Many of you will be traveling during the holidays for both business and pleasure. Although we’ve touched on business trip deductions in the past, we figured it’s time to outline more fully what can and cannot be claimed on a business trip, specifically a trip wherein you may mix business and leisure.
Overview
You’re already planning to travel, and maybe you’re planning to have an extra day at either end of the trip. Or maybe you’ll be traveling near your old stomping grounds, and want to visit some friends from college. You’re allowed to deduct any essential business portions of your trip, but anything that is nonessential cannot be claimed on your taxes. That means if you want to take a detour on your business trip to see an old friend, you can still deduct your airfare to a location so long as the principal reason for your trip is business related.
Devil is in the details
So what does that boil down to? It means that every small expense that is unrelated to your business portion of the trip cannot be claimed. When does this become tricky? Let’s say you travel to Austin for a business trip to meet with a client, and upon arriving in Austin you and the client have a lunch meeting: you are allowed the standard 50% meal deduction. Similarly, if that morning before the meeting you eat breakfast alone at the hotel restaurant, you can deduct 50% of your meal cost. Actually you can claim that deduction at any restaurant in town so long as it’s part of your business trip. But if you’re in, say, the hotel bar and grab lunch with your old college roommate, that’s no longer a business expense and you cannot claim the deduction for that meal–unless of course said former college roommate is the client in question.
The key is moderation and meticulousness. If you’re unsure, ask your CPA or tax advisor: you don’t want to draw the attention of the IRS.
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