Business travel, a necessary evil at many companies, can be an expensive and time-consuming activity for both employer and employee. It also can create tax headaches for all concerned unless the rules are followed to the letter. If it’s done right, business travel will be fully deductible by the company (but only 50% of travel meals are deductible), tax-free to the employee, and free of FICA and payroll tax withholding. If the rules aren’t followed, the expense will be deductible by the employer, taxed to the employee, and fully subject to withholding.
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Dean R. Holland, CPA