How to take advantage of a trip that is both business and personal
It is important to know whether you can count your day as a business day and know how to strategize your days to take advantage of a business deduction.
The cost of transportation within the 50 states and Washington, D.C, is either all deductible or nondeductible. If you spend the majority of the trip days on business, you can deduct 100 percent of your direct-route expenses transportation expenses. If the majority of your days are personal, you get no deduction. Your overnight trip out of town is deductible if its primary purpose is for business. Generally, this means the majority of the days were for business. There are two types of business days, travel day and presence-required day.
Travel day. The day you spend traveling to your business destination is a travel day, which is deductible. This must be your business destination and not your personal destination.
Presence-required day. If your presence is required at a particular place for a specific and genuine business purpose, it counts as a business day. This would include a meeting with any business associate, employee, partner, customer, or vendor.
You can count a day as a business day when circumstances beyond your control prevent you from pursuing your business objective.
You should take into consideration that if you are on a personal trip and you have a business meeting that takes at least four hours, you can count that entire day as a business day.
You may be able to take advantage of weekends, holidays, and other stand-by days. Weekends, holidays, and other stand-by days sandwiched by business days count as business days when it would not be practical to return home for the weekend. As an example, if you live in Nashville and travel to Los Angeles, it would not be practical or cost-effective to return home for the weekend. However, if you lived in Knoxville and traveled to Chattanooga, the cost and short drive involved would make it less likely the IRS and the courts would allow it as business days.
If your savings by traveling a day or two earlier or later exceed the cost of traveling the day before or the day after your business function, the extra days would be considered business days.
During your travel, you can deduct the cost of lodging and meals on business days but not personal days. Business-related expenses such as shipping and printing are deductible even on personal days.
If your spouse, dependent or a friend goes with you, you generally can’t deduct their travel expense. However, it may be deductible if it can be adequately shown that their purpose on the trip has a bona fide business purpose.
David Zubler has an accounting degree and computer science degree and has experience as an accounting manager and controller in manufacturing, and has owned his tax/consulting business since 1990. David Zubler is the founder and president of Your Tax Care. The company provides business and tax education to the public at its website, YourTaxCare.com. David can also be contacted by email at email@example.com.