Planning for a Tax Deductible Vacation

tax deduction for vacations

For Business Owners, a business vacation can be a valuable tool and tax deduction. Typically, however, the business owner gets to tax time and finds out there is a big tax liability due.

Then the wheels start turning. “What other deductions has she missed? Oh yes, the family vacation!” Thoughts turn to the family vacation and how it could possibly be construed to be a business trip.

The truth is that unless she actually conducted business, after the fact is too late.

It is possible to combine a business trip and family vacation, but there are things she should do right to make it legal.

Every summer there are seminars and work-related trips to be taken and it is fine to take her family along. She should be aware that only the business part of her trip is tax deductible.

If she drives her vehicle, it doesn’t cost any more in gas to take along the spouse and kids so all the gas is deductible. But if she stops to eat, only the persons involved in the business part of the trip can deduct the meal.

If they all stay in one hotel room then it may not cost any more for the room than if she stayed alone the whole room is deductible. If it costs more for more people in the room, then the extra is not tax deductible.

Amusement parks are generally not tax deductible unless she is in a business related to amusement parks. Deductions need to be honest and related to her business field.

Here are some things that she should do when planning and taking tax-deductible vacation.

  1. Plan Ahead. She has to make a plan of where she is going and what business she will conduct. There are many sources (especially on the internet) that can give her information about the businesses and events in the area she plans to go.
  2. Business Purpose. She must have a specific purpose for the trip. It can include such things as visiting other businesses like to see how they operate, making customer or vendor contacts, looking for opportunities for expansion, etc.
  3. Keep Receipts. The key to taking deductions is being able to prove she had expenses. Receipts include the actual sales receipt, checks, credit card statements and bank statements.
  4. Diarize Business Activities. Keeping a diary of all business activities is another key to justifying that the trip was related to business.

Self-employed individuals can attend lectures or meetings that are applicable to their line of business and claim tax deductions for the business expense at the end of the year. This is a great way to tour the country while aiding her business and getting to see different regions at the same time.

The days she is away on business is tax deductible, and then she can add on days for leisure that she must pay for herself. Another option is to arrange business meetings or lectures on a Friday and a Monday. She has to attend the meetings or lectures as scheduled, but the weekend is free for her to do whatever she wants. Meanwhile, her business expenses will cover the necessity for the lodging over the two-day weekend span.

Some investors even buy homes in other countries and states. By doing this they can claim some money back using their trip as a business expense for visiting and inspecting their property. The great thing about this is that the property is permanently situated there so they can go back and forth for as many holidays as they want. No need to wait for business trips or volunteer work.

IMPORTANT DISCLAIMER: This article does not constitute advice and you should not act solely on the basis of the material contained in this article. These are general comments only and do not constitute or convey advice per se. As we are not tax advisers and legislation differs from country to country. We therefore recommend that professional advice be sought before acting in any of these areas.

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