Fundamentals Tax

Fundamentals: Business Days - Can you count?

Calculating business vs personal travel days are important. Business days yield valuable deductions, personal days do not. Clearly maximizing business days is important.

It’s also important to plan business days so the trip passes the “primary purpose” test. To pass this test the trip must have more business days than personal days. Failing the test means the cost of transportation and other travel expenses (We’re talking planes, trains, & automobiles here.) are NOT deductible.

Business Days for US based travel

  1. Travel Day: Days spent traveling in a reasonably direct route to your business destination. NOTE: Super thrifty travelers might find a sizeable discount on travel a day or two earlier. If the cost of traveling sooner (including accommodations) is less than the cost of traveling later, count that as a business day too!
  2. Work Day: Days spent working all day is no brainer (seminars, education, etc). Of course – you knew that. You may not have known to count as a business day you must spend more than half of normal business hours in the pursuit of business. Generally, that means more than 4 hours. However, if circumstances beyond your control prevented you from working, don’t count the day out.
  3. Required Day: Days your presence is required at a specific place for a bona fide business purpose. Count these as a business day regardless of time spent.
  4. Weekends, Holidays, Waiting Days: Days falling in between two business days are included as business days if it would not be practical to return home (consider time and expense).

With some careful planning almost any trip can be turned into a deductible business trip. Can you turn your family vacation into a deductible business trip? Maybe. If you’re like me, not if your spouse and kids have anything to say about it!

Next, we should discuss what expenses are deductible on your business trip.

Notice: This generic information is not intended to be taken as tax, legal, benefits, financial, or HR advice. Since rules and regulations change over time and can vary (by industry, entity type, and locale), consult your accountant, lawyer, and/or HR expert for specific guidance.

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