One of the benefits of being a business owner is our ability to take tax deductions for business related expenses. With the sun shining and the temperature rising, it may seem like the summer vacation days just can’t seem to get here soon enough. As you plan for your next vacation this summer, make sure that you take advantage of all the tax write-offs that you are legally entitled to.
This summer make sure that you enjoy your vacation and take advantage of this wonderful opportunity to save on taxes by turning your vacation into a tax deduction. So how exactly do you turn your vacation into a legitimate tax deduction? The easiest way to demonstrate this is to go over a specific example of just how this can be done.
Let’s take for example Tim, who owns his own business. Tim decided he wanted to take a two-week trip around the US. So he did–and was able to legally deduct every dime that he spent on his “vacation”. Here’s how he did it.
1. Make all your business appointments before you leave for your trip
Most people believe that they can go on vacation and simply hand out their business cards in order to make the trip deductible.
You must have at least one business appointment before you leave in order to establish the “prior set business purpose” required by the IRS. Keeping this in mind, before he left for his trip, Tim set up appointments with business colleagues in the various cities that he planned to visit.
Let’s say Tim is a manufacturer of green office products looking to expand his business and distribute more products. One possible way to establish business contacts–if he doesn’t already have them–is to place advertisements looking for distributors in newspapers in each location he plans to visit. He could then interview those who respond when he gets to the business destination.
Example: Tim wants to vacation in Hawaii. If he places several advertisements for distributors, or contacts some of his downline distributors to perform a presentation, then the IRS would accept his trip for business.
Tip: It would be vital for Tim to document this business purpose by keeping a copy of the advertisement and all correspondence along with noting what appointments he will have in his diary.