Ways to Write Off Some Summer Sojourns

TAX ADVICE from Julian Block

(July 1, 2004) The tax code imposes tight restrictions on deductions for travel that combines business with pleasure. Nevertheless, the IRS blesses some of these travel costs. Here are several reminders on frequently-missed breaks for vacationers.

Business Travel With Your Spouse

The feds are absolutely unyielding when your spouse accompanies you to a meeting at some plush resort. No write-off for the portion of the outlays attributable to your spouse's travel, meals and lodging unless these three requirements are met: (1) the spouse (or dependent, or any other individual) is a bona fide employee of the outfit that pays for the trip; (2) the spouse undertakes the travel for a bona fide business reason; and (3) the spouse is otherwise entitled to deduct the expenses.

TIP: Tax relief remains available for lodging costs even when your mate tags along just to see the sights. Claim a deduction for lodging based on the single-rate cost of similar accommodations for you, not half the double rate you actually paid.

EXAMPLE: You and your spouse go by car to a business convention in St. Louis, where the two of you stay at a hotel that charges $150 for a double room and $130 for a single room. Besides deducting the entire round-trip driving (the driving costs the same whether your spouse accompanies you or not), claim a per-day deduction for your hotel room of $130, rather than just $75, half of $150.

Charitable Travel

As a volunteer worker for a church, university or other philanthropic organization, you get to deduct unreimbursed out-of-pocket expenses, including travel. Say you are elected or appointed to attend a church convention as a delegate. You can deduct reasonable amounts for travel, lodging and meals (100 percent deductible, unlike business meals, which are only 50 percent deductible). There are no deductions for other personal expenses, such as sightseeing or theatre tickets. Similarly nondeductible are expenses of accompanying family members.

Be aware that IRS regulations take direct aim at disguised vacations. There must be no significant element of personal pleasure, recreation or vacation.

EXAMPLE: John Hickey takes his Boy Scout troop camping and is on duty throughout the trip. John is entitled to deduct his payments of expenses for himself and for boys who belong to the group, but not for his own children. It makes no difference that he enjoys the trip or supervising scouts.

Investment Seminars

There are no deductions for costs incurred by investors to attend conventions, seminars or similar meetings at which they obtain information that helps them to plot strategies. Disallowed expenses include travel to the meeting site, attendance fees and meals, lodging and local travel while attending.

The disallowance applies solely to outlays made for investment reasons, like those of an investor seeking to obtain information about whether to buy or sell particular stocks. It does not apply to costs incurred for business reasons, like those of a financial adviser who meets with prospective clients as part of his job.

EXAMPLE: International Investments holds a convention at which stock market investors pay for the opportunity to discuss strategies with representatives of brokerage firms and listen to presentations from executives about their companies.

Result: The seminar rules bar deductions of expenses by investors, but not deductions of expenses by stockbrokers and others who are at the conference for business reasons.

Julian Block lives in Larchmont and is a syndicated columnist, attorney and former IRS investigator who the New York Times has called “a leading tax professional.” His “Year Round Tax Savings” shows how to save big money on taxes – legally. To purchase a copy, email: at julianblock@yahoo.com.

Print This Page--For best results, use landscape option in Preferences
Email this article