Professionals who must travel for work reasons should keep in mind that they may be able to add a personal vacation into their travel and expense it. Seldom do I get called to a business meeting in Hawaii, instead it is somewhere less desirable that I really don’t want to hang around any longer than I have to. But let’s look at how it works anyway.
A taxpayer who mixes a bit of pleasure with business while away from home may deduct all of the round-trip transportation costs as long as the trip was undertaken primarily for business reasons. Of course the IRS doesn’t really give us a hard and fast rule on what exactly “primarily for business” means but it does say it is “an important factor”. I am pretty sure that if your business trip only required 2 days and you stayed for 10 that there probably is a problem with deducting all of the transportation costs. So you would have to pro rate the expenses for the amount of time you spent between business and personal.
What about a Saturday night stay overs? Say an employee’s out-of-town business chores conclude on Friday, he may extend his business trip to take advantage of a low-priced fare requiring a Saturday night stay over, where the savings in airfare are higher than the costs of the weekend meals and lodging. The employee doesn’t pay tax on the reimbursement for his Saturday meal and lodging expenses. In this case, IRS said that under a “common sense test,” (imagine that they have common sense?) payments to the employee for the Saturday stay were deductible if a “hardheaded business person would have incurred such expenses under like circumstances.”
What about when a business trip straddles a weekend? A traveler may have to attend business meetings on Thursday, Friday and Monday. He is too far away to travel home and then come back (and besides, the trip back and forth would cost more than staying put), so he spends the weekend relaxing at the out-of-town location. Because he must remain at the location for business reasons, the weekend days (Saturday and Sunday) should fall under the “common sense test” and be treated as business days and the expenses are deductible.
What about when your spouse comes along? The expenses of a spouse accompanying a traveler aren’t deductible unless (1) the spouse is an employee of the taxpayer and travels for a bona fide business purpose, and (2) the expenses would otherwise be deductible by the spouse. Nevertheless, even if the spouse’s travel expenses aren’t deductible, a tax benefit may still be salvaged from traveling together. That’s because the business traveler’s deduction isn’t based on 50% of the trip expenses. The deduction is based on what it would have cost the taxpayer to travel alone. This rule can be a money saver on accommodations. For example, where the cost of a hotel room is $200 for one occupant and $149 for two, a taxpayer on business status may deduct $149 per night, not $200, when he gets a room for two.
Similarly, where the taxpayer travels out of town on business via rental car, and his spouse accompanies him for nonbusiness purposes, the entire cost of the rental is deductible, because the cost would have been the same for the taxpayer even if his spouse did not join him on the trip.
So there you go, the next time you want to bring your spouse along to Podunk USA, feel free to do it and take advantage of these tax breaks!