Although business is business and pleasure is pleasure, this time of year you may want to mix some vacation days with your business travel. With a little planning, your downtime can be subsidized.
If you go on a business trip within the United States and add some vacation days, you can deduct some of your expenses, but the question is, how much. First, let’s cover the pure transportation expenses. This means the costs of getting to and from the scene of your business activity, which includes: travel to and from your departure airport, the airfare itself, baggage fees and tips, cabs to and from the destination airport, and so forth. Costs for rail travel or to drive your personal car also fit in this category. Domestic transportation costs are 100% deductible, as long as the primary reason for the trip is business rather than pleasure. If a vacation is the primary reason for your travel, none of your transportation expenses are deductible.
The IRS doesn’t specify how to determine if the primary reason for domestic travel is business. The number of days spent on business versus pleasure is a key factor. The rules for foreign travel provide guidance on this issue. Travel days count as business days, as do weekends and holidays, if they fall between days devoted to business, and it would be impractical to return home.
For domestic trips, you should be able to claim business was the primary reason whenever the business days exceed the personal days. Be sure to accumulate proof about this and keep the proof with your tax records. For example, if your trip is made to attend client meetings, log everything on your daily planner and copy the pages for your tax file. If you attend a convention or training seminar, keep the program and take some notes to show you attended the sessions.
Once at the destination, your out-of-pocket expenses for business days are fully deductible. Out-of-pocket expenses include: lodging, hotel tips, meals (subject to the 50% disallowance rule), seminar and convention fees, and cab fare.
Separate rules apply for travel expenses of spouses when accompanying the tax payer.
Please contact your Contryman professional if you have additional questions regarding travel.