Last Updated on Apr 8, 2020 by James W
If you are an entrepreneur or small business owner there are some potential options worth exploring where you might be able to enjoy the win-win of a great family trip that also manages to qualify as a deductible expense.
Here’s a look at some of the key points that could allow you to take advantage or at least talk to your accountant about so that you can see what you can and can’t do about taking a vacation where some of your costs are deductible.
Your main reason for going
The fundamental starting point when it comes to the subject of deducting transportation expenses against tax is what the primary purpose of your trip is.
If you are hoping to spend a couple of weeks on the beach soaking up the sun and sipping cocktails you can’t really expect to claim any of that back as a justifiable business expense, but if the primary purpose of your trip is business then that offers a number of legitimate possibilities.
If you were attending a conference at Marriott Manchester, England, for instance, then that is a straightforward business trip where your airfare and accommodation should be allowable as a business expense.
When you mix up the itinerary and spend most of your days doing business but tag on a few days of leisure, this is where you could still potentially claim all of your transportation expenses.
Counting up the weekdays
For a travel expense to be deductible it has to demonstrate that the primary purpose of your trip was business and that the amount spent on the trip was a regular figure as well showing that the trip was necessary.
How the word necessary is interpreted in taxation terms is that your business trip could offer a tangible benefit in terms of increasing opportunities and profitability. Once you have justified the primary reason why you are getting on the plane, you can work on your scheduling.
A typical scenario where you might be able to make a trip deductible would be where you have a busy schedule of meetings on weekdays which take up at least half of your time, allowing you to tag on a weekend at the end of a busy week that could be free and deductible.
An underlying rule that you will have to work to is that for elements of the trip to be considered as deductible you will have to be seen to spend what could be described as a typical amount.
If you are booking a hotel room and the cost is the typical amount that could be considered acceptable for your industry you stand a greater chance of your claim being accepted than if you try and book a suite or two rooms so that the family has their own separate accommodation.
The process of making a trip tax deductible is not always that complicated provided you play by the rules and liaise with your accountant so that you know what is fair and what you could claim.
If you can claim some of your family vacation against tax that would definitely be worth exploring as an option.