As we continue to turn corners with the COVID-19 pandemic, going on trips can be more of a reality! Are you wondering how you can write off your vacation as a business expense? Or even just part of it? Arizona business owners, keep reading to learn more.
What Makes a Trip “Business Related?”
Simply put, a trip becomes a business trip when you perform work-related duties while on the trip. Even better if something work-related happens every day. This doesn’t mean that you pull out your laptop on the beach and send a few emails. That’s just working on the beach instead of your office in Arizona. It has to be more serious than that, like taking meetings with clients or attending a conference. If you’re wondering how to write off your vacation as a business expense, you likely aren’t looking to work every single day, so here are your options:
- Do something work-related every day, even if it’s something small.
- Set meetings for Friday & Monday with vendors and/or clients, and write off the weekend (The IRS allows you to count travel days as business days, along with any weekends or holidays that are sandwiched in between business appointments. source)
- Add these meetings and events into your calendar before you leave so that there is verifiable proof
- Keep track of your receipts, and the miles you drove.
What Travel Expenses Can Be Deducted?
There is a wide variety of expenses that can be deducted while traveling for business. To learn more about how to write off your vacation as a business expense, check out this list of deductible expenses:
- Firstly, travel by plane, train, bus, or car between your home and destination.
- Taxi fairs from the airport to your hotel, and to and from visiting clients/meetings
- Miles drove while on the business vacation including driving-related tolls/parking fees. If you rented the car, you can only deduct the business-use portion.
- 50% of your food costs
- Your hotel/lodging and non-entertainment meals.
- Dry cleaning and laundry.
- Other ordinary and necessary expenses related to your business.
What doesn’t count?
Since you are the business owner, only the expenses that you would incur on your own count. This is why many people prefer to drive on business vacations because it will allow you to deduct the entire expense of the drive, rather than just your plane ticket if you flew. This also means that only one hotel room will be deductible. The stipulations for travel deductions do change for overseas trips, so reference this IRS form for more information.
Expenses that are not properly documented will not be able to be deducted. This is the case for any business expense, so make sure you save receipts have have documentation of your activity.