The Internal Revenue Service allows unreimbursed job expenses incurred as part of employment to be written off of income when filing income tax prior to 2018. These can include various travel expenses.
Hotel expenses can generally be included as part of deductions prior to 2018, or afterward if you are self-employed, provided that the hotel is away from your normal work area. Filers must be careful to only deduct expenses that are legitimately part of their work.
When You Can Write Off Hotel Rooms
For the purposes of travel deductions, the IRS requires you to have a "tax home," which is the metropolitan area where most of your work takes place. Your tax home does not need to be in the same city where you formally reside; for example, if you live in Philadelphia and routinely take the train to New York City for work, New York would be your tax home and you would not be able to deduct hotel or travel expenses from working there. Your tax home changes to wherever you are working most often or if you change jobs or locations.
Employees of companies who are required to travel can deduct unreimbursed expenses from travel, including all of their hotel expenses and half of the cost of their meals. However, if the company reimburses expenses or provides a per diem allowance to an employee, only the amounts paid over and above these reimbursements can be legally deducted. You may also deduct the same costs when traveling as part of a job search or interviews.
Self-employed people can take the same deductions as employees on their Schedule C self-employment tax form, included with Form 1040, and frequently have higher travel deductions because no parent company reimburses their expenses. However, when these expenses are billed through to the client, the same rules apply as with an employee on an expense account: Any payments made by clients count as regular income, and only the excess is deductible.
As with other business expenses and deductions in general, you'll want to save receipts for the IRS, so make sure to get a receipt from the hotel front desk and save any documentation you have explaining your trip was from business.
Special Rules and Exceptions
You can deduct combined business and personal travel as long as these expenses are separately itemized. For example, if you take a trip to a conference and then spend a few days sightseeing, the entire airfare is generally deductible because the round trip would have been purchased solely for business purposes, but hotel nights and meals for the days after the conference are not legitimate business expenses. Likewise, a hotel room can be shared with family members if it is the same hotel room you would have booked solely for business, but additional hotel expenses for family members or additional travelers are not deductible.
If you're deducting unreimbursed business expenses, you must itemize your deductions and can only claim these and other miscellaneous itemized deductions to the extent they exceed 2 percent of your adjusted gross income.
2018 Tax Changes
Beginning in tax year 2018, unreimbursed job expenses when working for an employer are generally no longer deductible. Moving expenses and job search expenses fall into the same category. Self-employed deductions are essentially unaffected by the tax law changes.
On the other hand, the standard deduction is increasing, meaning that some people may not see a net increase in taxes when all the changes are taken into account.
2017 Tax Year
For the 2017 tax year, you can deduct unreimbursed job expenses in excess of 2 percent of your adjusted gross income. You must itemize your deductions to do so, and in some cases you may save more by simply taking the standard deduction.
Ellis Davidson has been a self-employed Internet and technology consultant, entrepreneur and author since 1993. He has written a book about self-employment for recent college graduates and is a regular contributor to "Macworld" and the TidBITS technology newsletter. He is completing a book on self-employment options during a recession. Davidson holds a Bachelor of Arts in American civilization from the University of Pennsylvania.