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Deductions for Business Travel with Your Spouse

Mar 7th 2016
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Some kinds of deductions always trouble the tax-takers. For instance, baleful bureaucrats become suspicious and demand a detailed accounting when business travelers journey to meetings or conventions at plush resorts or exotic locales and (gasp!) decide to combine work with play and take their spouses along.

Consequently, IRS regulations and rulings set stringent guidelines for deductions of a spouse’s travel expen­ses. To be sure, the IRS grinches have to allow you to deduct part of the tab for the cost of tending to business chores. All is not forfeited just because your mate tags along for no reason other than to see the sights, although in that event, strict limits are placed on what and how much qualifies as business-travel deductions.

The key requirement is to show that your attend­ance at, say, a convention is primarily for business. Then, there should be no problem about a write-off for what you spend to get to and from the convention, as well as outlays for hotels and meals during the meeting. Travel and hotel expenditures are 100 percent deductible, but meals are only 50 percent deductible.

Previously, the IRS balked at any deduction for the portion of the outlays attributable to your spouse’s travel, meals, and lodging unless you could show a genuine business reason for his or her presence at the convention.

Those expenses didn’t become deductible merely because your spouse performed some incidental services – for instance, typing notes or accomp­any­ing you to and remaining awake through­out convention gatherings. According to IRS regula­tions, what counted was whether your spouse’s presence was “necessary,” as opposed to “helpful,” to the conduct of your business, though in a number of cases, the courts ruled against the agency.

In 1993, Congress enacted Code Section 274(m) (3). It prohibits any deduction for travel expenses of your spouse even when he or she goes along for business reasons.

This blanket prohibition is subject to a limited exception, one that will allow relatively few travelers to salvage write-offs for a mate’s travel expenditures. Code Section 274(m) (3) allows a deduction only if you satisfy three requirements:

  • The spouse (or dependent, or any other individual) accompanying you on business travel must be a bona-fide employee of the outfit that pays for the trip.
  • The spouse must undertake the travel for a bona-fide business reason.
  • The spouse must be otherwise entitled to deduct the expenses.

Some frequently-missed tax relief remains available for lodging costs, even when your spouse, significant squeeze, or some other person tags along just for fun. Take a deduction for lodging that reflects the single-rate cost of similar accommodations for you, not half the double rate you actually paid for the two of you.

An example: You and your spouse journey by car to a business convention in Orlando, Florida, where the two of you stay at a hotel that charges $250 for a double and $220 for a single room. In addition to a deduction for the entire round-trip drive (the driving costs the same whether you are accompanied by your spouse or not), claim a per-day deduction of $220 for the room, rather than just $125, half of $250. To make it easier to preserve the deduction in the event of an IRS challenge, remember to have the hotel bill specify the single rate, or get a rate sheet.

Even better, some of your spouse’s meals might pass muster as deductible dining. Suppose your convention schmoozing includes dining with a business associate and the associate’s spouse. Because of the presence of the associate’s spouse, your spouse attends on a business basis.

Related article:

Tax Season Reminders on Deductions for Travel