Travel away from home for business purposes is generally deductible. However, travel for personal reasons is never deductible. Including personal enjoyment in business trips is not unheard of but just because you had some fun does not mean you should skip out on tax savings.

To be deductible as a vacation expense, the following rules apply:

• Travel expenses must be ordinary and necessary in the taxpayers line of business
• If a trip is taken solely for business then all expenses are deductible
• If the trip is primarily personal in nature, the expense is not deductible
• The trip must be related to a taxpayer’s trade or business. The determination of business versus personal is based on facts and circumstances. The primary factor is the amount of time spent on business activities versus personal
• The expenses of spouses or children accompanying the tax payer are not deductible
• Business expenses while on vacation are deductible regardless of if the vacation itself is deductible
• Travel expenses include transportation, lodging, meals, etc.
• If travel is for an event, the event must benefit the taxpayers trade or business

How to turn a vacation into a business deduction

To turn a vacation into a business deduction, you must plan the trip in such a way it is primarily business in nature. This is done as follows:

• Plan the trip in such a way where the number of business days exceed the number of personal days. The following counts as business days:
  • Time spent taking cell phone calls or responding to business emails or text messages
  • Travel days are considered business days
  • Days that were supposed to be business days but due to circumstances out of taxpayer’s control, business could not be conducted. An example is days of inclement weather
  • Weekends and holidays that fall between business days can also be considered business days
  • If an extra days is spent to reduce travel costs, the extra day can be considered a business day

There is no hard and fast rule to what should be considered a business day. It depends on what is customary in the taxpayer’s line of business, the place of origin or the place of destination.

Travel outside United States

Special rules apply if the business travel is outside the United States. The following counts as business days if travel is outside the United States:

• The trip lasts 7 days or more and less than 25% of time was spent on personal fun
• Vacation was not the primary purpose of the trip
• The presence of spouse and children does not affect the definition of a business day.

In summary, before you take a trip, it is important to take the time to arrange the trip in such a way where the business purpose exceeds the personal fun, that is if you want to reap a tax benefit from the trip. As always consult your CPA for personal advice.