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Make Your Trip Partially Deductible

Author: Brad Howland
First Posted: December, 2002

Introduce a business component into your trip and deduct a portion of the travel expenses from your income at tax time!

Even if you travel mostly for personal reasons, you should try to do something musical while you are there. Here are some real life examples:

These people all found a creative way to inject a business component into their personal travel, and by doing this they found an entirely legitimate way to make part of the trip deductible from their income tax!

How Much is Deductible?

The trick is to figure out some way to divide up the travel costs into personal and business expenses. There are no hard and fast rules telling you how to do this, but the method you use must be reasonable given the circumstances. If the trip was primarily for business purposes with a little personal excursion on the side, you should be able to deduct round-trip travel costs such as airfare, after subtracting a suitable personal portion. If the trip was primarily for personal reasons with a gig thrown in, you can't deduct round-trip costs, but you can deduct whatever expenses are directly related to the business portion. For example, if you traveled a total of seven days and one of those days was occupied with music, then you can deduct 50% of any meal expenses and 100% of any travel and accommodation expenses pertaining to your musical endeavors on that particular day.

If you are driving, make sure to keep a record of the kilometers driven for the business engagement. At tax time, you use your record of business/personal kilometers to deduct a percentage of the total car expenses for the year. The U.S. also allows you to use a standard mileage rate to determine eligible motor vehicle expenses. Canadians don't have this option: a standard mileage rate is available for calculating northern residents deductions, medical and moving expenses, but self-employed individuals in Canada should use a percentage calculation.

As always, the help of an experienced tax professional is essential for figuring out what is an allowable deduction and what isn't.

Related Web Sites

Canada Customs and Revenue Agency
Business and Professional Income 2001

Canada Customs and Revenue Agency
Motor Vehicle Expenses Claimed by Self-Employed Individuals

Internal Revenue Service
Business Travel Expenses

Internal Revenue Service
What Travel Expenses Are Deductible?

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