Tax Insights

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Tax deductions for vacation?

Business and pleasure can mix together on a single trip while retaining most of the tax benefits of a trip that is made solely for business purposes. If the trip is planned properly, you can write off or get reimbursement for the airfare, lodging and other transportation costs of a vacation. The trip must be undertaken primarily for business purposes to get this favorable treatment. But there are ways that personal days can still be counted as business days for tax purposes.

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If the business part of a trip takes place before and after a weekend, then those weekend days are treated as business days, even though the traveler is just relaxing at the destination location. The trip home and back on the weekend would be impractical and not cost-effective, so remaining out of town has a business purpose. Therefore, 50% of meals and 100% of lodging and other expenses are deductible for those days, even though no business is being done on the weekend.

In some cases, an airline will offer a deal on a Saturday night layover. If the airline savings are greater than the Saturday meals and lodging, then the Saturday expenses are deductible.

A stop for personal reasons on the way to or from the destination is allowable. The traveler should record what the round-trip transportation costs would have been without the personal stop. That is the deductible amount of transportation costs. Similarly, when traveling with someone else, the allowable deduction is what the travel expenses would have cost if it were a solo trip. This is especially useful when it comes to hotel stays.

Taxpayers who are not self-employed but are traveling on business for employers can receive tax-free reimbursements from their employers for the business portion of a trip. They will probably not be reimbursed for the personal portion of the trip, but they will have received transit to their destination that is essentially free.


Brandon Harbeke, CPA