School is almost out and I bet you are ready for a vacation. However, with the increasing cost of airfare, gas, hotels and meals while on the road, it's expensive to get away this year. Wouldn't it be nice if we could deduct the costs of some family-time away from home?
As you might expect, you generally can't deduct the costs of a family vacation. But....... there are special situations where you might be able to deduct most of the costs of the trip.
Practically every industry has courses, seminars, workshops, trade shows or other events taking place in desirable vacation spots. Even Las Vegas has turned into a family town. They provide unlimited entertainment and services for children. Getting child-care is easy, so the adults could get some time for themselves.
Deducting Your Costs & The Sandwich Rule
Bringing your spouse and children along to a business conference or trade show can cost very little extra, depending on how much time you have off for the trip. For instance, if you drive, it costs nothing extra to bring your whole family - as long as you fit into one car and one hotel room. While your room is probably fully deductible, don't deduct any extra fees for cots, resort fees for the family, and the kids' room service. Your meals during the business days of the trip will be deductible - theirs will not.
Even if you diligently adhere to your business duties, you still have the evening to spend with them. And if you plan the business vacation properly, you might even have a weekend at the beginning or the end of your trip, to spend with them.
For example, if an event starts on Monday, you can fly in on Thursday, have a business meeting on Friday, vacation over the weekend with your family and attend your event on Monday. This, my friends, is The Sandwich Rule. With this rule, you sandwich the weekend between business days, converting your weekend days to business days in the eyes of the IRS. With a little planning, you could end up being able to deduct all the days of your trip.
Wait, It Gets Better... You Can Deduct Your Family too!
When your children and your spouse actively work in your business, you can deduct their expenses of attending a conference as well. But they would have to be working during your event, or registered to take the courses with you.
Think of them just as you would any employee who came to a conference or trade show. They have duties to perform, courses to attend, continuing education to earn. Or if they are at a trade show, they should be working your booth, named in your brochures, picking up contacts or clients or customers for later follow-up.
Seminars, Workshops, Tradeshows Not Your Style?
You want to visit with family and friends. Fine. Simply arrange to toss in a few business meetings in the mornings or afternoons. Use the Internet to find potential business associates, vendors, customers, clients, new jobs - or media interviews to promote your business. Arrange to schedule appointments to meet these folks - in writing. Email is fine.
Aside from being able to write off part of your vacation, you're apt to make valuable new contacts, increase your business's sales, or reduce your costs - or even do some PR to market your business.
But remember, this is meant to be your family's vacation, as well. Don't overdo the business aspect and neglect the family time. Consider structuring the business time before and after a weekend - with the weekend being totally devoted to the family.
So, where will you go on your tax deductible vacation?
Call us if you have any questions regarding your tax deductible vacation, because the laws are a little tricky in this area and the wrong number of personal days will kill the deductibility of your trip.
Memorial Day Weekend
The three day weekend is finally here. I am looking forward to relaxing, going to the movies, and sleeping late. I have a golf game scheduled with the guys and a honey-do list I will complete. My daughter is scheduled to arrive home over the weekend as she moves in with us for a few weeks before her study abroad program in Spain begins. It will be fun to have her in the house, but after living on her own for two years, I am sure she will tire quickly of hanging with us old folks.
We at Fisher CPA Firm wish each of you a safe holiday weekend. And please, refer your friends who need help from a progressive accounting firm that is genuinely interested in seeing your business grow.