Business owners can deduct most of their business expenses on their tax returns. That is of course as long as the expenses are related to your business. However, you won’t be able to claim every deduction for your business you normally would while in the U.S. Only certain expenses are tax-deductible when incurred abroad.
Business Travel Expenses Deduction
Generally, you are able to claim a deduction for any of your costs as long as they are one hundred percent business-related and reasonable. Here are a few examples of the most common business travel deductions you can claim on your tax return.
Lodging: Assuming your trip is overnight or multiple days, you’re going to pay for a hotel or other accommodations. Luckily, no matter the price, the full cost of hotel stays can be deducted on your tax return.
Baggage and Shipping: The full cost of baggage and shipping can be deducted. However, the expenditure must be for business. So if you’re planning on making a presentation and ship or keep your equipment in your luggage, the costs are deductible.
Tickets and Transportation: Whether you go by plane or use your personal vehicle, the cost of your transportation is deductible. This includes the mileage, tickets, extra cost of baggage, etc. Any expense you incur while trying to get to your destination is deductible.
Claiming Business Expenses Incurred Abroad
There is no specific tax form for claiming the business expenses incurred abroad. You simply claim the deduction on your tax return the way you normally would. As long as the expenses are completely related to your business and not for your personal pleasure, you will reduce your taxable income by claiming the available deductions.
Note: Keep in mind the proof of your expenses may be in a language other than English. In this case, you may need to translate your receipts. Also, if the expense occurred is in another currency which is often the case for expenses occurring while abroad, that day’s current exchange rate is going to be taken into account when claiming the deduction.