When it comes to deducting business expenses, it’s important to make sure that all of the amounts deducted really are related to your work, not to your personal life. For that reason, many business owners believe that it’s impossible to mix business and pleasure and still get a tax deduction. However, that’s not 100% true. While you do need to be careful with documentation, you can combine work and leisure and still correctly deduct some of the expense on your tax return. Read on to learn how.
For business travel, a good rule of thumb is that if the primary purpose of a trip is related to your business, your expenses are deductible. That means you can deduct all travel expenses, including transportation, lodging, meals, and even incidentals. If you add in personal activities while you’re on your trip, simply do not include those additional expenses in your deduction. You can still deduct your transportation expenses and all other business-related expenses, just not the personal costs.
If a spouse or other companion joins you on your trip, their expenses (including transportation and meals) are not deductible. If your accommodations have different rates for single and double occupancy, be aware that you should only deduct the single-occupancy rate.
You’ll also want to keep in mind that special rules apply if you’re attending a business training or convention that’s held in a foreign country or on board a cruise ship. Because these are particularly complicated situations, you’ll want to consult with a tax professional before writing these off on your taxes.
You can make the most out of business travel by adding in personal leisure without undermining your ability to deduct business expenses! Just make sure to keep the personal and business expense receipts separate, and you should have no trouble calculating the deduction when the time comes to file your taxes. Or, if you need help determining what can and cannot be deducted, simply call Taxation Solutions, Inc. for knowledgeable, affordable tax assistance!