How to Get Tax Deductions for Part of Your Vacation

July 26, 2018 by · Leave a Comment 

One thing I’ve learned as a small business owner and a freelance writer is that you can take tax deductions on certain parts of your vacation, but it has to be done very carefully.

Previously, I’ve talked about “bleisure travel,” which is the practice of tacking a small vacation onto the beginning or end of a business trip. Then, if you’re visiting a city you’ve always wanted to explore, you can take a couple days off or stay over the weekend, and pay for your added hotel and food expenses yourself. It’s a great way to get to see a part of the world you might otherwise never visit.

But this is a little bit different. Taking tax deductions on your vacation means tacking a little bit of work onto your leisure time, not the other way around.

Before we go any further, let me issue two warnings:

  1. This is not professional tax advice. Talk with your accountant before you actually do this to make sure you’re deducting the right activities and so forth.
  2. You’re not going to be able to deduct your entire vacation, so don’t get ideas of taking a world cruise on the government’s dime.

1. Part of your vacation has to be work-related, like a conference or business meeting.

A trade show floor. You need to do some work on vacation if you want any tax deductions.To begin with, taking a vacation closely related to your work qualifies. This is sometimes referred to as a busman’s holiday, which is a vacation spent following or practicing one’s usual occupation. In the days of bus conductors and bus drivers, a busman might spend a day off riding on a pal’s bus or even take the bus to get to his holiday, hence the name.

A professional writer could visit a writer’s conference or research a particular location or city for her book; a house builder might spend a holiday week repairing and building houses for his church’s missions trip; a museum director would spend her holiday visiting museums in other cities or countries. Even a theater teacher heading to New York to watch Broadway plays could count that as professional development. In essence, if you are doing an activity that helps you improve your business, your work skills, or expand your knowledge, that can be tax deductible.

2. Schedule any business appointments before you leave.

According to Quickbooks,

. . .you must have at least one business-related appointment set up before you leave. It’s not possible to deduct any expenses if you leave with the idea that once you arrive, you will meet contacts and conduct business on the fly. The IRS expects you to establish a “prior set business purpose,” and keep a copy of your correspondence and books showing the scheduled appointments.

So, schedule your meetings and events before you ever leave. Mark them on your calendar, and save all the emails related to scheduling. This way, you can show you set the meetings before you left, if there’s ever a need to prove your deductions.

3. If you travel on a weekday, that can be deducted as business travel.

If you’re attending a conference or setting business appointments, travel during the week to get there and back. If your trip is being used primarily for business (i.e. you’re not taking a two-week vacation with one day of business meetings), you can deduct your transportation costs, whether it’s airfare or mileage. You can also deduct expenses on business days, like lodging, taxis/ride sharing, and 50% of your food.

4. Keep track of everything.

According to the IRS, you don’t need to keep receipts for anything under $75, but you do need to keep track of when everything happened. Whatever you do that’s work related, keep track of it in a diary or on your electronic calendar. Appointments, travel times, meals, conference sessions, you need to keep track of anything that ties into your business travel. That way, if the IRS wants to check, you can prove that you have legitimate charges and aren’t just counting handing out business cards at the hotel’s happy hour.

You can also get by with electronic copies of your receipt. I use Receipts by Tidal Pool Software to take photos of all my receipts, regardless of the amount. You could also use Evernote or just take photos of everything and upload them to a designated folder. I like Receipts because it keeps track of the amounts and I can export reports for the year’s taxes.

5. Just remember, you can only deduct your portion, not your family’s.

If you fly to get to your vacation, only your ticket is deductible. But if you drive, the mileage is deductible, and you still managed to get everyone there. Just remember, if you take the tax deductions, you can’t claim the expenses too (e.g. gas costs). You can only do one or the other.

It’s the same with food (only 50% of your cost is deductible), the hotel room (if you need two rooms, yours is deductible), and you certainly can’t deduct any entertainment expenses (unless that’s your actual job, and this is a research trip).

Finally, remember, your family wants to take this vacation with you, so don’t spend all your time working in an attempt to make this vacation as cheap as possible. They’ll accept a day or two of you working while they go off and have fun, but the whole reason for the vacation is to get a break for a while. Take advantage of it.

While you won’t pay for your entire vacation, you can at least see some tax benefits from tacking a little work onto your time off. Just remember to talk to your accountant or other tax professional before you book that three-week Hawaiian “business trip.”

Have you ever taken a busman’s holiday or deducted business expenses on a family vacation? How did you do it? Share your tips and tricks on our Facebook page, or in our Twitter stream.

Photo credit: ADunwoody07 (Wikimedia Commons, Creative Commons 4.0)

About 

Erik Deckers is a travel writer, as well as a content marketer and book author. He is the co-author of Branding Yourself, No Bullshit Social Media, and The Owned Media Doctrine. Erik has been blogging since 1997, and has been a newspaper humor columnist for over 20 years

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