How to Get Tax Breaks While on Vacation

Get Tax Deductions by Turning Your Vacation Into a Business Trip

by Erin Scobie on July 9, 2011

More and more people are finding ways to deduct their travel expenses from their taxes. Take, for example, the account of a film set designer who was able to spend several weeks in China meeting new people, taking in the culture, and generally having an amazing vacation, and she did it all tax-free. How? By writing off her entire escapade as a business trip.

According to Eva Rosenberg, an enrolled agent licensed to represent taxpayers, the most important thing to remember when preparing to have a business vacation is “document, document, document.” “The simple secret to all tax-deductible expenses,” explains Rosenberg, “is keeping excellent records and documenting your business intentions, business purpose and business-related activities.”

In order to claim your vacation as a business trip, you’ll have to be able to prove it was taken primarily for business-related reasons. One way to do this is by planning your trip extensively. Begin correspondence with people who may be able to help you or the company for which you work. A librarian, for example, could meet with library administrators or library science professors at a local university.

You can also bring your business with you. If you have clients, try gathering a group of them for a retreat where you can network and relax poolside at the same time. You can even charge them for the opportunity to come, thereby discounting your own expenses, not to mention making a little profit.

You can also turn yourself into a business by taking people along for the ride. Many travel agencies offer discounts on rebates to certain group sizes. You may even get your ticket free of charge. A geologist could, for example, report that he organized a trip to study volcanic rock … in Hawaii.

Again, maintaining impeccable records of where you went, why, and how much you paid are all imperative. Try keeping a travel journal, saving receipts, or maintaining an online record of your actions and keep them all in your tax records for April.

This is especially important for international ventures. The IRS is more likely to clamp down on deductions when it can question the relevance of your trip to the region, and whether or not a transatlantic flight was actually necessary. As Rosenberg says, “When it comes to conventions, seminars and meetings, the IRS says if the meeting could just as easily have been held in the U.S., they will not permit the deduction.”

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