Business Travel Requirements Cont...

An accountable plan, however, is one where you submit an expense report to your employer and are directly reimbursed by your employer for the out of pocket expenses incurred. In this case the expense reimbursement is not reported as wages on your Form W-2.
Generally, the IRS requires taxpayers to record the following elements of every T&E and meal expense.
·        The amount of expense;
·        The time and place of the expense;
·        The business purpose of the expense; and
·        The business relationship to the taxpayer of the individuals being entertained.

In addition, the taxpayer must also keep evidence, such as a receipt, for any T&E and meal expense that is $75 or greater.
For cellphones, you can only deduct costs which are related to your business, so you
must establish the percentage of business use. Documentation may include a log or other ledger indicating when calls were made for business and personal reasons and the purpose for such  business calls. Under the Cohan rule (named for a case involving
the famed Broadway showman George M. Cohan), the IRS may allow you to deduct a portion
of your expenses without documentation if you can
provide credible evidence of expenses.
Note that taxpayers have more leeway for employer-provided cellphones treated as fringe benefit. If an employer provides an employee with a cell phone primarily for non-compensatory business reasons, the business and personal use of the cell phone is generally nontaxable to the employee.
The IRS does not require record keeping of business use to receive this tax-free treatment.
A similar approach applies to arrangements common to small businesses that provide cash allowances and reimbursements for work-related use of personally-owned cell phones.
Deductible travel expenses while away from home include, but are not limited to, the costs of:
 

• Travel by airplane, train, bus or car between your home and your business destination. (If you’re provided with a ticket or you’re riding free because of a frequent traveler or similar program, your cost is zero.)
• Fares for taxis or other types of transportation between the airport or train station and your hotel, the hotel and the work location, and from one customer to another, or from one place of business to another.
• Shipping of baggage, and sample or display material between your regular and temporary work locations.
• Using your car while at your business destination. You can deduct actual expenses or the standard mileage rate, as well as business-related tolls and parking fees. If you rent a car, you can deduct only the business-use portion for the expenses.
• Meals and lodging.
• Dry cleaning and laundry.
  
• Business calls while on your business trip. (This includes business communications by fax machine or other communication devices.)
• Tips you pay for services related to any of these expenses.
• Other similar ordinary and necessary expenses related to your business travel. (These expenses might include transportation to and from a business meal, public stenographer’s fees, computer rental fees, and operating and maintaining a house trailer.)

Be aware of the regulations and the stringent rules in this area. Contact us if you have any questions regarding your business practices and whether your records would suffice in the event of an audit by the IRS. While we cannot promise to make you audit proof we can help you organize your recordkeeping so that all the records necessary would be available in the event of an audit.