Combining a business trip with a family vacation is a great thing to do in this economy, as long as you play by the rules. Daybreak financial consultant Eric Amado answers some common questions.
Q: Are transportation costs deductible?
A: If the trip is primarily for business and within the U.S., the cost of your transportation is fully deductible both ways. If it's international, the trip has to be at least 75 percent business in order to write off your plane ticket.
Q: If I take a business-related cruise, can I deduct this amount?
A: Yes! To be deductible, a business-related cruise has to be aboard a ship registered in the U.S. and avoiding foreign ports. Today the IRS says you can only deduct up to $2,000 a year and you must provide a detailed written explanation of the trip.
Q: How can you deduct for meals? What is the percentage you can expense on food?
A: You must be on a business trip. You are able to deduct your meals and those of your business associates. Food is deductible 50 cents on the dollar.
Q: If your family goes on business with you, can you deduct all the expenses?
A: No. You can only deduct business expenses not family expenses. However, if your entire family goes on the trip and everyone is in the same hotel room or rental car then you can deduct those expenses.
Q: What about fees or incidental costs? Are they deductible?
A: Yes as long as the trip is business related they can be deducted. For example, taxi fares, Internet access fees, phone calls, tips, laundry charges. If these are in any way business-related, you can write them off.
Q: What advice do you have regarding business expenses?
A: Business expenses are high on the IRS radar. If you deduct something make sure you are ready to prove it just in case of an audit. So if you travel for business, keep meticulous records: not just receipts, but anything that helps prove your business purpose — itineraries, agendas and programs.