24 May Write Off Business or Personal Trips on Your Taxes
With summer just around the corner, it’s time to start thinking about a much needed vacation. It might sound too good to be true when you know work will just keep piling up, but what if you knew how to use the trip as a tax write off, without facing tax problems?
There are several ways to have a guilt-free getaway and still use it to your advantage when it comes to filing taxes. The first is if you are traveling solely for business which means all costs accumulated can be deducted as long as they are properly documented and accounted for.
Based on your time management, you can still have personal vacation hours on business days. While you may have to answer work-related emails or take phone calls, you’ll likely have time to explore.
The IRS defines deductible costs as “ordinary and necessary” – most commonly categorized as meals, travel, lodging and entertainment expenses. Travel and lodging are the safest bet if evidence of work being conducted can be shown. If the primary purpose of your trip is business-related, you can also write off your transportation, laundry, dry cleaning and personal grooming costs.
If you plan on working during a personal vacation, you can still write off some costs. Publication 463 by the IRS states that “you can deduct any expenses you have while at your destination that are directly related to your business.”
Meals and entertainment usually earn 50% deductibility, but they must be work-related. You won’t be able to deduct your family’s expenses, however, if they acquire additional costs than what you would have already spent money on. They can legally tag along during the car ride or stay in the same room, if space permits it.
Keep in mind that location matters; things can get a little more complicated when venturing outside the United States. In this case, you’d have to allocate the costs between your business and other activities to determine your deductible amount.
As long as you follow the tips above, you are good to go on a mini-vacay. As always, keep your receipts … The IRS doesn’t require them for costs less than $75, but you should be keeping a log of the date and time for all transactions.