KimberW
Employee Tax Expert

Business & farm

Whether your entire trip can be categorized as a business trip depends on a number of factors. Business deductions are generally allowed for expenses that are ordinary, necessary, and reasonable. It's important when deciding whether an expenses meets those three criteria to separate yourself from your business as much as possible. 

 

Based on your scenario, I would not try to claim your winter expenses entirely as a business trip. Imagine that an employee of your company came to you with a proposal to live elsewhere for several months while continuing to do the same work that they do from home. And that employee wants you (the company) to pay for airfare, lodging, meals, etc. while they are living elsewhere. Would you (as the company) consider it to be a reasonable and necessary expense to pay for your employee's living and travel expenses for several months? 

 

That is the view that the IRS is going to take if you were to be audited. From your company's perspective, is the expense ordinary, reasonable, and necessary?

 

That's not to say that you cannot ever take a deduction for the business portion of travel -- even if it is combined with personal travel or your family accompanies you. We have a couple of great articles with some details of what can be deducted in similar situations:

Your Summer Travel Can Save You at Tax Time 

Your Guide to Vacations and Taxes 

 

If you do spend money on business expenses while you're on a trip that would be considered a personal trip -- you can still deduct that expense. For instance, meeting with a golf pro over dinner to build your client base, or attending an industry conference for networking purposes.

 

For documentation purposes, make sure that you keep receipts for all expenses. And be aware of the additional documentation rules regarding meals, in particular. You must maintain a log of the people who were at the meal, the business purpose of the meal, and an itemized receipt for the meal.

 

More information from the IRS can be found here: 

Topic no. 511, Business travel expenses 

Publication 463, Travel, Gift, and Car Expenses 

Topic no. 305, Recordkeeping 

 

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-- KimberW


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-- KimberW

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