Saturday, August 12, 2000
Mix of business, pleasure can be deductible
Problem: On an upcoming trip you want to mix a little business and pleasure.
Strategy: Don't forget your income tax deductions.
Crystal Faulkner, accountant and partner in Cooney, Faulkner & Stevens, says you can take your family along to a convention in paradise and still deduct your travel as long as the primary purpose of the trip is business.
Additionally, the cost of a single room during the days of business and 50 percent of your meals are fully deductible.
The costs associated with your family as well as extra personal days you tack on to the trip are generally nondeductible.
Convention and business travel expenses are generally deductible as ordinary and necessary business expenses if incurred in connection with a trade or business.
Fifty percent of the cost of business meals and entertainment is deductible. For spending to be deductible, there must be a sufficient relationship between the trip and the taxpayer's business. For example, a dentist most likely would not be able to deduct the cost of attending a real estate convention.
To secure any portion of a deduction, the person must meet requirements of substantiation and record-keeping. Substantiation is met if adequate records are maintained describing the amount of the expense, the time and place, the business purpose of the trip, and the business relationship of any entertainment.
The key to justifying your expenses is to document as much as possible. If you are traveling outside the United States, more stringent rules apply. Normally, travel expenses on these types of trips are only deductible if the entire time away is directly related to business.
If the trip is planned carefully to meet deductibility rules and adequate receipts are kept, your business trip doesn't have to be strictly business.
Readers: Consider Savvy strategies as general information only and seek the help of professionals because circumstances might vary.
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