Can your vacation be tax-deductible? It depends. I know, it seems like a trick question or a scammy Tik Tok opening, but if you have a trip that has both business and personal purposes you might be wondering what part of it is tax-deductible, if any at all. The IRS has plenty of rules around what counts as a business expense while traveling and what doesn’t. Let’s take a look.

The biggest cost associated with traveling is typically airfare so let’s start there. With time away that’s mixed between business and personal, the IRS is concerned with what the primary purpose was. This is decided by how many days were allotted to each function. If your trip was primarily business-focused with a few personal days, you can deduct your airfare. If it was overwhelmingly personal with just one or two meetings peppered in, it’s considered a personal vacation in the eyes of the IRS and thus no deduction. Here are some good tips to know: travel days count as business days (all of them) and weekends/holidays count when they are sandwiched between two business days. Any day that you conducted business on, even if it was for a meeting and then the rest of the day was your own free time, counts as a business day. To recap: if there are more business days than personal, your airfare can be completely deductible. If it’s flipped, you get no deduction on the airfare – not even a partial credit or pro-rate.

When you start traveling internationally, the rules change. If you are outside of the country for a week or less, your entire trip is counted as a business trip, even if you had personal time included. The definition of one week in this case is seven consecutive days. It doesn’t include the day you leave but does include the day you return. If you are traveling internationally for over a week, you would need to spend less than 25% of your time on personal, or nonbusiness, activity for your trip to still be allocated as a business trip and the airfare to be deductible.

While airfare can be all-or-nothing, everything else looks a little different. Other travel expenses like lodging and car rentals will be determined by allocation. For example, if you went on a trip with three business days and two personal days, that would mean that 60% of your lodging and rental car costs would be deductible. Whether your meals are deductible is based on which day you had them on. If you had a meal on a business day, it’s deductible. If it was on one of your personal days, none of the meals are deductible.

What about bringing your family? The IRS makes it clear that the expenses of bringing your spouse or children with you are not tax deductible. An exception would be if your spouse or child was a legitimate employee with an actual business purpose for being on the trip, and then their costs would be deductible on their own. The good news is that your costs can still be deductible as a single rate. For example, if you were staying in a hotel that costs $250 as a double and $200 as a single, you might be able to deduct $200. This same logic applies to other travel activities like renting a car. It’s important to note that estimating is not allowed when deducting travel expenses. You’ll need exact records of the time, place, business purpose and cost logged the same week you incur the expense or else the deduction is invalid.

Traveling for business can be a chore and a lot of people like to mix it up with fun vacation activities. Just make sure you are aware of the limitations of what you can deduct as a business expense for mixed business and personal trips. The IRS rules around travel can be confusing at first glance but are relatively straightforward about how to classify each scenario. If you have any questions on making sure your business expenses for travel are deductible, feel free to reach out to a team member today!