April 2008
Business & Personal Travel Deductibility
By Terry L. Schleucher
With summer just around the corner, many people are itching to get out of town.
Thus, this time of the year you may want to mix some vacation days with your
business travel. With a little planning you can get Uncle Sam to subsidize your
downtime. To understand the rules governing business travel deductions, the IRS
suggests you ask yourself the following questions.
What is the reason for my travel away from home?
If you answered "primarily for business," there's a good chance you
may deduct those travel expenses that are ordinary and necessary. Deductible
travel expenses include the cost of air, train or bus fare between your home and
business destination, as well as the cost of local transportation. You may also
deduct 100 percent of lodging, telephone, dry cleaning, and other expenses
related to conducting business, and 50 percent of the cost of your meals.
How long will my business require me to be away from home?
Your travel expenses are deductible when your business trip is long enough or
far enough away that you can't reasonably be expected to complete the round trip
without sleep or rest.
Are my travel expenses related to an existing business?
To be deductible, your travel must be for an existing business. Travel expenses
you incur in acquiring or starting a new business are not deductible, but are
considered start-up costs amortized over a 180-month period.
Is the primary purpose of my trip business or pleasure?
If you decide to add a few vacation days to your business trip, you may still be
able to deduct your travel expenses and the business portion of your lodging and
meals, provided you can demonstrate that business was the principle reason for
the trip. An important factor in determining if your trip is primarily business
or pleasure is the amount of time you spend on each. If your trip is primarily
for personal reasons, you cannot deduct any travel costs, even if you conduct
some business at your destination. You can however, write-off business expenses
you incur at your destination.
Is my spouse an employee of the business?
The expenses of a spouse or significant other are not deductible unless he or
she is an employee of the business. In addition, to qualify for a deduction, the
spouse's or significant other's travel must be for a bona fide business purpose,
and the expenses must be otherwise deductible by the spouse or significant
other.
Do I have good records to support my deduction?
You need receipts to substantiate your travel and lodging costs. For each
expense, you should record the date, amount, place, business purpose, and
business relationship. For incidental expenses and for meals, you need a receipt
only for expenses of $75 or more.
Please keep in mind that tax laws are constantly changing and all situations
need to be independently evaluated. If you have special circumstances that
involve significant amounts, you should do some detailed investigation to see
how the rules apply to your situation.
Certified Public Accountants
1035 N. Main Street, Findlay, OH
45840 - Phone: 419-422-8111 - Fax: 419-422-5969
2453 West Market Street, Tiffin, OH 44883 - Phone:
419-448-8555 - Fax: 419-448-5885
Questions or comments? Please email ksc@knuevenschroeder.com
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