| How could you possibly make money on vacation. | | | | Adequate documentation shall consist of amount, date, |
| Well, by saving tax dollars means putting more money | | | | place and essential character of the expense. If, |
| in your pocket. The IRS is actually pretty lenient when it | | | | however, Bob stays in the Motel 6 and spends $42 on |
| comes to deducting travel expenses, you just have to | | | | lodging, will he need a receipt? The answer is yes. You |
| have some sort of business purpose while having fun | | | | need receipts for all paid lodging. |
| at the same time. | | | | Not only are your on-the-road expenses deductible |
| Fun Trips Can Save You Taxes | | | | from your trip, but also all laundry and dry-cleaning |
| How would you like to deduct every cent you spend | | | | costs for clothes worn during trip. Thus, your first dry |
| on vacation this year? A client has and for the rest of | | | | cleaning bill that you incur when you get home will be |
| this article, we will refer to him as Bob. Want to know | | | | fully deductible. Make sure that you keep the dry |
| how? Bob wanted to take a two-week trip around the | | | | cleaning receipt and have your clothing dry cleaned |
| United States. He learned that every thing is much | | | | within a day or two of getting home. |
| cheaper when you can legitimately deduct it. | | | | Weekend days between business days are deductible |
| Schedule all business appointments before leaving | | | | Interestingly, the IRS notes that if you have a business |
| Some people believe that they can go on vacation | | | | day on Friday and another one on Monday, you can |
| and simply hand out their business cards in order to | | | | deduct all on-the-road expenses during the weekend. |
| make the trip deductible. That is not true. You must | | | | For example, if Bobmakes business appointments in |
| have at least one business appointment before you | | | | Florida on Friday and one on the following Monday. |
| leave in order to establish the "prior set business | | | | Even though he as no business on Saturday and |
| purpose" required by the IRS. | | | | Sunday, he may deduct on-the-road business |
| The first thing that Bob needs to do is set up | | | | expenses incurred during the weekend. |
| appointments in various cities such as Los Angeles, | | | | The majority of your trip days should be business |
| Newport Beach, and Long Beach before he leaves. | | | | days |
| The best way to establish this is to put advertisements | | | | The IRS says that you can deduct transportation |
| in the newspaper or make calls, looking for distributors. | | | | expenses if business was the primary purpose of the |
| He could then interview those who respond when he | | | | trip. The majority of the days in the trip must be for |
| gets to the business destination. It would be important | | | | business activities. Otherwise, you cannot make any |
| for Bob to document this business purpose by keeping | | | | transportation deductions. This is an all-or-nothing |
| a copy of the advertisement and all correspondence. | | | | proposition. Contact your CPA if you have any |
| Classify it as Business Travel | | | | questions regarding this. |
| In order to deduct all on-the-road business expenses, | | | | Say for instance Bob spends six days in Los Angeles. |
| you must be traveling on business. By definition, you | | | | He leaves early on Thursday morning. He had a |
| are on business travel whenever you are sleeping | | | | business meeting on Friday and meets with distributors |
| overnight in a strange bed, while conducting business. | | | | on Monday and flies home on Tuesday, taking the last |
| For example, Bob wanted to go to a regional meeting | | | | flight of the day home after playing a complete round |
| in Boston, which is only a one-hour drive from his | | | | of golf. How many days are considered business |
| home. If he were to sleep in the hotel where the | | | | days? |
| meeting will be held in order to avoid possible | | | | All of them are business days! Because it includes |
| automobile and traffic problems, he will be deemed to | | | | traveling - even if the rest of the day is spent at the |
| be on business travel. You don't need to live far away | | | | beach. Friday is a business day because he had a |
| to be on business travel. If you have a good reason | | | | business meeting. Monday is a business day because |
| for sleeping at your destination, you could live a couple | | | | he met with prospects and distributors in pre-arranged |
| of miles away and still be on travel status. | | | | appointments. Tuesday is a travel day. So every day |
| Deduct all expenses for each day you're away | | | | was deductible. |
| For every day you are on business travel, you can | | | | Also, because Bob accrued six business days, he |
| deduct 100% of lodging, tips, shoe-shines, laundry and | | | | could spend another four or five days having fun and |
| dry cleaning, car rentals, and 50% of your food. | | | | still deduct all his transportation to Los Angeles. The |
| According to the IRS, no receipts are required for any | | | | reason is that the majority of the days were business |
| travel expense under $75 per expense. The only | | | | days. However, he can only deduct six days worth of |
| exception would be for lodging. | | | | hotels, dry cleaning, shoe polishes, and tips. The |
| For example, if Bob pays $20 for drinks on the plane, | | | | important point is that Bob would be spending money |
| $7.95 for lunch, $12.00 for breakfast, $50 for dinner, he | | | | on lodging, airfare, and food, but now most of his |
| does not need receipts for anything since each item | | | | expenses will become deductible. |
| was under $75. You would, however, need to | | | | How's that for vacation planning? If you plan it right and |
| document these items in your diary. A good tax diary | | | | don't mind doing both, you can save some tax dollars. |
| is essential in order to audit-proof your records. | | | | |