Posted in: Best practices, In this week's e-newsletter, Latest news & views, T&E
Lately, more biz travelers have started heading out a day earlier to snag cheaper airfares. Is that a problem for T&E processing? It’s cheaper in the long run, but what does it mean for your T&E processing and IRS compliance? If a traveler adds an extra day (usually airlines require a Saturday night stay for the cheapest rates) it’s OK for you to reimburse the employee’s lodging and meals for the “extra” day.
One catch: The cost of the extra expenses must be less than your company would’ve paid for the non-bargain airfare. In other words, if the cheaper day’s flight only saves you $100 and you’ll pay an average of $200 for hotel, meals, etc., the extra day’s expenses aren’t deductible for your company. (Not to mention, your employee isn’t really saving you any money.)
Another common question: If the employee flies out early and spends the day taking in the local sites and not doing any business at all, is it still a deductible business expense?
In this case, yes. Just be sure tickets to the distant city’s ballpark or art museum don’t make their way into the employee’s expense report — just meals and lodging are deductible business expenses.