How Do You Deduct Tips You Pay In Cash While Traveling (To the Bellboy, Cab Driver, Housekeeping, etc) on your Taxes?

I’m currently working in Detroit and just was thinking about when I’d have some time to change a twenty for a bunch of ones when a friend of mine posted on Facebook asking about how, for her taxes, she can deduct cash tips she paid out while traveling.

I realized that I didn’t exactly know the answer to this except that my usual way of deducting the tips I pay out to people in cash is mild guesswork. I know that when I travel for work I almost always tip housekeeping about $2-$3 a day. I rarely use a bellboy to bring my suitcases anywhere, but maybe would use one approximately 4 times a year in order to help me carry something or other up, and tip $2-$3 each time. I’d tip a shuttle driver about $3 about 8 or 9 times a year. Etc, etc.

Make sure you deduct your cash tips to hotel or transportation staff anytime you travel for work. The tips are actual valid deductions. If you’re self-employed, these are no-brainer bona fide travel expenses. But even if you’re not self-employed, if you end up traveling for work, the tips you pay in cash while traveling can absolutely be deducted if you’re itemizing deductions.

The deduction would be under ‘business travel expenses’ and the way you would note them in your records would be to write the tip amount on some form of receipt related to the trip in question. So, for example, if you tipped housekeeping and the bellman during a business trip to Detroit, you would get the hotel receipt (even if it was $0.00 because your company paid for the hotel) and write the cash amount paid on the sheet of paper. Then you would keep that for your records.

This may seem like nickel and dimeing, but these deductions are valid and can really add up, so you might as well take them if you travel a lot for work and are itemizing your expenses.

In our thirties, we should try our darndest to get better at doing our taxes the best we can, so we can keep the most money. We might as well- why lose the money you’ve worked so hard to earn?

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View from my hotel in Detroit. I’m here for 16 days, and a lot of tipping happens in all that time.

 

Throw Money at the Problem

Right now I’m working an auto show in Detroit.

The day I left to fly to Detroit, I woke up later than I’d wanted to. I’d packed the night before and was mildly exhausted.  After I’d already walked 3 blocks away from my apartment towards the bus to the airport, dragging two heavy suitcases behind me, I realized I’d forgotten my Global Entry card and had to drag the suitcases all the way back home. I live a 15 minute bus ride away from LaGuardia airport, but because of all my delays, I ended up just getting an Uber (these are cabs called from an app, in case you’re unfamiliar with Uber in your city).

I felt sort of guilty about spending $17 on an Uber cab instead of $2.50 on a bus, but the cost of being late and missing the flight would have been much much more. The time, stress, and possibly money spent on a new flight would have been much costlier than just throwing money at the lateness problem.

A much as I love saving money, I’m a big fan of picking your battles and using money when you need to. We have money in order to make our lives easier. Sometimes you need to take that hard earned money and throw it at problems that’ll quickly go away when hit.

Don’t get me wrong- I’m not at all rich…not yet 🙂 If you read some of my other articles you’d know I’m still paying off my student loan debt and definitely am not swimming in money. But a little bit of saving goes a long way toward solving some small problems. Now that I’m thirty, I’ve had a few good years of not desperately eating ramen noodles every day…and I have a slight bit more money to put into my ‘throw money at the problem’ account…which is basically my normal checking account.

Jane touched upon this in her post How Much of Your Life Do You Outsource? She was mentioning how much she hated doing laundry at a laundromat when she had to carry heavy bags. Before I lived in a building that had washers and dryers, I used to pay extra for drop off service at the laundromat a few blocks away. I’d just have the people who worked there clean and fold it. I hated having to go back and forth multiple times to the laundromat…I just wanted to drop my laundry off and pick it up all finished. I used this laundry drop off solution for years- it was worth it to me. I saved money elsewhere…like on taking buses to and from airports mostly. I spent my extra money on laundry problems. And I had no regrets.

Recently, I used another paid service Jane mentioned in her same post– this service is a food delivery program called Blue Apron. Blue Apron basically delivers 3 meals a week to your doorstep- only it doesn’t deliver them cooked and put together. The meals are in the form of ingredients and recipes and you cook the meals yourself. Blue Apron is pretty brilliant in a lot of ways. For one, it basically teaches you how to cook. Secondly, the time consuming act of buying ingredients is out of the picture. Thirdly, you know exactly what’s going into your (fancy) meals.

photo 2 (4)I actually managed to finagle a week of Blue Apron for free. A friend of mine ordered it for herself and loved it. She invited me to try a week of it as a free trial (a special promotion Blue Apron offers which I recommend you look around for 🙂 ). Everyone I know who’s tried Blue Apron loves it. In fact, all the married and engaged couples I met at a BBQ I mentioned in my How To Be A Third Wheel  post were buzzing about using it to cook for their significant others instead of ordering out all the time.

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I enjoyed the 3 meals I received from Blue Apron, and was super impressed with their beautiful delivery and presentation. I learned how to cook three new dishes, and the ingredients were delicious and fresh. However, the cost of 3 meals a week (with 2 servings each) would be $60 a week, which was a bit steep for my tastes. So I canceled the service before I had to pay for it. For me, cooking dinner every night is a problem I’d rather solve with time than money. I know I can cook 3 dinners a week for way less money than $60 and didn’t need to pay for Blue Apron’s services. Still, I think Blue Apron is a great and worthwhile service for certain types of people, the same way laundromat drop off was a great and worthwhile service for me.

Sometimes you just need to throw money at a problem….and sometimes you don’t. Know yourself and your budget. Then choose wisely which one it’ll be.

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