This is a question that many business travelers ask themselves in the middle of the night, when they are jammed into the middle of a row of economy class seats on a flight across the Atlantic for an important customer meeting the next morning. The answer to the question becomes even more urgent when they have a crying baby in the seat in front of them and a seat-kicking toddler directly behind them. Wouldn’t it be nice if they were able to sit in first-class, with plenty of legroom and elbow room? Not to mention the quiet atmosphere at the front of the cabin that would allow them to put the finishing touches on their presentation, followed by a good night’s sleep in a lie-flat bed.
Well, I’m here to tell you that you may indeed be able to avoid the chaotic situation we have just described and fly in first-class instead of “cattle class,” as it’s often referred to by bleary-eyed travelers. But before you order the pre-flight champagne and canapés, let me explain the conditions that apply.
The tax code allows you to deduct all business expenses that are “ordinary, necessary, and reasonable” in nature. Your actual expenses will depend on what type of business you have, and the amount of your allowable deduction will depend on the facts and circumstances in each case.
For example, the major part of a self-employed pizza delivery driver’s expenses will relate to the vehicle she uses for delivering pizzas to her customers. Whereas the largest expense for a plumber working on new houses will likely be the cost of pipes, fittings, and other materials that are needed to do his work. All of these expenses are ordinary and necessary for the businesses we have just outlined. However, the pizza driver would likely attract the attention of the IRS if she tried to deduct the cost of copper pipes and stormwater fittings as a business expense because these items are not an ordinary and necessary expense in her line of business. In the same way, the plumber might draw attention to himself if he claimed an expense for gold-plated water pipes, as this may not be seen as a “reasonable” expense. Of course, it may well be that a particular customer requested such high-end trimmings, and the deduction would likely be allowed if the plumber could provide receipts and evidence of his customer’s unusual request.
These same ordinary, necessary, and reasonable principles apply to business travel expenses. You have total control over the amounts you choose to spend on travel, but your expenses are only deductible if they meet the governing criteria. For example, you have many choices available to you if you need to make a business trip from Los Angeles to New York: you could travel by bus, car, train, or airplane. Under normal circumstances you would choose to fly, but your expenses would likely be deductible regardless of which method you chose. However, things are more complicated if you decide to fly first-class. If the trip is urgent and the only fare that would get you to New York in time is a first-class seat, then your expense would likely be deductible. But you may have a problem proving your case to the IRS if your only reason for choosing first-class for the five-hour flight is that you want to be well-rested for your meeting during the afternoon after the day you arrive. On the other hand, your claim for a deduction is more likely to be accepted if your flight has a longer duration that involves traveling overnight across the Atlantic or Pacific.
The bottom line here is that it’s your money, and you can spend it on travel in any way you want. But if you want to be able to deduct your first-class airfares, be aware that the IRS may question you about these expenses and will make its decision based on the facts and circumstances of each trip. You are, therefore. well-advised to keep good records of your travel expenses with supporting documentation, and the circumstances surrounding each trip.