Q. I periodically travel out of town in my RV (motorhome) for my knife-sharpening business. I sharpen and sell hair salon shears and cover six states. I park my RV overnight and am charged parking fees. Are these parking fees deductible?
A. Yes, your parking fees are deductible. In fact, this is only one of the deductions you can qualify for when you travel from your tax home for your business. Your tax home is the entire city or general area where your principal place of business is located.
Whenever you travel from your tax home overnight for your business you can deduct:
Since you’re using your RV as a transportation vehicle, you may write off your mileage with the mileage deduction while on your knife-sharpening trips. You can use the standard mileage rate of 54 cents per mile in 2016. To use the standard mileage rate, you must use it the first year you use your RV for your business. You’ll probably do much better if you deduct your actual expenses such as the cost of your gas and other vehicle expenses.
You can also qualify for a depreciation deduction when you use the actual expense method. This can be quite large if your use the RV more than 50% of the time for business and qualify for Section 179 expensing.
If your RV has a gross vehicle weight rating of between 6,000 and 14,000 pounds, you can get a $25,000 Section 179 expensing deduction. RVs that weigh more than this can qualify for Section 179 expensing up to $500,000.
You can also deduct 50% of the cost of your meals while traveling for business. You may deduct 50% of your actual meal expenses, or you may use the IRS’s standard meal allowance which ranges from $46 per day to $71 per day, depending on the location.
Finally, you can deduct 100% of the cost of your lodging while on a business trip overnight. For most people, this means deducting the cost of a hotel. But you can also deduct the cost of parking an RV overnight while you travel for business. This is likely cheaper than staying at a hotel, so you’re actually keeping your deductible expenses down by traveling this way.
Be sure to keep track of all your expenses while you travel. You don’t have to keep receipts for expenses less than $75 but you still need a record. There are several great apps that can help you do this. Hopefully, you already have the MileIQ app to keep track of your business mileage, so you’re off to a great start.
Our resident small business tax expert, Stephen Fishman, is here to answer your small business tax questions.