Did You Work on Any Vacations?

Did You Work on Any Vacations?

Did You Work on Any Vacations?

Small business owners tend to take their work with them wherever they go. If this has been the case with you, you may be able to deduct some of the expenses you incurred while on vacation. Here are some general guidelines:
  1. Have a specific business purpose in mind before you leave home. The IRS requires you to have established “prior set business purpose.” This could be an appointment with a customer or contractor, a visit to a supplier or job site, or a project that you plan to spend significant time on. Set up your appointments before you leave. It isn’t enough to bring along a stack of business cards and hope for the best.
  2. Determine how many days were primarily business days (more than half of the day spent on business), and how many were personal days (less than half of the day spent on business). Keep records of how you arrive at this calculation.
  3. For every business day, you can deduct 100% of your lodging, car rental, and tips, plus 50% of your meal costs. No deduction for personal days. Do not include family members’ costs when you calculate your business costs.
  4. Transportation costs in the USA are all-or-nothing. If your trip was more than 50% business days, then 100% of your round-trip transportation costs are deductible as a business expense. If your personal days were more than 50% of the total, then there is no deduction for round-trip transportation. The calculation is different for travel outside the USA. Talk to your tax accountant.
  5. Direct business costs are always deductible. Examples include postage, hotel internet fees incurred so that you can work, supplies you need in order to work, etc.
Tip: You many have more business days than you realize. Days spent traveling are business days. If Friday and Monday are business days, then Saturday and Sunday are also business days. For example, suppose you fly from Salt Lake City to Tampa on Monday. You spend Tuesday, Wednesday, and Thursday on the beach. You spend Friday and Monday primarily on business. The following Tuesday and Wednesday are beach days, and you fly home on Thursday. You have six business days (two travel days, two working days, and the weekend) and five personal days, so your round-trip transportation is 100% deductible.

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About the Author

Angela DeLong, EA, has been preparing tax returns for individuals and businesses for 40 years, is an Enrolled Agent with the Internal Revenue Service, and is on the verge of retirement. She has a master’s degree in mathematics and enjoys reading, quilting, traveling, and Biblical archaeology. Angie is happily married and has four adult children and two grandchildren.

Sunrise and Lendio do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only and is not intended to provide and should not be relied on for tax, legal, or accounting advice. You should consult a tax, legal, and accounting advisers before engaging in any transaction.


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