Personal finance expert Timothy Gagnon shares tips and advice for managing tax-deductible personal time during business travel.
- The cost of travel to and from a meeting or business trip is deductible, even if you stay longer or do some side trips. For example if you travel to Texas for a conference, the airfare is deductible even if you go see the Alamo for a week, as long as the extra stay does not raise the travel cost. There have been cases where staying over a weekend meant a lower airfare so the extra days’ hotel cost were deductible too. Also, the Tax Code that the IRS enforces does not say you must travel direct, so if you were to take a trip through a couple stops to a conference the cost of the direct flight could be deducted, thereby lowering your over all cost of travel with “vacation” stops along the way.
- Hotel costs related to business are deductible, but not the extra nights’ hotel bill for the vacation time. As for extra people in the room, if say the spouse and kids do not raise the cost of lodging, then there is no effect. The Code looks that you have a reasonable room accommodation so a better hotel with amenities is possible. Extra rooms are a problem unless necessary for business, such as holding meetings in multiple rooms during the day and family uses the room overnight.
- The costs of a spouse accompanying you are deductible only if the spouse’s presence is necessary for the business being done. Avoid taking the spouse on the trip when he or she has no input or part of the meeting or relationship to the work, even if they work for your company —it has been denied. Same case with children, even if they work for the company.
- Expensive wine and food is an issue since it must be reasonable to the business conducted. Upon audit, you must be ready to show the business purpose of the meeting or trip, what business was done during the stay, the reasonableness of the time and trip deducted and the separation of the personal expenses out of the total bill. The unwritten rule has been, if there is no additional cost to the trip or accompanying people, then the entire amount is deductible, if there are extra costs then those are not deductible.