Seven Travel Deduction Tips

Seven Travel Deduction Tips

You can save your company a substantial amount of money by being aware of the following rules governing tax-deductible travel expenses. 


1. Attitude is everything 

Vacation time is so sparse for most entrepreneurs that combining business and personal trips is the norm. So when is the trip deductible? "It comes down to point of view," says Judith Dacey, CPA and owner of Small Business Resources, Inc., www.easyas123.com, in Orlando, Fla. "If the primary reason for the trip was business, it counts as a business trip." 

2. Time counts 

A rule of thumb is that if less than 25 percent of a trip is spent on personal issues, it can be considered a business trip, Dacey says. 

3. Get the free weekend 

One way small business owners can make the most of a business trip is by scheduling it to run across a weekend. If you have an appointment on Friday and one on Monday, even if you do no work at all on Saturday and Sunday, those count as business days, Dacey says. "They were necessary for you to make your Monday appointment," she says. 

4. All in the family 

It's not unusual for small business owners to get help from family members when they are on a business trip, such as at a seminar or trade show. But unless that person is an employee of your company, their expenses aren't deductible, even if they end up doing as much work as you. 

5. Meal matters 

When it comes to claiming the 50 percent meal deduction the IRS allows, small business owners are usually better off taking the per diem deduction rather than keeping receipts and totaling actual expenses, Dacey says. "Per diems are reasonable and an amount you can deduct whether you spend it or not," she says. Go to www.gsa.gov for the government's per diem rates in each city. 





6. Hotel hints 

There's no per diem rate for lodging, so be sure you keep actual receipts, Dacey says. 


7. On the road 

You have two choices when it comes to claiming car mileage: take the IRS rate of 34.5 cents per mile, or maintain your own actual operating and fixed costs. "My personal opinion is take the IRS rate," Dacey advises. "Most entrepreneurs are not itty-bitty pieces of paper people, so they lose half of their receipts and the rest are in a box and they end up losing money." Even if you take the IRS rate, you still must keep a mileage log, recording the date, miles and purpose of the trip. 

Be sure to check with your tax professional before acting on this or any tax advice.

by

Sreejith.P

anisree0@gmail.com

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