How to Avoid Tax Headaches when Employees Travel Out of Town on Business

HollandAdmin Blog, Tax Blog

Dear Tax Payer,

Business travel, an expensive and time-consuming activity for both the employer and employee, also can create tax problems 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 still be deductible by the employer, but it will be taxed to the employee and fully subject to withholding. This article reviews the business travel rules that apply in a variety of common situations.

Sincerely yours,

Dean Holland, CPA, MSA


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