Sounds great doesn’t it? Work and vacation in one, especially if you can just write off your family vacation on your taxes! So, here’s the question we’re discussing in this article: So can you write off your family vacation if you undertake training or work as a fitness professional for a session or two at your vacation destination? The answer is Yes and No. If you follow the rules laid out by the IRS, business owners are permitted to “write off” or deduct some aspects of their vacation expenses, even if the trip is not solely for business. There are some key guidelines you should be aware of, in advance of your trip. One of the key takeaways from this article should be that you can’t do this in hindsight. You have to plan it! You Must Schedule Fitness Related Business Appointments Before You Leave For a trip to be even partially deductible, you must have at least one business-related appointment set up before you leave home. Specifically, the IRS requires you to be able to demonstrate a “prior set business purpose.” Documentation of these appointments set up in advance is essential, and you should keep a copy of your correspondence and diaries showing scheduled appointments. This is key: do not leave on your trip “hoping” to turn it into a business trip along the way. Make sure you maintain evidence that you had at least one meeting set up prior to the trip. This could be a certification course, or a paid training session where you will be coaching. Be a Smart Scheduler Smart scheduling on your part can optimize the deductability of the trip. A helpful equation: count of the days of your travel and make sure that the days where the primary purpose of the travel is business outnumber the vacation days. Your travel days count as business days, as do weekends, if you have a meeting on a Friday, and another on a Monday. This way your travel would be 100 percent deductible, and your out of pocket would be the expenses related to your vacation days. Is the Travel Primarily for Business Purposes? Keep the helpful equation above in mind as you plan your schedule. Also note that you must be traveling away from your office or place of business for longer than an ordinary day of work. Once you have been away from home for at least for one night, you can deduct 100 percent of transportation costs – whether airfare or mileage. Any layovers or stops made for personal reasons cannot be deducted. Only Your Expenses Are Deductible While it can be great to have your family along for the ride, you are only allowed to deduct the expenses you would typically incur if you are traveling solo. Only your ticket, for example, if you travel by air is deductible. If you travel by car, it is 100 percent deductible because you would incur the same expense alone. It should also be noted that only 50 percent of the cost of your food is deductible, along with only the lodging you would normally have occupied. In practice, this means if you typically rent a single hotel room, but you need a suite so there is room for your children, you can only deduct the cost of the room you would normally book. What is Deductible? There are specific rules about what you can and cannot deduct if you bring your family (including a significant other) with you on a business trip. IRS Pub 463 lays out all the details, but here is a short summary:
- For every day on your trip that is a business day, you can deduct 100 percent of your lodging, tips, and car rentals. For example, you will be able to deduct your hotel bill for those business days (but not for the extra vacation days). The cost of a hotel room will still be deductible, but only up to what the room you usually book (when traveling without family) would cost. For example, if a single room at a hotel would cost $190 and a family room costs $260, then only $190 would be deductible.
- You can deduct 50 percent of your food costs (this includes tip and tax), for every day that’s considered business.
- If Business travel includes use of your car, you can deduct business-related mileage, tolls, and parking as well. Rental car costs or taxi rides to and from work locations or the airport will be fully deductible since the cost is the same regardless of how many people are in the car.
- You can also deduct other travel-related expenses that are “ordinary and necessary” (for example, baggage fees, laundry, or dry cleaning).
- Shipping baggage and sample or display material between your regular and temporary work locations if it is necessary for your business activities. This could include fitness apparel and equipment needed for your business travel.
- Important Reminder: Any separate costs incurred by family members are not deductible (this includes meals).