How to Turn Your Vacation into a Tax Write-off

1
How to Turn Your Vacation into a Tax Write-off
2

• Wait a minute, you say the IRS frowns on
  claiming vacation costs as business deductions.
  But you can sneak some play time into a work
  trip, and keep it all perfectly legit. Heres how
  to follow the rules while saving a bundle.

3
Whats Considered a Business Trip

• These are the criteria you must meet to satisfy
  the IRSs definition and qualify for deductions.

4

1. The primary purpose of the trip must be business.
   You must spend the majority of your days away in
   work-related activities, such as meeting with
   customers. The days you spend traveling to and
   from the destination count as business days, so
   meeting this requirement is easier than it seems.

5

• For example, you could fly to Honolulu on
  Monday, attend a conference Tuesday through
  Thursday, hit the beach on Friday and Saturday,
  and fly home Sunday. That would be considered 5
  work days and 2 vacation days.

6

1. The trip must be planned in advance. Write out a
   detailed itinerary and what youll be doing each
   day. Get it time stamped well in advance of your
   departure for example, you could email it to a
   colleague.

7

1. The trip must be to somewhere other than your
   tax home. In other words, you must leave the
   location where your business is based for longer
   than a normal work day.

8

1. The trip must be for ordinary and necessary
   activities. For example, it may be necessary to
   rent a car during your stay, but its not
   necessary to rent a luxury class one. Theres a
   lot of room for interpretation here, but its
   better not to try and push it, especially since
   the IRS penalties can be substantial.

9
Different Rules for International Trips

• Traveling outside the USA offers even more
  opportunities for vacation deductions.
• You only need to spend 25 of your days doing
  business.

10

1. If you spend less than 25 of your time working,
   you can still take deductions, but only as a
   percentage of the total cost. For example, if you
   spend 1 day out of a 5-day trip to Italy on
   business, thats 20 of your time away and you
   can deduct 20 of your airfare.

11
What You Can Deduct

• These are the expenses you can write off when
  youve met the criteria for a business trip.
• Travel 100 of air, train, bus or other
  transportation fares as well as rental cars.

12

1. Lodging 100 of the days you spend working. If
   you work your itinerary right, you may also be
   able to write off the vacation days, by
   sandwiching the vacation days in between work
   days.

13

• For example, you might fly to Orlando on
  Thursday, have a work day on Friday, see Disney
  World on Saturday and Sunday, have another work
  day on Monday, and fly home on Tuesday. Since it
  wouldnt be cost effective to fly back and forth
  for each work day, the weekend you stay over
  would be considered work days.

14

1. Food and entertainment 50 of all meals and
   entertainment that specifically facilitate
   business, or that are incurred while traveling to
   and from your destination. Keep receipts and good
   records in case the IRS asks.

15
When Family or Friends Come Along

• You cant directly deduct any of their expenses.
  However, in many cases they can ride on your
  coattails for less than full cost.

16

• Car Rental As long as its the same ordinary
  and necessary car you would have rented if you
  were alone, nothing says there cant be other
  people in the car.

17

1. Lodging You can deduct the portion of hotel
   costs that you would have paid for a single room.
   For example, if you would have spent on a 100
   single room when traveling alone but youre in a
   150 double with your significant other, you can
   still write off 100.

18
When Your Trip Doesnt Quite Qualify as Business

• You may be spending the majority of your days on
  vacation, and just happen to meet with a client
  while youre there. Or maybe you didnt get the
  necessary documentation to support your claim
  that it was a business trip.

19

• You can still write off 50 of meals and
  entertainment you spent for business purposes.
  However, you cant deduct any travel or lodging
  costs.

20

• Need more help with deducting your vacation
  expenses? Were here to answer any questions you
  have, and file your tax return correctly so that
  you get every write-off youre entitled to.

21

• All work and no play makes you a dull business
  owner. So go ahead and take some time for R R.
  You deserve it!