Business owner’s Travel, Meals and Entertainment Deductions

By Jeffrey Brooks, CPA, CFP, MBA for JBrooks Wealth Advisors PC 602-292-2009

For several years, I taught for the American Institute of CPAs tax course on travel, meals and entertainment.

Can you deduct travel costs when you are away from home for personal purposes? NO.
When can you deduct travel costs? Would you like some key points to remember next time you travel? Yes!

1. You fly to L.A. on Saturday morning for a Monday business seminar or to meet a person who can be helpful to your business.
2. Saturday is a business day because you are allowed to deduct a day before your meeting. You could have come into L.A. on Sunday but for personal purposes you came in a day early.
3. The overnight stay needed for the Monday business meeting puts you in what is called “travel status”.
4. You can deduct the airplane costs, rental car/taxi, hotel and meals for the time you are gone.
5. What if you flew into L.A. on Monday a.m. and flew back home on Monday evening? You would still be able to deduct the airplane costs, rental car/taxi, hotel and meals for Monday. However, you will miss out on having a deductible weekend day of fun!
6. Unfortunately, tax law limits your business meal deductions for your meals and snacks to only 50% of what you spend. However, 50% deduction is better than nothing!
7. How many hours do I have to work on Monday to get business deductions? 4 hours.
8. Why 4 hours? Because you must work over 50% of a work day. A work day is considered 8 hours.
9. What if you fly to San Diego first to enjoy Mission Bay for the weekend? Side trips are not deductible. As long as you got to L.A. by Sunday, you would simply deduct the cost of the airfare that you would have paid if you went directly to L.A. You would deduct what you would have deducted if you flew directly to L.A. on Sunday. If you drove to San Diego and then to L.A., you would deduct the business miles from your home to L.A., your business destination.
10. If you can achieve a sizeable discount on your business travel if you travel a day or two earlier, you can still deduct the personal days so you are ready for your L.A. meeting on Monday morning.
11. You finish your seminar at 5 P.M. on Monday in L.A. You decide to go to Disney Land with the family on Tuesday. You must treat Tuesday as a personal day. However if you need to spend time meeting with the other participants that evening and cannot get a flight out and must sleep over Monday night, you can deduct Tuesday too!
I hope this has helped you!! Enjoy your summer and thank Uncle Sam for picking up part of the tab! Jeffrey Brooks, CPA, CFP, MBA for JBrooks Wealth Advisors PC 602-292-2009

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About Jeffrey Brooks

Jeffrey Brooks, CPA, CFP, MBA since 1976 has specialized in helping clients save significant taxes, help businesses increase their cash flow, revenues and profits while increasing their control and satisfaction. Jeff and his accounting firm sincerely cares about the happiness of his clients.

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JBrooks Wealth Advisors, PC.

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Address: 4647 N 32nd Street, Suite B245
Phoenix, Arizona 85018
Phone: 602-292-2009