When you travel to a business location where you spend the night, you are in travel status. But will the tax rules make this a business or personal night?
The rules also affect your costs during the day. When you have an overnight business travel day, you generally deduct your costs of sustaining life for the day, such as breakfast, lunch, dinner, snacks, drinks, lodging, and taxis.
Business days also are important in determining how much of your travel cost you may deduct. For example, on a seven-day trip to London, one business day makes the airfare deductible.
Yep, you heard that right. Six personal days and one business day in London—you deduct 100 percent of the airfare.
Transportation days are the trickiest days.
Days spent traveling to or returning from a destination outside the United States are treated as business days—provided you use a “reasonably direct route” and you don’t engage in “substantial diversions for non-business reasons” that prolong your travel time.
If you don’t use a reasonably direct route, you count as business days the amount of time that a reasonably direct route would have taken.
Similarly, if you engage in substantial non-business diversions, you count as business days the amount of time it would have taken without such diversions.
These rules apply to whatever mode of transportation you use. So if you travel by airplane and don’t take a reasonably direct route, you count as business travel days the number of days an airplane would take to reach your destination by a reasonably direct route. The same is true for travel by car or cruise ship.
Once you are at your business travel destination, if a Saturday, a Sunday, a legal holiday, or another reasonably necessary standby day intervenes while you endeavor to conduct your business with reasonable dispatch, you treat such a day as a business day.
In conclusion, the science involved in tax law is finding cases, rulings, procedures, and publications that support your position. The art form is planning ahead and having some fun while you travel for business.
We specialize in helping clients clarify their taxes so they keep more of their money. Many small business owners who come to see us in Fort Worth, TX generally do not understand the tax law enough to explain it to a fifth grader.