Taking Your Summer Vacation On Uncle Sam

By Barbara Weltman May 14, 2004
Barbara Weltman Last summer, two-thirds of small business owners got away for at least one week on vacation. Here are some ways you can work down time into your plans while writing off your travel costs.

Part business/part pleasure

If the primary purpose of your trip within the U.S. is for business, you can deduct all of your travel expenses. For example, schedule four days for business and take a long week-end to sightsee or relax and all of your airfare to the business destination as well as lodging there is fully deductible; no allocation is required for expenses related to your personal time. (Meals are only 50% deductible.) Of course, expenses related to sightseeing and other personal activities (including meals and lodging on your days off) are nondeductible.

Include the weekend in your travel plans to obtain lower airfare for a Saturday night stay and gain a double benefit: Lower airfares and full deductibility for lodging on the stayover, even though you spend the time on personal activities.

Note: Special rules govern the deductibility of expenses for foreign travel.

Expanding your horizons

Need to take continuing education courses to keep a professional license? Interested in learning a new skill for your business? Travel costs for education can be fully deductible as long as you already meet minimum job requirements and the courses merely maintain your skills (and do not qualify you for a new trade or business). You can write-off:

  • Registration fee for the course.

  • Travel to and from the seminar (e.g., including airfare or mileage on your car to the seminar location and any local transportation to out-of-town locations).

  • Lodging and meals.

    • Caution: Special limitations apply to cruise ship travel.

    Taking company along
    If you travel with your spouse or other companion, you cannot deduct their travel costs, even if they serve some business function in accompanying you. Exception: If your travel companion works for you, then his or her costs are deductible if the companion’s trip has a business purpose (other than merely company for you).

    But even if a companion’s travel expenses are not deductible, consider that two can often travel as cheaply as one – there’s no extra cost for rideing in the same car or staying in the same hotel room.

    Preparing for Being Away
    Whether your trip is partly for business or purely for pleasure, you need to take steps before you leave so that things can run smoothly:

  • Schedule your time away during your slow period. Or keep trips short.

  • Delegate authority to someone in your absence so problems can be addressed without contacting you.

  • Use technology to keep in touch.

  • Buy trip-cancellation insurance in case a business or personal problem arises to prevent your going away.
    Category: Finance, Accounting, and Taxes
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