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Introduction
Many businessmen are there who go on a business trip. But at the same time, it is important to draw a line between business trip and a vacation. You cannot go on both and then, claim expenses for your business trip as per the IRS. As per the strict rules of IRS, there are certain guidelines which you have to follow, which will define your trip as a business trip. Also, you can learn here more on, how to write off a family vacation & broaden your horizons on the same. The first and the foremost rule that the IRS has is that your business strip should not consist of a trip within the state in which you are or a tax state.
‘Mostly Business’ Trip
Next, the IRS has also defined that your trip should consists mostly of business. The word, ‘mostly business’ has been quoted by the IRS. Some of the common examples of mostly business are as follows. Suppose you go on a business trip to Minnesota and spend 5 days in business meetings and the rest of the days you go out to see the city, then this trip to Minesota can be qualified as a business trip. On the other hand, if you go to Florida and enjoy there with friends and family for 5 days and the remaining 2 days you go for business meeting, then such cannot be qualified as a business trip, it is a vacation, because most of your days you have spent with family and friends enjoying. Moreover, the IRS calculates the days that you have spent on business.
Other Terms Defined by IRS that Constitutes Business Trip
Besides all of that, there are some other terms which the IRS has quoted for a trip or travel to qualify as a business trip and travel. Those words are, ‘ordinary’ & ‘necessary’. The business trip and expenses spent should be ordinary and necessary in nature. Necessary in the sense that it should be necessary in business meeting/convention/seminar/research to spend that amount i.e. ‘ordinary and necessary’. Now, for example while writing-off a vacation or trip, you cannot ask the IRS for deductions of expenses that are unnecessary, like if you need to reach a location and you rent a car, if you rent a Range Rover for travelling, which is costly and you don’t rent a Camry, which also could have dropped you till your destination, then in such a scenario renting a Range Rover was unnecessary, then such expenses cannot be claimed by the IRS. The IRS does a thorough scrutiny of all your details of the business trip & expenses claimed during the IRS audit. And, lastly the IRS also sees whether your trip was planned and documented in advance. So, always plan a business trip in advance with paperwork as a proof.
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