Robert J. Fedor, Esq., L.L.C.

Know the IRS tax rules when mixing business with pleasure

Owning, running and managing a business can be hard work and at times stressful. It's no wonder then, that many Ohio small business owners enjoy escaping their everyday lives and responsibilities and jetting off to exotic, or at least semi-exotic, locations.

While we've likely all heard the phrase warning not to mix business with pleasure, when it comes to business trips it may make financial sense to do just that. However, as with all business-related matters, it's important to review the IRS rules related to business trips and tax deductions.

 

 

In most cases, it's completely acceptable to extend a business trip by a few days for a personal vacation. Additionally, many of the costs associated with such trips are considered tax-deductible. It's important, however, to keep close track of those expenses that are business-related as opposed to strictly personal.

When figuring business-related trip expenses, such expenses typically fall into two categories, ordinary and necessary. These deductible business-related expenses relate to things such as transportation costs, lodging, meals and even potentially entertainment when clients are involved.

When planning a business and pleasure trip, it's important to be strategic and ensure that the majority of time is indeed dedicated to business matters. Business owners can get into trouble with the IRS if, for example, they attempt to deduct costs associated with a two-week trip where only one day is dedicated to a business conference and the rest devoted to pleasure.

In some cases, business owners have also encountered tax problems when attempting to deduct hotel costs. When a portion of a trip is related to business and a portion to pleasure, those days associated with the business trip are tax-deductible whereas those associated with a personal vacation are not.

Source: Bankrate, "Tax help for business, pleasure, trips," Kay Bell, 2013