Monday, August 20, 2018

Keep More Money Month - Chapter 3

As we are getting closer to the end of the summer, we are talking about keeping your money. And since this time of the year is the favorite time for travel for many families, I wanted to share some ideas about tax deductions you can take with your vacation travel.

Before I get into details, I will caution you to keep great records of what you actually do on the trips, so you can prove that the trip had business purpose. The good news is that your vacation can be (partially) tax deductible. It takes some math to figure out what percentage of the expanse you can take out, so please make sure you figure it out correctly.

There are 2 scenarios that I want to discuss today. The first one is when you plan to travel for business and decide to take your family with you. The second scenario is when you plan a family vacation and would like to be able to deduct some of it on the taxes.

If you plan to travel for a conference, convention or any other type of business reason, and you figure the location is just awesome enough to want to show your family, you probably decide to stay a few extra days at the destination. Let's say you travel for a 2 day conference that happens on Wednesday and Thursday, and decide to stay over the weekend and return on Sunday. You take your family with you and enjoy Friday and Saturday at that location. Now a 2-day trip became a 4-day trip, and since half of the time there was spent at the conference, you can also deduct half of the plane ticket price.

Another deduction can be part of the cost of the hotel room - make sure you only deduct the percentage of the room rate for the days of the conference. Let's say you use 50% of the first 2 nights, since you share the cost with your husband (technically). The time you spend with the family - the 2 extra vacation days - is not tax-deductible, so please stay away from any trouble with the IRS. Make sure you keep track of your food expenses for any meals you eat at the conference with fellow attendees - half of that will be a tax deduction.

In the second scenario, if you plan to travel with your family already, and would like to save some of the money off your taxable income, you need to make sure you have some business activities while you are away. These can be business meetings, prospecting - if you can provide services or products to people at that location.

Whether you plan to travel for business and then decide to extend the travel time in order to spend time with the family, or you plan a family vacation and then schedule some business meetings in that area, you can deduct part of your travel expenses. One word of caution: keep track of the time you spend for business and deduct the percentage that pertains to that time.

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