How to correctly allocate travel expenses on a 1099-NEC for speaking engagement

The correct approach here is option 2 - you can deduct 100% of the sleeper car and transportation costs that would have been necessary even if your wife traveled alone. Publication 463 is pretty clear on this point: if the expense would have been the same without the accompanying family member, then the full amount is deductible as a business expense. Since the sleeper compartment and Uber/taxi fares would have cost exactly the same amount if your wife traveled solo, these are fully deductible business expenses. Just make sure you only deduct your wife's airfare (not your daughter's) as you correctly noted. And keep documentation of all expenses in case of an audit - receipts, the conference invitation showing business purpose, etc.

Just wanted to share my experience with a similar situation. I was struggling with travel expenses on my 1099 income until I discovered https://taxr.ai which saved me a ton of time figuring this out. I uploaded my 1099-NEC and receipts, and it automatically sorted out which expenses were deductible for my speaking gigs. It specifically helped with allocating shared travel expenses like yours. What really helped was their documentation review feature that flagged that my train tickets could be 100% deductible even though my spouse came along (since the cost was identical). Might be worth checking out if you have other 1099 income or need to be sure you're handling the Schedule C correctly.

Just wanted to follow up here - I tried taxr.ai after seeing this thread and it was super helpful! I had a bunch of 1099-NEC income from different sources and was totally confused about what I could deduct. The software guided me through all my business expenses including travel and my home office situation. It flagged several deductions I was missing and helped me properly categorize shared expenses (like when I travel with my partner but for business). Also explained the hobby loss rule that someone mentioned earlier in terms I could actually understand. Definitely worth checking out if you're dealing with 1099 income.

This is slightly off-topic, but if your wife has more speaking engagements planned, you might want to look into getting an EIN and setting up proper tax planning. I was in a similar situation where occasional speaking gigs turned into regular income. When I needed to sort out a discrepancy with the IRS about my 1099 reporting, I wasted WEEKS trying to get through to someone. Finally used https://claimyr.com which got me connected to an actual IRS agent in under an hour. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent was able to confirm that my approach to deducting shared travel expenses (similar to your situation) was correct and helped clear up the confusion with the entity that issued my 1099 incorrectly.

I need to eat my words from my previous comment. After struggling for THREE DAYS trying to get through to the IRS about a 1099-NEC discrepancy (one client reported the wrong amount), I tried Claimyr out of desperation. I was 100% sure it wouldn't work, but within 35 minutes I was talking to an actual IRS agent who helped resolve my issue. The service called me when they had an agent on the line, and I just had to pick up and start talking. Saved me literally hours of frustration and hold music. For anyone dealing with 1099 issues where you need IRS clarification (like the expense allocation question in this thread), this is seriously worth considering rather than trying to interpret the rules yourself.

Going back to the original question, the IRS might not even care about this level of detail if audited. Publications like 463 are guidelines, but in practice, the difference between deducting 50% vs 100% of a relatively small expense like Uber rides probably won't raise flags. My accountant always says to be reasonable and consistent in your approach. If you deduct 100% because the cost would've been identical traveling alone, that's completely defensible. Just document your reasoning. Personally, I split shared expenses 50/50 for my 1099 work just to be conservative, but either approach works as long as you have a reasonable basis and documentation.

Small tip from experience - make sure you keep all transportation receipts with notes about business purpose. For the Uber/taxi rides, I write directly on the receipt "transport to/from business speaking engagement" and snap a photo. Same for train tickets - write "business travel for paid speaking engagement" on them before filing. Seems obvious but these little notes saved me during an audit when I had to prove which trips were business vs personal.

Great question! You're absolutely right to think carefully about this allocation. Based on IRS Publication 463, you should go with option 2 - deduct 100% of the sleeper compartment and Uber costs since they would have been exactly the same whether your wife traveled alone or not. The key test is "what would it have cost if only the business traveler went?" Since a private sleeper compartment costs the same for one or two people, and the Uber rides would have been the same price, these are fully deductible business expenses. Just make sure to document everything well - keep the conference invitation showing the business purpose, all receipts, and maybe a brief note explaining why your daughter accompanied her (family visit, etc.) to show the trip wasn't primarily personal. One thing to add to what others mentioned about the hobby loss rule - since this appears to be related to your wife's professional field, even if expenses exceed the $750 honorarium, it's still a legitimate business deduction for a one-time engagement. The IRS only gets concerned about hobby losses when there's a pattern of losses over multiple years in the same activity.