COMBINE BUSINESS, PLEASURE, AND TAX BREAKS ON SUMMER TRIPS

For a couple years I ‘ve been blaming it on lack of sleep and too much pressure from my job, but now I found out the real reason: I’m tired because I’m overworked. The population of this country is 237 million. 104 million are retired. That leaves 133 million to do the work. There are 85 million in school, which leaves 48 million to do the work. Of this there are 29 million employed by the federal government, leaving 19 million to do the work. 2.8 million are in the Armed Forces, which leaves 16.2 million to do the work. Take from the total the 14.8 million people who work for State and City Governments and that leaves 1.4 million to do the work. At any given time there are 188,000 people in hospitals, leaving 1,212,000 to do the work. Now, there are 1,211,998 people in prisons. That leaves just two people to do the work. You and me. And you’re sitting there reading jokes. Talal Sultan.

Do you plan on mixing pleasure with business on a trip this summer? There’s no problem from a tax perspective as long as you follow a basic precept: The primary purpose of the travel must be business-related. Otherwise, you’ll forfeit valuable tax deductions.

On the other hand, if you stick to the tax itinerary, you can write off most of your travel costs – even though you’re spending part of the time on personal pursuits. The key is to record significantly more “business days” than “personal days” on the trip.

Example: John Green, a self-employed individual, flies cross-country on Monday to make a presentation to a client. He is in business meetings Tuesday through Thursday. On Friday, the client inks the deal. John decides to spend the weekend playing golf and lounging by the pool. He flies home the following Monday.

The round-trip airfare costs John $1,500. He also incurs $1,400 in lodging ($200 a day) and $800 in meals ($100 a day) during his eight-day trip.

On these facts, John spends six days on business – the two days traveling count as business days – and only two days on pleasure. So the trip qualifies as business-related travel. He can deduct the entire airfare as well as five days’ lodging and 50% of the meals attributable to his business stay. Result: John deducts a total of $2,800 ($1,500 airfare, $1,000 lodging and $300 meals).

Note that any personal expenses, such as green fees at the golf course, are nondeductible. Also, if family members accompany you on a trip, you can’t deduct their expenses, but your travel may still qualify as business-related. As always, there is an exception to this rule where a family member is an employee on payroll and that family members participation in the deal is both ordinary and necessary.

Of course, this is just a brief summary of the pertinent tax rules. To review the tax requirements for your travel plans, check with us before you hop on board.