It can be tricky trying to figure out what is tax deductible and what isn’t. If you plan a personal trip, there’s no question that you can’t deduct any expenses. The water does get a little murky when you plan a personal trip and conduct a meeting or two with a vendor or prospect while you’re out there. Being able to “kill two birds with one stone” can help your business continue to thrive rather than take a hiatus while you’re on “vacation mode.” How can you know what is considered a deductible business trip expense and what isn’t?
How To Detect What Is And Isn’t A Deductible Business Trip Expense
A deductible business trip expense is subject to numerous rules that must carefully follow. If you don’t, you run the risk of trouble if you are audited. Though travel expenses are the most common business expense deductions, they are also the most confusing. For an entire trip to be deducted (i.e. flight, lodging, meals, etc.), the primary purpose of the trip must be business. However, you can mix business and little pleasure if you are familiar with the IRS ground rules regarding travel expenses.
If you are starting a new business or acquiring one, travel expenses in connection with that are not deductible. You can, however, start adding these costs to the startup expenses, elect to deduct a portion, and amortize the rest over a period of 180 months. See how tricky this can be? Your best bet is to consult with a professional regarding your options with any and every potential deductible business trip expense.
Tips On Travel Expense Management
There are countless tips that we could recommend about travel expenses. One being that in order to be considered a deductible business trip expense, the expense must be necessary, reasonable, and ordinary. Another trip is that you must be “away from home” to be a travel expense. Your travel day can count as business when you travel in a moderately direct route to your destination for business. If your presence is required and requested by someone at a particular event, meeting, or business function; that day can count as a business day. Whoever requested your presence must be business-related. That could be an employee, partner, customer, associate, vendor or client.
Conclusion
For example, if you travel on a Friday to meet with a client on Saturday and return on Sunday; your trip is deductible. To find out more about what is or isn’t considered a deductible business trip expense, contact us today to discuss your options. We can collaborate and find your best deductible options today!