Travel Expense Worksheet for Tax Purposes

Jack Connors, an accountant for a manufacturing company, has been preparing tax returns on weekends for several years to earn extra income. Although Jack uses a commercial tax package to prepare tax returns, he has discovered that it doesn't provide assistance in determining the portion of a business trip that is tax deductible. Jack has asked you to develop a worksheet to determine deductible travel expenses that he can use with a client who travels on business.

The IRS rules state that a taxpayer can deduct travel expenses incurred while pursuing a business purpose. Those travel expenses include transportation, lodging, incidentals, and $50\%$ of meals. Incidentals are items such as local transportation, laundry, and similar small items that are necessary while traveling. Sometimes a trip may involve both business and personal activities. If fewer than $50\%$ of the travel days are devoted to business, none of the transportation expenses are deductible; otherwise, the transportation expenses are fully deductible $($Please assume that there is no situation that business travel days can be equal to personal travel days$).$ The costs for lodging, meals, and incidentals are deductible to the extent that they are related specifically to business activities. Only $50\%$ of meals associated with business travel are deductible.

A calculation formula of each item of deductible travel expense is following.

Transportation $=$ IF Number of business travel days is greater than Number of personal travel days THEN Transportation total cost