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If the trip is entirely for business
purposes, you can deduct all the travel costs, plus meals (at 50%),
lodging, and some incidental costs such as for laundry and dry cleaning.
If the trip is primarily personal, none of the costs of travel to and
from the destination are deductible, even if some time is spent on
business. Lodging, meals, etc. would be deductible for the business
days. The rules are more complex if the
trip is primarily but not entirely for business. In this case, unless an
exception applies as discussed below, the costs allocable to the
personal (vacation) part of the trip cannot be deducted. For example, if
the trip covers ten days—four personal and six business—meals,
lodging, etc. are only deductible for the business days. Furthermore,
only 60% of the travel costs (airfare, etc.) are deductible, reflecting
the fact that only 60% of the days of the trip were business days. The allocation of part of the travel
costs to the nondeductible portion need not be made if the primary
purpose of the trip is business and the trip does not last for more than
a week. A week for this purpose means seven consecutive days, not
counting the day of departure, but counting the day of return. Even if the trip does last for more
than a week, no allocation is required if the personal days total less
than 25% of the total days spent on the trip. For this purpose, the
total days of the trip include the day of departure and the day of
return. Even if business is conducted on only part of a day, it's
counted as a business day. Business days also include days spent
traveling to or from a business destination and weekend days or holidays
falling between two business days. Example.
Frank flies to Paris on a Monday primarily for business reasons. He
spends Tuesday and Wednesday vacationing and then spends Thursday,
Friday, and the following Monday through Thursday on business before
flying home Friday. Counting the days of return and departure, it's a 12
day trip. Only the first Tuesday and Wednesday are nonbusiness days.
Thus, less than 25% of the trip is personal (2 of 12 days). Except for
meals and lodging costs for those two vacation days, the rest of the
meals (at 50%) and lodging, and all of the travel costs (airfare, etc.)
are deductible. The travel costs need not be allocated between personal
and business because of the 25% rule. If you don't meet the one week or 25% test, you may still be able to deduct all of the travel costs if you can show that the chance to take a vacation was not a major consideration for the trip. Of course, the larger the vacation portion, the more difficult it will be to make your case. |
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