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Tax
Tidbit #5
How to Deduct
Your Next Vacation
by
Wayne Davies, EA
It is
perfectly legal to deduct your next vacation. Here's how to do it.
To qualify
for this deduction, you must meet the following two criteria:
1. You are
self-employed or own a small business
2. On your
next trip, you combine business with pleasure.
The first
requirement is pretty cut and dried.
The second
requirement is somewhat trickier and will be the focus of this
article.
To deduct any
U.S. trip, you can combine business and pleasure, but the primary
purpose of the trip must be business.
And here's
how the IRS defines a trip taken primarily for business purposes:
the number of "business days" must be greater than the
number of "personal days". To complete the definition,
travel days are considered "business days".
Here's an
example to clarify the rules:
You take a
10-day "vacation" to Orlando. You spend one day getting
there and one day getting back. You spend 4 days attending a
seminar. The other 4 days are spent with Mickey Mouse &
Company.
Let's tally
up the days:
Business Days
= 6 (2 travel days + 4 seminar days)
Personal Days
= 4 (doing theme parks)
So, are the
number of business days greater than 50% of the total days? Yes.
So here's what you get to deduct:
-- 100% of
your transportation expenses (even though 40% of your days were
personal days)
-- 100% of
your "on-the-road" expenses for the 6 business days,
including hotel bills, cab fares, rental car, seminar fees, dry
cleaning, laundry and meals. (Although the meal expenses are still
subject to the 50% rule.)
The
on-the-road expenses for the 4 personal days are not deductible.
But you're still getting a great tax break here.
Assuming you
spend $1,000 for transportation and the 6 business day expenses, a
sole proprietor in the 35% tax bracket (15% federal tax + 15%
self-employment tax + 5% state tax) saves $350.
Three hundred
and fifty bucks!
Hmmmm . . .
now that's a tasty little morsel!
Hungry for
another Tax Tidbit? This article is part of a 5-article
series:
Tax
Tidbit #1: http://www.YouSaveOnTaxes.com/tax-tidbit-1.html
Tax
Tidbit #2: http://www.YouSaveOnTaxes.com/tax-tidbit-2.html
Tax
Tidbit #3: http://www.YouSaveOnTaxes.com/tax-tidbit-3.html
Tax
Tidbit #4: http://www.YouSaveOnTaxes.com/tax-tidbit-4.html
Tax
Tidbit #5: http://www.YouSaveOnTaxes.com/tax-tidbit-5.html
Have
you heard about the recent tax law change that turned a small
business loophole into a crater?
http://www.YouSaveOnTaxes.com/tax-crater.html
Want
to know the biggest tax mistake you can ever make? (And how
to avoid it?)
http://www.YouSaveOnTaxes.com/tax-mistake.html
Do
you know why the most important business decision you
probably never made is the key to paying thousands less in taxes?
http://www.YouSaveOnTaxes.com/tax-decision.html
About The
Author:
Wayne
M. Davies is author of three tax-slashing eBooks for small
business owners and the
self-employed:
** The Tax Reduction Toolkit **
29
little-known but perfectly legal strategies to reduce your taxes,
postpone your taxes, and even avoid taxes altogether -- for small
biz owners & self-employed people only!
http://www.TaxReductionToolkit.com
**
Incorporation Tax Secrets Revealed **
How to save thousands in taxes by
forming a corporation or LLC for your small business or
self-employment activity. Discover the #1 Tax Secret of the Rich!
http://www.IncorporationTaxSecrets.com
**
How To Incorporate Yourself For Free **
How to
avoid paying $500, $1000, $1500 or more in lawyer fees by
incorporating your small business all by yourself...for FREE!
http://www.HowToIncorporateForFree.com
Wayne's eBooks are available separately, or
at a discount as a 3-volume set:
**
The Ultimate Small Business Tax Reduction Guide **
Find out just how easy (and legal) it is to reduce your
taxes by $2,000...$3,000...$4,000 or more!
http://www.SmallBusinessTaxReductionGuide.com
To
receive a free copy of Wayne's 25-page Special Report,
"How
To Instantly Double Your Deductions"
click
here:
http://www.YouSaveOnTaxes.com
www.YouSaveOnTaxes.com
A
Division of Wayne M. Davies Inc.
4660
W. Jefferson Blvd., Suite 220
Fort
Wayne, IN 46804
(260) 459-3858
Wayne@YouSaveOnTaxes.com
http://www.YouSaveOnTaxes.com
http://www.MagneticMarketing.biz
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