Are you looking to spend some relaxing sun filled beach time and write this off on your taxes? How can I write off a vacation is a question commonly asked by business owners. The IRS allows business owners to write off some aspects of vacation. Let’s talk about how to do this correctly and legally.
You have a trip planned to go snow skiing this winter. You are flying out on Thursday and returning home on Tuesday. Both Thursday and Friday are travel days and are considered business days by the IRS. You scheduled a prospect meeting on Friday and are attending a conference on Monday. There are now 4 business days in your trip so far. The IRS allows weekends or holidays that are in between business appointments to count as business days. Your 6-day trip to shred some powder in Aspen is now 6 business days. You could stay an extra 5 days as personal vacation and your transportation is still fully deductible along with costs associated for your business days. You would only be out of pocket for the expenses related to the personal time.
A few tips to do this correctly:
• You must be a business owner
• Always have the business-related portion of the trip documented before you leave for vacation
• You can’t deduct your family’s expenses (however, if you choose to drive you can still deduct the full mileage)
• Talk to your tax advisor if you are traveling to another country as rules are stricter.
The above strategies are commonly used and typically discussed when people think of writing off a vacation. There are two little used strategies frequently overlooked that can provide some great tax savings.
1. Annual Meetings. Plan your vacation around an annual meeting. If you own an LLC or a corporation you should have an annual meeting and document the minutes. These meetings are a great time to establish yearly goals, create budgets and seek input from the board or other strategic advisors. Many people choose to have their annual meeting offsite so they can get away from day to day distractions. Why not have your annual meeting at a place you would spend time on a vacation?
2. Rental property visits. It is commonplace for landlords to perform a yearly inspection of their properties, check-in on tenants, and property managers. If you moved out of state and take a yearly trip back home to visit grandma or have a place you like to vacation to regularly, buy a rental property there and enjoy some write offs of traveling back and forth between the rental property and home.
In conclusion, by following the IRS rules and properly scheduling your business events, you can successfully combine business and pleasure.
Disclaimer: This is not tax, legal, or financial advice. Each financial situation is different so please contact your financial or legal advisor.