Is Your Trip a Deductible Business Expense?

Is Your Trip a Deductible Business Expense?

If you travel for business, you have probably heard that you can deduct the cost of your flight, hotel, meals, and entertainment. But before you go and do this…here are a few things to watch out for to determine which parts of your trip are REALLY deductible.

To help you understand business travel, consider this:

You planned a personal trip to Los Angeles, arriving on Friday afternoon and leaving on Sunday afternoon.

About a week later, you learn that a vendor you need to meet with is going to be in L.A. when you are. You arrange a dinner on Friday night to finalize negotiations on a large contract.

Can you now deduct 100 percent of your flight expenses to Los Angeles? How about meals?

Trouble Ahead: Business vs. Personal Travel

You must have business as your primary purpose for the trip.

In general, a business trip can involve two types of business days:

  1. Travel day. You count as business those days you spend traveling in a reasonably direct route to your business destination. (Again, note this is your business not your personal destination.)

  2. Presence-required day. If someone requires your presence at a particular place for a specific and bona fide business purpose, this counts as a business day. That “someone” could be any business associate, employee, partner, client, customer, or vendor.

This trip we created for you works like this:

  • Day 1, Friday, is a personal day. (You may deduct the cost of the business meal with the vendor whether you pay for it in total or go Dutch treat.)

  • Day 2, Saturday, is a personal day.

  • Day 3, Sunday, is a personal day.

How can you deduct the entire trip?

Let’s say you had this situation: You travel on Friday to meet with the vendor on Saturday and return home on Sunday.

Now, you may have a deductible trip.

Get a Free Tax Savings Consultation

If you are planning a trip that will involve both personal and business days and would like me to review your trip days for tax deductibility, give us a call.

Pinewood Consulting’s CPAs will help you assess your tax savings potential through a free consultation. Book yours today with Chad Pavel, CPA.