If you’re planning business travel, you may be able to use tax deductions to give yourself and possibly your family a less-expensive mini-vacation courtesy of your business and the IRS.
Will you be conducting business meetings in another part of the U.S. or otherwise traveling within the country for business? If so, you can use the opportunity to create an affordable “mini-vacation” for yourself and perhaps your family.
Here’s how to do it:
As a self-employed individual or business owner, you’re entitled to a deduction for the full cost of a single hotel room plus the full cost of your transportation to and from the business site when you travel for business in the continental U.S. If you drive your car instead of taking an airplane or train, you can deduct your mileage at the going mileage rate. Meals and business-related entertainment are deductible at half your cost.
If you’re traveling alone and flying, compare the cost of airfare and hotel for staying over the weekend to the cost of hotel and airfare if you don’t stay over the weekend. If it’s cheaper, stay the weekend and take in the sights. You’ll be able to deduct all your hotel costs and 50% of meals for the weekend as well as for the business part of the trip. (Sightseeing expenses are not deductible, however.)
If you have to travel on business to a location by car, you can take the family along for the trip. Since they are traveling in your car, you have no added transportation costs for them. If the family stays in your room, you deduct the single-person room fee. At most hotels and motels, that’s the lion’s share of the room charge, so the other family members stay almost free for the business part of the trip.
As long as you can prove the primary motive for the trip is business, your only nondeductible expenses will be the extra fees for the family to stay in your room, their meals, and the cost of any side trips of sightseeing expenses for them and you. The major expense — transportation to the site and the bulk of the room fees — will be deductible.
To make sure you can prove a business reason for the trip, keep a record of who you saw, what business you discussed, and any outcome of the meetings. If you’re attending a conference, make note of the days and hours you attended. You might be asked to prove you spent more time on business than on vacation.
Finally, be sure to save all receipts so you can prove your deductions.
Disclaimer: The content on this page is for informational purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.