Katie has to make a business trip to Florida for two nights to meet with potenti
ID: 2491145 • Letter: K
Question
Katie has to make a business trip to Florida for two nights to meet with potential clients. Her flight costs $350 round-trip. When she arrives she rents a car for $80 and she incurs $20 in gas and tolls. Her hotel for two nights is $250. She takes her potential clients to dinner and spends $550 (of which $300 would be considered extravagant). Her breakfast both mornings in the hotel cost a total of $20. She is reimbursed by her employer for her flight but not for the other expenses. Katie's AGI for the year is $40,000. Assuming she has no other miscellaneous itemized deductions what amounts may Katie deduct from AGI on her tax return related to these expenses?
Explanation / Answer
EMPLOYEES CAN DEDUCT TRAVEL EXPENSES INCLUDING TRANSPORTATION, AIRFARE AND HOTEL. AS REGARDS MEALS DURING TRAVEL THE DEDUCTION IS SUBJECT TO 50% OF THE ACTUAL AMOUNT HOWEVER LAVISH COSTS CANNOT BE DEDUCTED. AIRFARE HAS ALREADY BEEN PAID BY THE EMPLOYER SO IT IS NOT DEDUCTIBLE.
SO KATIE'S DEDUCTION WILL BE CAR + GAS + HOTEL + 50% OF 250 ( LAVISH AMOUNT EXCLUDED) + 50% FOR BREAKFAST
= 80 + 20 + 250 + 125 + 10 = $485.
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