Summertime is in full swing. The kiddos are out of school. The sun is blazing. The burgers and dogs are hitting the grill. It’s also a time when many families hit the road or take to the water skies for some much-needed vacation time.
While travel expenses can take a bite out of any budget, there are feasible ways you can write off some of your summer vacation when prepping your tax return.
Keys to Deducting a Summer Vacation
The biggest key to deducting a summer vacation – or any trip – is to conduct some type of business when you are out of town and enjoying a change of scenery. If you own a small business, this could involve meeting with a business partner or client for a few days in a hotel conference room while your family spends time getting a tan on the beach. You can definitely put on your swimsuit once your work is done for the day.
Remember, vacation expenses you write off must be “ordinary and necessary” to the type of business-related activities you are conducting, and these costs must be appropriate and common to your industry.
To deduct a good amount of your trip, it must be mainly for business purposes. You can include a few “off days” in your travels, but the primary goal of going somewhere different must be to perform business-related activities to qualify for a substantial write-off on your IRS return.
What Travel Expenses Are Deductible?
- Transportation Expenses: You can write off airfare, a rental car, Uber fares, train tickets, and other transportation-related costs. The IRS says that if your entire trip is for business, you can deduct 100% of your transportation expenses. However, your write-off is limited if you incur these costs for pleasure or sightseeing. If you use your personal vehicle for a vacation you mix with business, you can claim either mileage or actual expenses for the business-related trips you take on the road.
- Lodging Costs: You can deduct all lodging expenses if your trip is entirely for business reasons. The general IRS rule is that you can only write off the nights after which you conduct business during the day. So, if you take a weeklong trip to Las Vegas and spend 3 out of 7 days doing business, your write-off is limited to those 3 nights at the hotel and does not include the other 4 nights spent on vacation. If your spouse or child stays in your hotel room with you, and there is no additional fee for double occupancy, you can write off the cost of each night if you’re doing business those days. There are exceptions to this rule, such as if you get a cheaper airline ticket and must stay overnight somewhere to accommodate your flight schedule. Just be mindful that you can’t deduct any costs incurred by your friends or family, even if you cover these expenses for them.
- Meals and Entertainment: You can claim a 50% deduction on any meals or entertainment events you participate in, as long as there is some type of business tied to these activities. Save all receipts and write down all participants and what was discussed for proper IRS documentation when filing your return and claiming this tax break.
- Workshops, Seminars, or Conference: If you attend an industry-specific event or seminar, such as an electronics trade show, you can write off the cost of your ticket and any other fees associated with it.
The Bottom Line
Taking a vacation solely for leisure is typically not deductible. Plus, you can’t claim expenses incurred by family members or friends traveling with you. However, if you’re able to lump business into your itinerary, you may be eligible for some key tax write-offs that could help significantly reduce your tax bill from the IRS. It’s worth exploring your options to find creative yet legitimate ways to take advantage of deducting a summer vacation.