It is undeniably possible to mix pleasure and business when it comes to company travel. The trick is to structure the trip so the primary point of your travel is for business reasons with one or two leisure days in the mix. If structured correctly, this plan can supply some very nice benefits leading to Uncle Sam reimbursing you for a part of the travel costs via tax savings.
You must use caution if you’re attempting to mix a work trip with leisure days so you don’t risk losing refunds. It’s important to follow IRS rules on what qualifies as a allowable cost. The basic guide for travel and entertainment is that in order for costs to be thought of as refunds, they’ve got to be ordinary and necessary for your business. ‘Ordinary’ means something that’s considered standard to your trade, perhaps taking a potential customer out to eat to chat about a business matter. ‘Necessary’ means something that’s appropriate and helpful for your company like attending a trade or business meeting having to do with to your industry.
Company travel rebates have one or two limitations; the IRS is very aware of the aptitude for misuse. In the U.S., if your trip is basically for business, the travel costs are deductible. This includes airline fare, automobile rental, taxis and even tips. Out of the pocket costs for personal days typically aren’t deductible unless you can qualify for the weekend rules covered below. The basic rule is that a trip will be considered essentially for business if your trip includes more business oriented days than personal ones.
If staying over a weekend substantially reduces the price of your business/vacation, the out of the pocket costs for Saturday and Sunday are deductible, whether or not you do nothing business oriented on those additional days.
Because it sounds better if you and your other half are both traveling for business reasons, the expenses for both of you will very likely be deductible. Nevertheless you cannot subtract any particular costs associated with your kids, for example the price of their airplane tickets. Valid business costs that you would have ran into if you traveled alone (like taxis or rental vehicles) which are shared by the members of your family are completely deductible.
Only your meals (and your spouses) are fifty percent deductible while on your business trip/vacation.
Your accommodations are one hundred percent deductible while traveling for business. Nonetheless if your family lodges with you, you can only subtract the price of the room you would pay for if traveling by yourself. Once your personal vacation takes place, your out of the pocket costs aren’t deductible (unless the weekend rule mentioned above is applicable).
In addition to the aforementioned, there are more business-related deductions the IRS will permit. For instance tips, telephone calls, web access and even laundry. Bear in mind the costs you opt to deduct must be reasonable. You do not want to go wild. The IRS can refuse deductions at their discretion, especially if they’re too exorbitant.
It’s acceptable to mix business with leisure, so if you’ve got the opportunity to take your family along on a business journey, by all means do so. Just make sure to keep accurate records or other paperwork in order to legitimatize your business affairs when necessary. Make sure that you include how many days were spent on business and the purpose for your trip. Additionally, remember that if you’re facing an IRS audit, business travel is typically one of the first places an agent will examine. Be certain to keep comprehensive records to substantiate your business costs while traveling.
If you are facing an IRS audit or incur other tax problems, do not hesitate to call the professionals at JG Tax Group. Our staff has over 120 years of combined IRS experience and will help secure your financial future.
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