or anything else deemed to be lavish can not be included.
There is an exception to the rule that was effective in 2021 and 2022. According to the Consolidated Appropriations Act signed into order on December 27, 2020, food and beverages that are directly purchased through a restaurant are eligible for deduction. Whether or not this will remain the case in 2023 is unclear.
Conference or Seminar Costs
If you’re traveling for business as a dentist, you may be attending a conference or seminar. This could entail other expenses that are eligible for write-off, including:
- Booth rental costs
- Marketing collateral
- Shipping or packaging materials
- Display expenses
- Ticket to the event
- Meals during the event
Other Travel Expenses You Might Be Allowed to Deduct
Miscellaneous purchases may take place during a business trip. These might include:
- Cell phone use during the trip (including international fees)
- Dry cleaning for business attire needed for the trip
- Luggage fare for the flight
- Local transportation, tolls, and parking charges during the business trip
- Tips you’ve disbursed related to your travel expenses such as to drivers or concierge
Maximizing travel expenses is one of the most common tax deductions dentists may overlook. Before you take your next business trip, think about consulting with a professional accountant, CPA, or tax professional about the details.
Such experts can help you decide what tax write-off approach might be best for your dental practice, as well as be able to clarify whether or not something specific items are eligible for deduction.