‘Bleisure’ travel can unpack tax breaks
The idea of taking a business trip to or near one of the top travel destinations can make the trip more appealing – especially if the trip won’t be all work/no play. Business trips with a few days added for a personal holiday result in bleisure (business + leisure) trips, which allow people to save money on personal travel costs. When small business owners go on bleisure trips, they also might benefit from tax savings, as could employees who pay for their own travel and aren’t reimbursed by their employer.
“But, deciding to check your e-mail while on a vacation isn’t going to reach the eligibility requirements for taxpayers to reap tax benefits associated with an actual business trip that includes some extra personal time for fun,” said Jackie Perlman, principal tax research analyst at The Tax Institute at H&R Block. “The primary reason for taking the trip is a key factor in determining which travel expenses are eligible business-related tax deductions.”
For tax purposes, potentially eligible business travel expenses are defined as ordinary and necessary costs of traveling away from the taxpayer’s tax home for a business, profession or job. If not reimbursable by the employer, these expenses can be claimed by employees as miscellaneous itemized deductions, which are deductible to the extent they exceed 2 percent of adjusted gross income. But, business owners are not limited on how much of these eligible expenses they can deduct.
If the primary purpose of the trip is for business purposes, the following expenses generally can be deducted as business travel expenses for the person working on the trip – not everyone who tags along just for the fun:
- Transportation expenses to and from the travel destination and worksite – airplane, train, bus, car, taxi, limousine, etc.
- Shipping costs – sending baggage, supplies and display materials
- Lodging – only for the nights needed for business purposes
- Meal expenses – generally 50 percent deductible
- Entertainment – 50 percent of expenses to entertain a client, customer or employee is deductible if the expenses are directly related or associated with a clear business purpose
- Other expenses – related tips, laundry, telephone and fax services.
“The only expenses deductible from a business trip are expenses the person working would have had to pay if they traveled alone and didn’t extend the trip beyond what was needed to conduct business,” Perlman said. “Also, when claiming these business-related expenses and any other expenses as tax deductions, taxpayers should be sure to have the paperwork and receipts that support them.”
Business-related expenses may be deductible even if the primary purpose of a trip is a vacation. For instance, a taxpayer who attends a business meeting during a family vacation could deduct the cost of the taxi to and from the meeting site and possibly one day’s worth of lodging expenses.
So before packing those bags for the next bleisure trip, understand how the rules about deducting business travel expenses apply to the specifics of the trip.
By Teresa L. Clark
Teresa L. Clark came to H&R Block in January 2010 after working as a civil servant for more than 13 years. Since that first tax season she has written blog posts and talking points, edited content of all shapes and sizes, facilitated media interviews for the experts in The Tax Institute at H&R Block and supported the DIY team. Clark has a master's degree in integrated marketing communications from the University of Kansas and is a member of the Honor Society of Phi Kappa Phi.