A Guide to Roaming Write-Offs
Q: When traveling overseas for trade shows or business meetings, what expenses can you write off? How about if your spouse or partner goes with you? -- C.C., Temecula, Calif.
A: When you're traveling for business purposes, all of your general travel costs are deductible, experts say. That includes payments for airline tickets, meals, hotels, and public transportation, such as a cab, train, or taxi.
But some entrepreneurs don't realize they can also deduct additional business-related costs while on the road, says Navin Sethi, a CPA and tax manager at Rothstein Kass Certified Public Accountants in Walnut Creek, Calif. Those costs include things like dry cleaning, telephone calls and faxes, hotel Internet charges, computer or other equipment rentals, and even tips, manicures, and haircuts.
Steer clear of trying to deduct items such as lavish meals or extravagant lodging expenses while you're traveling, Sethi recommends. And personal entertainment costs incurred on a trip are never deductible, he says.
Many small-business owners take their spouses along on business trips, points out Ted Hilliard, a CPA and financial analyst based in Oakland, Calif. That spouse's or family member's expenses, however, don't generally count as deductible unless the spouse or other relative serves as a legitimate employee of your business and is also traveling specifically for business purposes, he says.
The rules grow more complicated if the trip combines business and pleasure, as many do. In that case, direct business costs are still fully deductible, but other costs (such as airline tickets) may be either partially deductible or disallowed entirely. "The deductibility of these costs will depend upon whether the trip is judged to be primarily for business or primarily for pleasure," Sethi explains.
ASK YOUR CPA.
Make sure you document all the relevant business expenses incurred during your trips, and keep receipts as documentation. "If you're not sure about an expense, call your tax professional and describe the situation," Hilliard recommends. That way you have a professional opinion on whether it's deductible or not.
Better yet, run the scenario by your accountant before you leave. Before you get on the plane, it's good to know what will -- and won't -- fly at tax time .
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