Each year, many people combine their vacations with work-related activities. Although the Internal Revenue Service will carefully check to ensure that no fabrications or embellishments are made, it is completely legal to write off many of your vacation costs as business expenses. By following these five tips, you can deduct as much as possible from your next tax filing.
1. Deduct Expenses When Looking For Work
If you are planning an upcoming trip to look for employment or to interview for a particular position, you can actually deduct these travel costs as business-related expenses when you next file your taxes. However, you need to have been employed recently and the interviews and job scouting need to be in the same field where you once worked. You are not allowed to deduct travel expenses if you are searching for your first full time job as an adult.
2. Use the Per Diem Method for Business Travel
The Internal Revenue Service allows business travelers to either track each individual expense or claim per diem expenses. This per diem way of tracking means that you have a specific amount per day you can write off. Business travelers are legally allowed to deduct the full amount per day, even if it was not necessarily spent. This includes lodging, food, and incidental costs, and it requires you to document exactly where you were.
3. Deduct Domestic and International Flights
If you are taking a trip within the United States that is at least 50 percent related to business, you can deduct the full cost of your flight. However, keep in mind that you should not abuse this privilege repeatedly. It is best only to deduct flights where the majority of your time is spent doing business-related activities, although a day or two on either side of vacation activities is reasonable. International flights are also completely deductible as long as you can prove that 75 percent of the trip was for business reasons.
4. Be Reasonable and Keep Records
If you normally spend $100 per day on your vacation spending but live in absolute luxury for your business expenses, it may look suspicious. Live like you normally would if you plan to deduct expenses. Keep as many receipts as possible and try to keep a rough itinerary of where you were, what business events you participated in and when you spent time on vacation.
5. Include Spouses or Children Carefully
There are several ways that you can include your spouse, partner, or children along on your business trip without spending much more. For example, you can write off your rental car as a business trip expense. As long as they all use your car with you, you can deduct that. If your spouse shares a hotel room with you, that is also deductible. Be sensible and remember not to deduct their meals or incidentals, which are entirely vacation expenses.
Combining business trips with vacations can be a great way to save money. By deducting as much as legally possible with these tips, you can reduce your spending and still enjoy a great trip.
Joe Israel is a globe-trotting freelance blogger who writes about ways to save on travel. If you have to travel for business, Joe recommends claiming tax back by turning your vacation into a tax write-off.