Summer Business Trips Combined With Vacation May Provide Tax Benefits

Summer is upon us, and you may be thinking of combining a business trip and vacation plans. Although business is business and pleasure is pleasure, the tax code does not always adhere to absolutes. With a little planning, valid tax deductions may be available for out-of-town business-travel expenses, both domestically and internationally. What follows are a few strategies to help you achieve the greatest tax benefit from properly combining and documenting business and personal travel.

Combine Business and Vacation Domestic Travel

When some vacation days are added onto a business trip within the United States, business-travel expenses are typically deductible. The actual transportation expenses (cabs, plane fare, etc.) are deductible for out-of-town business trips and include the costs of getting to and from the place of business activity, i.e., travel to and from the departure airport; the airfare itself; baggage fees and tips; cabs to and from the destination airport; and so forth. Costs for rail travel or to drive a personal vehicle also fit into this category. The bottom line is domestic transportation costs are 100-percent deductible, as long as the primary reason for the trip is business rather than pleasure. On the other hand, if vacation is the primary reason for travel, no transportation expenses are deductible.

Although the Internal Revenue Service (IRS) does not specify how to determine if the primary reason for domestic travel is business, the number of days spent on business versus pleasure is a key factor. Travel days count as business days, as do weekends and holidays if they fall between days devoted to business and it would be impractical to return home. "Standby days," when physical presence is required, but work is not necessarily performed, also count as business days. Any other day principally devoted to business activities during normal business hours is also counted as a business day, as are days when work was expected but not possible, due to reasons such as local transportation difficulties, power failures, etc.

For domestic trips, business will likely be considered as the primary reason for a sojourn whenever the business days exceed the personal days. You may want to accumulate and maintain proof by logging everything in a daily planner. No deductions are allowed for a spouse, dependent or other individual who accompanies the taxpayer or employee on a business trip unless such person is an employee of the person...