How to Make Your Fun Travel a Business Deduction | NAWBO

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How to Make Your Fun Travel a Business Deduction

 

By Ronica Brown, CPA, Ronica Brown Agency in Atlanta, GA

If you are a travel enthusiast, my guess is you are constantly searching travel sites to find cool places to visit, or you are wondering why you never have time to travel and promising yourself that something will change soon. In college, I imagined myself taking all sort of cool trips around the world, exploring cultures and collecting unique treasures. My most recent treasure is a hand-sewn leather wallet from Cuba.

Regardless of how you decide to take on your dream of traveling the world, if you own a business, then you can make these trips deductible. In today’s technology world, if you control the areas of your business you can do remotely, you will have some freedom to take these trips. Think about all the exciting places to visit in Europe or Africa. Yes, these trips require extremely long flights and you may think you cannot stay away for that long. The great news is you can bring your business along with you and enjoy the benefit of tax-deductible expenses. Business trips, whether local or international, can be tax deductible if planned correctly. Some of the things you should consider include:

1) Your business portion of the trip should be pre-planned so you are able to meet the travel rules and make the trip deductible.

2) Business activity should be legitimate business activity that can be performed while you are traveling.

3) Based on your travel location, more documentation may be needed to prove your business purpose, but with planning, you can make this a no-brainer.

The deductible expenses for your trip include airfare, accommodations, transportation and 50 percent of travel meals. If you go on a family trip, then the cost of your family to travel will not be deductible.

Other rules to keep in mind to ensure you qualify include:

1) Business day rule – If you are conducting business (e.g. meeting with someone for a business reason), then your whole day is a deductible business expense. This is regardless of how long the meeting takes.

2) Conventions and seminars – If you are attending any conventions or seminars, these should be at least 4.5 hours to qualify your entire day as a business day.

3) Weekend days – If you have a business travel week that is before and/or after (e.g. Friday and Monday) a weekend then your weekend days can be considered business regardless of what you do on those days.

4) Trips less than seven days – If your trip is less than seven days and you conducted business on a day of your trip, then your entire trip can be deductible.

5) Trips over seven days – If you are traveling for more than seven days, then the deductible portion of your trip will be based on your percentage of business days compared to personal days.

If your entire trip cannot be deductible, based on these rules, you can mix your fun and business so that you get a prorated portion of your trip deductible. The key is keeping documentation on your business activity to validate your deduction. Documentation can include e-mails with pre-arranged meetings, itinerary for conferences, minutes from directors and meetings conducted.