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Ahh, summer. Backyard barbeques, trips to the beach, fresh veggies from your garden or the local farmers' market...whatever your summer pleasure, it's time to relax and enjoy a slower pace of life. Maybe you're thinking about getting away with your family, traveling together to a fun destination. What's all this got to do with taxes? Well for most people, not a whole lot. But for some of us a summer vacation could mean a tax deduction if we plan things right. But if you're planning your summer vacation, then probably the last thing on your mind is the IRS. After all, taxes were due April 15 and now it's time to forget about them for another year. Summer's here, let's all enjoy the nice weather and spend time with family. However, a little bit of extra planning could mean saving money on your federal tax bill come next April. How?
Let the Current Mileage Rate Help You on Your Summer Vacation
If you take your family on vacation to a spot that's also got something work-related going on for you, then you could end up being able to deduct part of the travel expenses you incur. If your summer vacation plans involve driving then use of the current mileage rate can really add up next year at tax time.
What Counts as a Business Expense?
The IRS says an expense must be ordinary and it must be necessary in order for you to deduct it on your federal tax return. Although the IRS doesn't define these terms, the courts have come up with some guidelines:an ordinary expense is something you'd expect in that line of business. For example let's say you book your summer vacation to the Grand Canyon in Arizona and also attend a Gemological Institute conference. You plan on deducting the cost of attending that conference, which is centered around gemstones and jewelry. That's fine if you are in the jewelry business. But if your business is a landscaping company then it's hard to see how that could be an ordinary expense. The term necessary has been interpreted by judges to mean appropriate. The idea of the expense being helpful to your business is also important for an expense to be considered necessary. For that same landscaping business from the example above, a necessary expense might be weedkiller. Or the expenses from attending a mandatory poisonous materials (pesticides) certification program would also be considered necessary. But traveling to Amsterdam to view the tulips each spring may not exactly be considered necessary unless your business focuses on tulips. That one might be a stretch.
With That in Mind, Let's Deduct Your Summer Vacation!
So, you book family trip to Vegas. You live in L.A. so you plan on driving. Even though you will be attending a gemological conference in Vegas (you own an accessories boutique) for two days and spending the rest of your eight day vacation with your family, you can use the standard mileage rate to deduct the full price of driving to Las Vegas. For those two days you are attending the conference you can also deduct the cost of your meals and any costs incurred in getting around town for the conference. You can't deduct your family's meals on those days, however. Just keep in mind the meanings of ordinary and necessary when deducting parts of your summer vacation. And keep your receipts for meals and other expenses if you plan to itemize rather than taking the Meals & Entertainment per diem. For the driving deduction you can simply take the number of miles driven and multiply by the standard mileage rate. Don't forget to keep a driving log so you can back up your tax deduction claim. Floyd Davis CPA Tax Forms
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