Wouldn’t it be great to turn your fun trips into tax cuts? If you plan to take any trips this summer, here are some ideas that will help you get the most out of your travel budget.
1. Make all your business appointments before you leave for your trip.
Most people believe that they can go on vacation and simply hand out their business cards in order to make the trip deductible. Wrong.
You must have at least one business appointment before you leave in order to establish the "prior set business purpose" required by the IRS.
The first thing that you need to do is set up appointments in the various cities that you will visit before you leave. One way to establish this is to post an ad for distributors in the town’s newspaper. You could then interview those who respond when you get to the business destination.
2. Make It All "Business Travel."
In order to deduct all on-the-road business expenses, you must be traveling on business. By definition, you are on business travel whenever you are sleeping overnight in a strange bed - conducting business, that is!
3. Make sure that you deduct all of your on-the-road -expenses for each day you're away.
For every day you are on business travel, you can deduct 100% of lodging, tips, shoe-shines, laundry and dry cleaning, car rentals, and 50% of your food. According to the IRS, no receipts are required for any travel expense under $75 per expense. The only exception would be for lodging.
4. Sandwich weekends between business days.
Interestingly, the IRS notes that if you have a business day on Friday and another one on Monday, you can deduct all on-the-road expenses during the weekend.
5.Make the majority of your trip days business days.
The IRS says that you can deduct transportation expenses if business was the primary purpose of the trip. The majority of the days in the trip must be for business activities. Otherwise, you cannot make any transportation deductions. This is an all-or-nothing proposition.
With proper planning, you can deduct most of your vacations if you combine them with business. That can make your life a lot less taxing!
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