deduct business travel

Can you deduct business travel when it’s combined with a vacation?

Business Travel Deductions:

At this time of year, a summer vacation is on many people’s minds. If you travel for business, combining a business trip with a vacation to offset some of the cost with a tax deduction can sound appealing. But tread carefully, or you might not be eligible for the deduction you’re expecting.

General rules
Business travel expenses are potentially deductible if the travel is within the United States and the expenses are “ordinary and necessary” and directly related to the business. (Foreign travel expenses may also be deductible, but stricter rules apply than are discussed here.)

Currently, business owners and the self-employed are potentially eligible to deduct business travel expenses. Under the Tax Cuts and Jobs Act, employees can no longer deduct such expenses. The potential deductions discussed below assume that you’re a business owner or self-employed.

Business vs. pleasure
Transportation costs to and from the location of your business activity may be 100% deductible if the primary reason for the trip is business rather than pleasure. But if vacation is the primary reason for your travel, generally none of those costs are deductible.

The number of days spent on business vs. pleasure is the key factor in determining whether the primary reason for domestic travel is business:

  • Your travel days count as business days, as do weekends and holidays — if they fall between days devoted to business and it would be impractical to return home.
  • Standby days (days when your physical presence is required) also count as business days, even if you aren’t called upon to work those days.
  • Any other day principally devoted to business activities during normal business hours also counts as a business day.

You should be able to claim business was the primary reason for a domestic trip if business days exceed personal days.

Deductible expenses
What transportation costs can you deduct? Travel to and from your departure airport, airfare, baggage fees, tips, cabs, etc. Costs for rail travel or driving your personal car are also eligible.

Once at the destination, your out-of-pocket expenses for business days are fully deductible. Examples of these expenses include lodging, meals (subject to the 50% disallowance rule), seminar and convention fees, and cab fare. Expenses for personal days aren’t deductible.

Keep in mind that only expenses for yourself are deductible. You can’t deduct expenses for family members traveling with you — unless they’re employees of your business and traveling for a bona fide business purpose.

Substantiation is critical
Be sure to accumulate proof of the business nature of your trip and keep it with your tax records. For example, if your trip is made to attend client meetings, log everything on your daily planner and copy the pages for your tax file. If you attend a convention or seminar, keep the program and take notes to show you attended the sessions. You also must properly substantiate all of the expenses you’re deducting.

Additional rules and limits apply to the travel expense deduction. Please contact us if you have questions.

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QTIP trusts

Provide for your spouse, then your kids, with a QTIP trust

QTIP Trust

If you want to preserve as much wealth as possible for your children, but you leave property to your spouse outright, there’s no guarantee your objective will be met. This may be a concern if your spouse has poor money management skills or if you two don’t see eye to eye on how assets should be distributed to your children. In both of these situations, a properly designed Qualified Terminable Interest Property (QTIP) trust may be the answer.

How does it work?
A QTIP trust provides your spouse with income for life while preserving the trust principal for your children. By appointing a qualified trustee, you can have greater confidence that the assets will be invested and managed wisely. And the trust documents will ensure that, upon your spouse’s death, the trust assets will be distributed to your children according to your wishes. Read More >

fraudulent email in business

Are Spammers Forging Email From Your Company?

Fraudulent Email in Business

Have you ever been contacted by a customer, vendor or other business associate asking the question “Did you send me this email?”  As a cybersecurity professional, I applaud people who take this step to verify fraudulent emails before acting on them.

Do not be alarmed, upset, or embarrassed if you receive such a question.  Email is inherently forgeable.  Anyone can register an email address and fake the sender’s name.  For example, anyone can set up an email address “joker123@gmail.com” or something similar, and fill out the new user form stating their name is “Bill Gates”, even when it is not their name.

Once a forged email address is set up, one simply has to craft an email that tricks the recipient into disclosing information or clicking on a malicious web site link.  If the fraudster has even one copy of a legitimate email from Bill Gates, in this example, the faked email can be made all the more convincing, complete with email signature and fonts that match legitimate email. Read More >

empower managers

3 ways to supercharge your supervisors

Empower Managers.

The attitudes and behaviors of your people managers play a critical role in your company’s success. When your managers are putting forth their best effort, the more likely it is that you’ll, in turn, get the best performances out of the rest of your employees. Here are three ways to empower managers – supercharge your supervisors: Read More >

Father and daughter reading from a laptop

Can you claim your elderly parent as a dependent on your tax return?

Tax Dependents.

Perhaps. The ability to claim your elderly parents as tax dependents depends on several factors, such as your parent’s income and how much financial support you provided. If you qualify for the adult-dependent exemption on your 2017 income tax return, you can deduct up to $4,050 per qualifying adult dependent. However, for 2018, under the Tax Cuts and Jobs Act, the dependency exemption is eliminated. Read More >

business advisors waukesha

Corporate culture: Rotten apples could spoil your financials

AUDIT SERVICES

Auditors often say that the tone at the top of an organization trickles down to every level of the business. Is your company’s work environment ethical and open? If not, corporate culture assessments can help prevent and detect unethical and criminal behaviors. But, to cover all the bases, your external auditors generally must work closely with people inside your organization. Here’s how you can facilitate this critical part of the audit process. Read More >

Inventory Managment

Can your inventory management policy be transformed?

What if your inventory management policy could be transformed by a simple change? It’s no secret that companies that own inventory struggle to balance competing interests. On the one hand, the finance folks want to minimize the cash tied up in inventory, while the sales team never wants to run out, which can delay or lose a sale! In fact, recent studies have indicated that 42% of inventory-based firms consider excess inventory to be their biggest concern, while 37% list stock-outs as the biggest problem. And a third concern is the amount of time it takes for inventory planners to manage these issues. Read More >

tax credits, charitable deductions

Size of charitable deductions depends on many factors

Charitable Deductions

Whether you’re claiming charitable deductions on your 2017 return or planning your donations for 2018, be sure you know how much you’re allowed to deduct. Your deduction depends on more than just the actual amount you donate.

Type of gift

One of the biggest factors affecting your deduction is what you give: Read More >

Faces of 3 generations

5 estate planning tips for the sandwich generation

ESTATE PLANNING TIPS

The “sandwich generation” accounts for a large segment of the population. These are people who find themselves caring for both their children and their parents at the same time. In some cases, this includes providing parents with financial support. As a result, estate planning — which traditionally focuses on providing for one’s children — has expanded in many cases to include aging parents as well.

Including your parents as beneficiaries of your estate plan raises a number of complex issues. Here are five tips to consider: Read More >

Profit Dial from Min to Max

What is job cost reporting?

Job Cost Reporting

Custom jobs require ongoing supervision to achieve the best financial results. Whether you’re a general contractor constructing a strip mall, a manufacturer building made-to-order parts or an architect drawing up blueprints, once a project is underway it’s easy to focus on getting the job done, rather than on the resources that are being consumed.

That’s why job cost reporting — the process of coding and allocating project expenses to track financial efficiency and profitability — is a mission-critical activity. Here are a few best practices to keep in mind. Read More >