5 Tips To Planning Your Holiday Travel With Your Tax Strategy In Mind
With the holidays right around the corner, many of us are making holiday travel plans
. As you are making your holiday travel plans, identify opportunities to integrate your holiday travel plans with your tax strategy - legally!
Tip #1
Spend more than 50% of your time during each 8-hour day on business activities and you can deduct 100% of your travel expenses. This means you can deduct all of your travel expenses if you conduct business from 8 AM to 1 PM every day, and then take the rest of the day off to visit with family and friends.
Tip #2
Travel expenses for your spouse and your children are 100% deductible if they are involved in your business and spend more than 50% of each day on business activities.
Tip #3
Create a reason that is great for your business to travel to that location. This is my favorite tip because I find when I create a great business reason to travel, my business benefits in a way that it wouldn't have without the travel.
I have many friends and family members in Utah that I like to visit as often as I can. I decided to take a business trip there a few years ago to explore the possible expansion of my rental real estate business into Utah. I spent more than 50% of each day on business activities and then I also had some personal time to visit with friends and family. My rental real estate business in Utah has doubled since then and my regular travel there is a legitimate business expense!
Tip #4
If it's personal - treat it as personal. If one of your goals for a particular trip is to take a break from business, then treat that trip as personal. Trying to claim that as business travel could draw a lot of scrutiny to your legitimate travel expenses. Or if your spouse and children don't participate in the business, treat their portion of the travel expenses as personal - trying to deduct their expenses could jeopardize your portion that is legitimate.
Tip #5
Travel outside of the U.S. has a completely different set of rules. Be sure to discuss this with your tax coach before you travel.
Travel is one of my favorite deductions because it is one of those expenses that most of us already have, and when planned properly, it gives us the opportunity to increase our business's bottom line while decreasing our tax liability.