When Is Your Travel a Tax Deduction?


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6-29-2010-11

Thinking of a trip this summer? The only things I like better than exploring a new area is doing it (1) when everything is on sale and (2) taking it all as a write-off.

You might have seen some great prices on hotels and resorts at great destinations. A lot of things are on sale. Now, let’s work on the second part – taking the trip as a write-off.

In order to take a tax deduction for travel, there needs to be a legitimate business purpose for the trip for each person there is a write-off.

Let’s say you work as a chiropractor and neither your spouse or kids are involved in the business. If you fly to Florida for a chiropractic conference and bring along your family for a trip to Disney World, part of your trip will be deductible. None of your family’s trip will be deductible. Let’s continue on with that example and say that you are in Florida for 7 days. You attend the conference for 4 of those days. Your airfare will be deductible and 4/7 of the meals and lodging expense for you. Your tickets to Disney World won’t be deductible.

Let’s use another example and say you fly to NYC for business meetings on Thursday, Friday and Monday. It doesn’t make any sense to fly back home for the weekend because of the cost of airfare, so you just stay over in NYC. In this case, you’ve got a full deduction for the hotel and meals, even on the weekend. But unless your business is somehow related to a Broadway show, the Broadway show tickets won’t be deductible.

The rules are a little different if there is international travel involved. In that case, you need to pro-rate the flight so that some is deductible and some is not, based on work versus play days.

So how can you get more of a write-off? Simple! Turn more days into business days when you travel. Visit competitors, possible clients or vendors and in general, be able to demonstrate that the trip really does help your business. Get your spouse and kids involved in the business and then give them tasks on the trip too, in order to turn part of their travel into an expense. And of course, remember your business needs an annual meeting. The cost for shareholders and directors to attend is generally covered by the company. That means you’ve got a deduction.

Like a lot of tax planning, when it comes to taking a write-off for your travel remember that pigs get fat and hogs get slaughter. Be a little piggie, but don’t go whole hog.

For a list of over 300 possible business deduction, check out Appendix B in “Loopholes of the Rich” now FREE! when you purchase “Smart Business Stupid Business” HERE



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