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Tax Carnival and travel tax breaks

I finally made it home last night, much later than I have planned. But at least I got home, in one piece and, once I finally walked through my front door, in much better spirits.

As you might recall, I popped up to Oklahoma City for a Taxpayer Advocacy Panel Town Hall meeting on Thursday. The meeting went well. We had a decent crowd, especially considering that most Sooner State residents were a bit preoccupied with the impending blizzard.

Ah, yes. The Oklahoma blizzard of March '09. I can say I was there. Actually, the OKC area didn't get hit with much snow, but driving thunderstorms soaked the metro area and the winds were brutal. Add temperatures hovering around freezing, and travel of all types was a pain.

So as much as I enjoyed the TAP meeting and spending some time with my panel colleagues, National Taxpayer Advocate Nina Olson and her staff, and my mother, I was plenty ready to get home on Saturday.

Unfortunately, the travel gods decided to may my return a tad more tedious than I wanted.

OKC flight cancellations 032809 See that snapshot there to the left? Yes, it's blurry; I took it with my cell phone camera and obviously didn't hold the thing steady. But the colors are the key.

All those red blocks indicated flights canceled Saturday morning at Will Rogers airport.

Lucky for me, my flight was a bit later in the day. But the tail end of the front that brought inclement weather to Oklahoma also produced high winds in the Dallas area. And yes, I had to short hop from OKC to Dallas to connect to my Austin flight.

There's a saying here in Texas that when you die and go to heaven (or the other direction ...), you'll have a layover in Dallas. But I digress.

So we were held at Will Rogers to accommodate landing issues at DFW. Because of that, I expected to miss my connection, but it also was delayed so I got on the plane. Then that flight proceeded to sit at the gate for almost another hour before we took off.

The point of my rambling, aside from still venting a day later, is to say I am tired. I finally got a decent night's sleep in my own bed, but am still a bit out of synch.

That's not a good way to feel right now, as I have a lot of stuff left to do before tomorrow, including write a story and finalize a presentation I'm slated to give to a local small business group tomorrow night.

In light of that, Tax Carnival #51 is going to have to take a cue from flight controllers and be delayed. It's supposed to go up tomorrow, but instead, I'm slotting it for a Tuesday take off.

In keeping with the aeronautic theme, I'll paraphrase the flight attendants' usual spiel: I realize you have a choice of blogs to read, so I do sincerely appreciate your choosing Don't Mess With Taxes. And I especially appreciate your understanding and patience for this brief Tax Carnival postponement.

Deducting travel expenses: My trip to OKC for TAP wasn't technically business travel. And the panel picked up my expenses.

Tax tip icon (3) But I've been thinking about business travel of late because, as I mentioned, I'm going to be speaking with small business folk tomorrow night about tax breaks they can utilize.

Business travel is a good one to claim. Any form of travel for business that is indeed for a legitimate business purpose -- the IRS phrase is "ordinary and necessary" -- counts. Just be sure to carefully document, document, document.

If you drive for business, keep a notebook in your vehicle to record the date, mileage, tolls, parking costs and the purpose of your trip, including with whom you met.

When deducting vehicular business travel, you have two options. You can keep track of actual auto expenses, such as fuel, depreciation, garage rent, lease payments, registration fees and repairs.

Or you can record your mileage and then use IRS per-mile amounts, known as the standard mileage rate, to figure your business travel deductions. In this case, you would keep track of all your business miles and then multiply them by the standard rate, which the IRS establishes at least annually.

For 2008 tax purposes, there were two business travel rates (thanks to a summer increase to reflect high gasoline prices):

  • 50.5 cents per mile for travel between Jan. 1, 2008, though June 30, 2008, and
  • 58.5 cents per mile for travel between July 1, 2008, through December 31, 2008.

For 2009, the business mileage rate is 55 cents per mile.

If you use the standard mileage rate for a year, you cannot deduct your actual car expenses for that year. But you still can add parking and toll costs to the standard amount.

If you're flying, you need your ticket receipt, of course, and then track the business purpose and people with whom you met.

The documentation can be a tax lifesaver. Say, for example, you fly out to meet a client but you arrive to find that he's had to reschedule until the next day. That extra night's stay and associated business costs are deductible.

Meeting over meals: You'll want to keep track of your meals, too. Any business related dining is also deductible, but only at a 50 percent rate. Again, make sure that you do indeed discuss work over the meal.

The travel doesn't even have to be yours to qualify. Flying a potential employee to see your company or a client to your offices is an example of a travel deduction. All expenses in relation to his visit are deductible. 

Mixing business and pleasure: But don't try to disguise personal travel as business. You can't head out to a golf resort for a week and simply schedule a few business-related meetings about the day's 18 holes. The IRS knows the difference between a vacation and business travel and its examiners are not afraid to call out such aggressive deduction tactics.

However, if you do tag some personal time onto a business trip, that won't invalidate you legitimate business deductions. In fact, your travel costs to and from the business meeting still count in full. You just have to pull personal costs out of your other business travel amounts.

Let's say, for example, I flew to OKC on Thursday to attend a business meeting. I met with the Taxes R Us Corp. on Thursday and Friday. Saturday I spent the day with my mother. Then I flew back home on Sunday.

My total round-trip airfare is deductible. So are my hotel costs Thursday and Friday night, as are half of the tabs for meals over which we discussed business projects.

My room Saturday night, however, is a personal expense. But that's a great deal, as that's the only non-work cost I incur. Mom took care of feeding me on Saturday and I made her happy by spending some time with her.

The same rule applies if you bring the spouse and kids along on your business trip and then get in a day at an amusement park. You'll have to pick up the family's extra personal expenses, but as long as you are truly doing business before or after the purely personal portion, some of your costs are still deductible.

You can read more about business travel breaks and requirements in IRS Publication 463, Travel, Entertainment, Gift, and Car Expenses.


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thanks for the tips!

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