Make Money On Vacation
How to turn your fun trips i'); document.write('nto tax cuts
How would you like to deduct every dime you spend on vacation this year? Tim did. Legally. Want'); document.write(' to know how?
Tim wanted to take a two-week trip around the US. He learned that every thing is much cheaper when'); document.write(' you can legitimately deduct it.
1. Make all your business appointments before you leave for your t');
document.write('rip.
Most people believe that they can go on vacation and simply hand out their business cards in order to make t');
document.write('he trip deductible. Wrong.
You must have at least one business appointment before you leave in order to establis'); document.write('h the "prior set business purpose" required by the IRS.
The first thing that Tim needs to do is set up'); document.write(' appointments in various cities such as Chicago, Sacramento, and Phoenix before he leaves. The best way to establish thi'); document.write('s is to put advertisements in the newspaper, looking for distributors. He could then interview those who respond when he'); document.write(' gets to the business destination.
Example:
Tim wants to vacation in Hawaii. If he places some adverti');
document.write('sements for distributors, or contacts some of his downline to perform a presentation, the IRS would accept his trip for ');
document.write('business.
Tip:
It would be vital for Tim to document this business purpose by keeping a copy of the ad');
document.write('vertisement and all correspondence along with noting what appointments he will have in his diary.
2');
document.write('. Make It All "Business Travel."
In order to deduct all on-the-road business expenses, you must be trav');
document.write('eling on business. By definition, you are on business travel whenever you are sleeping overnight in a strange bed - cond');
document.write('ucting business, that is!
Example:
Tim wanted to go to a regional meeting in Boston, which is only a o');
document.write('ne-hour drive from his home. If he were to sleep in the hotel where the meeting will be held (in order to avoid possible');
document.write(' automobile and traffic problems), he will be deemed to be on business travel.
Tip:
Remember: You don\'');
document.write('t need to live far away to be on business travel. If you have a good reason for sleeping at your destination, you could ');
document.write('live a couple of miles away and still be on travel status.
3. Make sure that you deduct all of your');
document.write(' on-the-road -expenses for each day you\'re away.
For every day you are on business travel, you can deduct 100% of');
document.write(' lodging, tips, shoe-shines, laundry and dry cleaning, car rentals, and 50% of your food. Tim spends three days meeting ');
document.write('with potential distributors. If he spends $50 a day for food, he can deduct 50% of this amount, or $25.
Accordin'); document.write('g to the IRS, no receipts are required for any travel expense under $75 per expense. The only exception would be for lod'); document.write('ging.
Example:
If Tim pays $6 for drinks an the plane, $6.95 for breakfast, $12.00 for lunch, $50 for ');
document.write('dinner, he does not need receipts for anything since each item was under $75.
Tip:
You would, however,');
document.write(' need to document these items in you diary. A good tax diary is essential in order to audit-proof your records.
');
document.write('Example:
If, however, Tim stays in the Bate Motel and spends $22 on lodging, will he need a receipt? The answe');
document.write('r is yes. You need receipts for all paid lodging.
Tip:
Not only are your on-the-road expenses deductib');
document.write('le from your trip, but also all laundry and dry-cleaning costs for clothes worn on the trip. Thus, your first dry cleani');
document.write('ng bill that you incur when you get home will be fully deductible. Make sure that you keep the dry cleaning receipt and ');
document.write('have your clothing dry cleaned within a day or two of getting home.
4. Sandwich weekends between bu');
document.write('siness days.
Interestingly, the IRS notes that if you have a business day on Friday and another one on Monday, yo');
document.write('u can deduct all on-the-road expenses during the weekend.
Example:
Tim makes business appointments in ');
document.write('Florida on Friday and one on the following Monday. Even though he as no business on Saturday and Sunday (other than monk');
document.write('ey business), he may deduct on-the-road business expenses incurred during the weekend.
5.Make the m');
document.write('ajority of your trip days business days.
The IRS says that you can deduct transportation expenses if business was');
document.write(' the primary purpose of the trip. The majority of the days in the trip must be for business activities. Otherwise, you c');
document.write('annot make any transportation deductions. This is an all-or-nothing proposition.
Example:
Tim spends s');
document.write('ix days in San Diego. He leaves early on Thursday morning. He had a seminar on Friday and meets with distributors on Mon');
document.write('day and flies home on Tuesday, taking the last flight of the day home after playing a complete round of golf. How many d');
document.write('ays are considered business days?
All of them. (Nice work, Timmy!) Thursday is a business day, since it includes'); document.write(' traveling - even if the rest of the day is spent at the beach. Friday is a business day because he had a seminar. Monda'); document.write('y is a business day because he met with prospects and distributors in pre-arranged appointments. Saturday and Sunday are'); document.write(' sandwiched between business days, so they count. Tuesday is a travel day. So every day was deductible.
Since Ti'); document.write('m accrued six business days, he could spend another five days having fun and still deduct all his transportation to San '); document.write('Diego. The reason is that the majority of the days were business days (six out of eleven). However, he can only deduct s'); document.write('ix days worth of lodging, dry cleaning, shoe shines, and tips. The important point is that Tim would be spending money o'); document.write('n lodging, airfare, and food, but now most of his expenses will become deductible.
With proper planning, you can'); document.write(' deduct most of your vacations if you combine them with business. That can make your life a lot less taxing!
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