Vacation Expenses as Tax Deductions

Finance | Prager Metis | Feb 20, 2015

Often, clients ask us about the right (and legal) way to write off vacation expenses as tax deductions. We’ve compiled a few tips to make sure you are complying with the IRS:

Establish business appointments with business colleagues prior to your trip. Log the appointments that you have set up because the IRS requires “prior set business purposes.”

Make sure your trip is “business travel.” The IRS states that travel expenses are 100% deductible as long as your trip is business related and you are traveling away from your regular place of business longer than an ordinary day’s work and you need to sleep or rest to meet the demands of your work while away from home.

Be sure to deduct all of your travel expenses for each day you’re away. For every day that you’re on business travel, you can deduct 100% of lodging, tips, car rentals, and 50% of your food. The IRS does not require receipts for travel expense under $75 per expense–except for lodging. However, it is good to document in order to audit-proof your records. Acceptable documentation would include amount, date, place of meeting, and business reason for the expense.

Sandwich weekends between business days. If you have a business day on Friday and another one on Monday, you can deduct all on-the-road expenses during the weekend.

The majority of your trip days count as business days. The IRS says that you can deduct transportation expenses if a business is the primary purpose of the trip. A majority of days in the trip must be for business activities; otherwise, you cannot make any transportation deductions.