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With the cost of travel increasing, you may be considering doing a little business while on vacation, or doing a little vacationing while on business. Is there a difference? The IRS says yes.


There are separate rules for travel in the US and travel outside the US. Our discussion will apply to travel in the US (the 50 states and D.C.).


The deductibility of your travel expenses depends on whether your trip was primarily for business or personal purposes, and how much of your trip was business-related.


You can deduct all of your travel expenses if your trip was entirely business related. If your trip was primarily for business and, while at your business destination, you extended your stay for a vacation, made a personal side trip or enjoyed other personal activities, you can deduct only your business-related travel expenses. These expenses include the travel costs of getting to and from your business destination and any business-related expenses at your business destination.


Example: You work in Atlanta and take a business trip to New Orleans. On your way home, you stop in Mobile to visit your parents. You spend $1,070 for the 9 days you are away from home for travel, meals, lodging and other travel expenses. If you had not stopped in Mobile, you would have been gone only 6 days, and your total cost would have been $920. You can deduct $920 for your trip, including the cost of round-trip transportation to and from New Orleans. The deduction for your meals is subject to the 50 percent limit on meals.


If your trip was primarily for personal reasons, such as a vacation, the entire cost of the trip is a nondeductible personal expense. However, you can deduct any expenses you have while at your destination that are directly related to your business.


Caution: A trip to a resort or on a cruise ship may be a vacation even if the promoter advertises that it is primarily for business. The scheduling of incidental business activities during a trip, such as viewing videotapes or attending lectures dealing with general subjects, will not change what is really a vacation into a business trip.


As you make your travel plans, your Rea & Associates representative can help you map out the tax laws and maximize the deductibility of your travel expenses.


-By Mary Williams (Wooster office)


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