Hotel costs while conducting business are also deductible. But as with business and vacation days, you must differentiate between personal and business hotel stays. You cannot deduct hotel charges for the extra days you stay over to enjoy a location’s recreational offerings, such as a magic show or sporting event. But be warned: If it doesn’t pass the sniff test for mere mortals, the agents eagle-eyed at the IRS will ferret out any discrepancy. For example, if you had a breakfast meeting with a client then spent the rest of the day at the hotel pool followed by a Cirque de Soleil show before heading home, you’re asking for trouble. That night’s hotel stay is a personal expense; not a deduction on your tax return.
Dining and Miscellaneous Expenses
Sealing the deal with a handshake over a meal is a time-honored business practice for which the IRS gives some wiggle room. Generally, you can deduct 50% of your business-related meal costs. Many work-related costs also are deductible. But be sure to keep receipts for travel, hotel, meal and transportation costs and other miscellaneous business expenses. You can write off expenses such as cab, car rental, train or bus fares to and from the airport, hotel and business meetings or events. Additionally, if you made photo copies or shipped communication materials to your meeting destination, those expenses are also deductible. So are the extra charges you incur for business calls or Internet access fees.
Taking Family Along
Turning you next business trip into a mini-vacation by taking the family is a smart move, just be prepared to do more rigorous record keeping. Your spouse’s and children’s expenses are not deductible. However, the tax code allows you to deduct some expenses, such as hotel and car mileage to out-of-town meetings, even with your family along for the ride. And for the days you conduct business, most of your family-shared room will be deductible.
If you are an employee, make sure you follow the company policy, which means keeping receipts and documenting the business portion of the travel. Click here for more information on IRS tax guidelines for business travel.