Tax deductible vacations, how to increase tax deductions on travel
When it comes to tax deductible vacations, nothing can be more important than keeping proper documentation. So before we even dive into all the legal ways and many pointers on how to increase tax deductions on travel, understand that the IRS code and regulations require you to record all travel related expenses at or near the time such expenses are incurred. So make sure you do that and have no fear.
Now as we said before in How to reduce taxes legally - tax reduction strategies under Your vacation is ripe for tax deduction paragraph, you must travel for a period of time sufficient to require sleep. Remember that. You of course can deduct all travel expenses that were necessary to keep you going, like lodging, meals, laundry and so on. Once you are home from your tax deductible vacations, keep in mind that you can also deduct your first laundry, dry cleaning or garment repair costs as long as the clothes got dirty or damaged on during you business / vacation travel. Same goes about fixing your car, luggage, etc.
How to increase tax deductions on travel
To maximize your bottom line, eat less. Apparently, while the IRS wants you to sleep nice and sound, your nutrition does not concern the agency that much. Otherwise how can you explain that you can deduct 100% of on-the-road expenses, but just 50% of your meal cost? And what about entertainment? Tough luck, but unless you have business interests / goals which you can prove when going to your favorite classical music concert, you can not write it off.
Tax deductible vacations - hire your spouse
You both must be in the same business to take your spouse to vacations or business trips and deduct travel expenses for both. To satisfy the IRS requirements, your spouse must be gainfully employed in your business, travel with clear business purpose and whatever expenses incurred, would be deductible otherwise.
Increase tax deductions - take business car for vacation travel
As long as you travel on business, you can take your family on vacations with you. Even though you can only write of your expenses, all car costs can be deducted since traveling with a car full of family members is pretty much as traveling alone. You deduct your gas, tolls and increase your business mileage.
On the contrary, if you fly on business and take the spouse with you, just like my friends did few weeks going to Lake Tahoe for continuous education for doctors, only your flying costs can be deducted.
Hotel, food and the rest
When travel on business with others, you can only write off expenses as you would spend traveling alone. Deducting a cost of meals and lodging for others who travel for leisure while you are on business trip is not allowed.
How to increase tax deductions on travel? Drive far
Since the federal government reimburses IRS employees a full day per Diem for every 300 miles they travel, you should follow the example. By going 65 miles per hour with few 20- or 30- minute stops, you can easily cover 300 miles in something close to 7 hours. Plan accordingly to drive at day time or if you prefer at night, to cover 300 miles to your business destination. The other important point is that 300-mile IRS rule is used to determine the maximum amount of travel days that the IRS allows - yourself or your CPA will divide the amount of mileage you cover by 300 and the round up result will be the maximum number of travel days you can claim.
Will continue with more tips on how make your vacations tax deductible and increase travel deductions in general. Now is this disclaimer - I am neither an accountant nor a financial planner. I have no formal financial education. This post is for information only. Tax laws change, so always consult a qualified accountant.
Thu Mar 25, 2010 11:03PM | Copyright: www.bad-credit-advisor.com | More in Taxes | Comments (0)
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