Maximizing Travel Deductions

5 Tips to Planning Your Holiday Travel with Your Tax Strategy in Mind
With the holiday season here, many people will be traveling so it is a great time to review a few tips on how your travel can help your tax strategy.

The tips I share here are specific to the U.S. tax law. The key is understanding the rules in your country and using them to your benefit in your tax strategy.

Tip #1
When traveling, spend more than 50% of your time each day on business activities and you can deduct 100% of your travel expenses. Plan your business and other activities so you can easily meet this requirement.
Tip #2
Travel expenses for your spouse and your children are 100% deductible if your spouse and children are involved in your business and spend more than 50% of each day on business activities. Planning is the key here. Plan your business and other activities so your family meets this requirement.
Tip #3
Create a reason that is great for your business to travel to your desired location. This is my favorite tip because I find when I create a great business reason to travel, my business benefits in a way that it wouldn’t have without the travel.

I have many friends and family members in Utah that I like to visit as often as I can. I decided to take a business trip there several years ago to explore the possible expansion of my rental real estate business into Utah. I spent more than 50% of each day on business activities and then I also had some personal time to visit with friends and family. My rental real estate business in Utah has doubled since then and my continued travel there is a legitimate business deduction.

Tip #4
If your travel is for personal reasons – treat it as personal and don’t deduct it. If one of your goals for a particular trip is to take a break from business, then treat that trip as personal. Trying to claim that as business travel could draw a lot of scrutiny to your legitimate business travel expenses.

Or, if your spouse and children don’t participate in the business, treat their portion of the travel expenses as personal – trying to deduct their expenses could jeopardize your portion that is legitimate.

Tip #5
Travel outside of the U.S. has a completely different set of rules. Be sure to discuss this with your tax advisor before you travel.
Use Your Travel in Your Tax Strategy
Travel is one of my favorite deductions because it is one of those expenses that most of us already have, and when planned properly, it gives us the opportunity to increase our business’ bottom line while decreasing our tax liability.
                                                                                                                  
Tom Wheelwright
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