Travel Deductions in a Better Future

Remember back in the day when we could get on the plane and be somewhere else? When we could worry about what counts in things like travel deductions?

It was wonderful.

Well, that wanderlust has gotten to me, so I’m going to talk about Travel Deductions as if it’s something anybody cared about today. You know, for your future plans.

Plus I’m working on a class where I learned something new.

So let’s talk travel deductions to places that aren’t your house.

Travel For Business — When You Can Again

Business trips are way down, and there’s some debate about whether they’ll ever come back again.

They have at least two things going for them, though. (1) They take you places that are not your house and (2) the expenses are tax deductible.

That’s true whether you’re an indiepreneur running your own shop or a multi-billion dollar corporation.

Let’s start with the obvious. If you’re flying into Orlando solely for business conference, and you’re staying there for 3 nights, you can deduct the flight, any transportation fees (i.e. taxis, Uber, rentals), plus the hotel.

Meals will also be deductible, but they have that rather arbitrary 50% limitation (unless Pres. Trump gets his way).

Easy enough, right?

But what if you decide to spend an extra 2 days there and go to Disney World?

Well, for the 5 people in the world who have seen the movie High Strung, Great News, T. Furrows!

The only part of the trip that would be non-deductible is the ADDITIONAL personal expense.

Let’s run it through it.

EXAMPLE TIME!

Let’s continue with our explanation above but throw in some names and numbers.

Donny produces wedding videos. Adobe reached out to him to invite him to an exciting conference in Orlando to teach him all the new Adobe Premiere tips and tricks.

The flight costs $300. Transportation to and from the hotel & conference center cost him $60. His meals cost him $50 a day. And the room costs him $100 a night.

For 3 days he goes to the conference. He decides to stay an extra two nights for the Disney Experience.

What is deductible?

The Flight – No matter what, he was going to have to pay $300 for the flight. Since it didn’t cost him any extra to stay a few more days, he’ll get to deduct the full amount.

NOTE: if he brought someone along for a non-business reason like a spouse, that spouse’s ticket would be non-deductible.

Transportation – Again, all deductible. If he paid extra for transportation to Disney World, that would NOT be deductible, but I’m assuming for simplicity’s sake that his hotel has free shuttles to the Parks.

Room – Only the 3 conference days would be deductible. So $300. The extra 2 Disney days are personal and are non-deductible

Meals – These would be deductible only for the conference days. So $50 x 3 = $150. But since they’re only 50% deductible, he could only deduct $75 of that. The additional 2 days of meals are non-deductible.

And this, my friends, is why people like business travel to places that have interesting things to see and do. Zoom backgrounds are just not the same.

Foreign Travel Deductions

If you’re like me, you probably read the information above and start thinking, “Yes, time to find an Adobe Conference in Rome!”

Unfortunately, the rules aren’t quite the same in this case.

For foreign business travel, you still get travel deductions, but the IRS is much more weary of people abusing the deduction as an excuse to find a way onto the beaches of Thailand.

If they find out the purpose of your trip is more for pleasure than for business, you’ll have to allocate your expenses pro rata, including that expensive foreign flight.

That means if I jet set off to Machu Picchu for 2 days of conference and 6 days of drinking Inca Kola, only 33% of my flight will be deductible. All the other expenses would have to be analyzed line by line like we did above.

Get Planning…With Low Expectations!

If we ever get out of this COVID-19 mess, travel deductions can potentially be a great way to give your business a little money back for going to a place you want to go to anyway.

Just keep the business reason first and the fun part second. And make sure your reservations great cancellation policies…who knows when all of this stuff will end and we’ll return to normal.

Now please excuse me as I put together yet another trip plan I know I’ll never use.