Business Travel or Personal Vacation?

So you decided to attend that business convention in California over the holidays and are rounding up your expenses to turn in to your tax preparer. Oh, you decided to take the entire family along? Here’s a quick guide to help you determine what is a tax deduction and what is not.

Air fare. Assuming the business convention benefits your trade or business and the trip isn’t mainly a sight-seeing vacation with the family, the cost of your air fare is a valid business expense. The cost of all other family members’ air fare is, however, nondeductible.

Car travel. If you decided to punish the family and make them ride all the way to California with you in the compact car because it gets good gas mileage, then the entire amount of transportation costs are deductible since it costs no more to drive with the entire family in the car than it does with just you in the car.

Hotel room. Since you are the only member of the traveling party whose expenses qualify for a business deduction, you may only deduct the single rate charge for the room in which you are staying during the business portion of your trip.

Meals. Your meals are deductible (subject to the 50 percent limitation) for the days that are spent on business related purposes. If you add extra days to the trip after the business convention (perhaps to get back in the good graces of the family after that cross-country car ride), the meal expenses incurred for those days is not deductible.

As with most deductions, you need to be sure to keep all of your receipts to properly substantiate them. You will also need to keep enough information to properly document the days that were spent on business. Please consult your Rea and Associates professional to discuss your specific situation.

This article was originally published in Illuminations: Facts & Figures from people with a brighter way, a Rea & Associates enewsletter, 1/4/2006.

Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.