Combining business, pleasure offers handy tax advantages

It’s no coincidence that business conventions are often held in places that are sunny, attractive, intriguing or historic and on their own are a draw beyond the exhibitor booths.

If you have the chance to combine time off with a business trip and take advantage of the attendant tax benefits, go for it. With school out and parents still working, taking a business/pleasure trip can give you a respite from the job and summer camp or baby-sitting fees as well.

Professional meetings in places where animated characters stroll about or sandy beaches beckon are optimal for families.

This isn’t some tax scam – as long as the trip and expenses are documented properly, it is allowable. The Internal Revenue Service Web site www.irs.gov and Publication 463 Travel, Entertainment, Gift and Car Expenses outline how to handle these trips.

Travel expenses related to a convention are deductible if the gathering serves a business purpose, according to the accounting firm Bourgeois Bennett in Metairie, La. If you go farther than North America, you’ll have to meet a stricter requirement. But for those content with seeing a favorite U.S. city, that’s not a worry.

The cost of traveling to and from the destination is deductible if your primary purpose is related to your business or trade. So how much time you spend concentrating on business and how much you spend napping and sightseeing is important.

Keep the receipts and relevant documentation to prove where you went, why, how long you were there and how much you spent. The hotel bill printed out at the end of a hotel stay along with your personal calendar are among the items that can substantiate your expenditures.

If the hotel rate is the same whether one person (the business traveler) or a group (the entire family) stays, the entire cost is deductible. If the hotel charges an additional fee for having children in the room, you can’t include the extra as a business expense. Also, if you add a day to your itinerary, those additional costs aren’t deductible.

Here’s an example from the IRS: You work in Atlanta and take a business trip to New Orleans. On your way home, you stop in Mobile, Ala., to visit your parents. You spend $1,070 for the nine days you are away from home for travel, meals, lodging and other travel expenses. If you hadn’t stopped in Mobile, you would have been gone only six 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.

Meals are deductible at 50 percent. So if you spent $50 taking a client to lunch, only $25 of that is deductible, per IRS rules. Keep the receipts. Also, note that the IRS specifically doesn’t care for “lavish or extravagant” meals. The IRS says expenses won’t be disallowed just because they cost more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs or resorts. If in doubt, use common sense or ask your accountant for advice.

Other deductible travel expenses can include laundry costs, taxi fares from the airport to the hotel and computer connection fees if the use is business-related.

If your employer reimburses you for any of these expenses, that amount must be subtracted from your expense for tax deduction purposes. But if you are the business owner, those business-related travel expenses are something for your income tax return.