Time with family is precious. That’s why more and more business travelers are adding on vacation to their trips and inviting family to join them. Sometimes it’s easy to mix business and pleasure – especially with the trend toward booking business conferences at resort areas like Orlando or Las Vegas. With a little advance planning, you can get Uncle Sam to foot part of the bill – legally.
The Internal Revenue Service lets you deduct 100 percent of your transportation costs for travel within the United States – as long as the primary reason for the trip is business. If your trip is primarily for pleasure, only expenses directly related to business are deductible. So the trick is to make business the principal purpose of your trip. Then you can mix in a few vacation days and still fully deduct transportation costs, including: airfare (for yourself only), getting to and from the airport, tips for baggage handlers, cabs from your hotel to your business meetings and back. Of course, you don’t have to fly to get tax write-offs. The same rules apply when you travel by rail or car. Pack the family into the car for the joint business/vacation destination, and you can deduct the total cost of driving back and forth, even though others are in the car. When you share your hotel room with family members, you may deduct the cost of what you would have paid for a single, rather than double, room. Just be sure to ask the hotel to note the single rate on your bill.
Plus, you can write off all your daily out-of-pocket expenses – lodging, hotel tips, and 50 percent of meals, seminar and convention fees, cab fare, etc. – for business days at your destination. Your out-of- pocket expenses for personal days are not deductible. There is a really easy way to gain maximum tax deductions and take some extra days off too. It’s the Saturday night stay-over exception. If staying over a Saturday night would substantially reduce your airfare – and thus the overall cost of your business trip – the IRS will cut you a break. In effect, the IRS lets you count the extra days as business days because staying over actually saves money. Remember, your trip must still be primarily for business and you can only deduct 50 percent of your meal expenses. Keep in mind that the IRS pays close attention to deductions claimed for business travel. Maintain a log to substantiate your business activities. Include the dates of departure and return, the number of days spent on business, and the reason for the travel.
About the Author
Dorothy J. Griggs is a licensed Enrolled Agent and has over 10 years of tax and accounting experience. Enrolled Agents are tax professionals licensed by the federal government to represent taxpayers and assist them with tax planning and tax return preparation. Dorothy is also a member of the National Association of Enrolled Agents. For more great tax tips, visit her website at www.avirtualaccountant.com
Written by: Dorothy Griggs, EA