Suppose you're planning to take a business trip across the country. Are you eligible for tax benefits if you invite your spouse to accompany you? It depends on your circumstances. Specifically, the tax rules differ if your spouse is an employee of your company or is just going along for the ride.
If your spouse is an employee
Generally, if you're traveling primarily for business reasons, you can deduct the costs of your business travel, including airfare, lodging and meals, qualified entertainment, and local transportation costs. Meals and entertainment are subject to a 50% limit. Therefore, if your spouse works for your company and legitimately performs business services on the trip, you can deduct the expenses both of you incur. Be aware, however, the expenses attributable to personal recreational activities are completely nondeductible.
If your spouse is not an employee
This is a different story. Although you can continue to write off the full amount of the expenses for your travel for business purposes, the portion of the cost allocated to your spouse can't be deducted. It's purely a personal expense.
However, you may be in line for a tax break. If your cost is reduced because your spouse is traveling with you, you can deduct what it would have cost to go alone. For example, if you pay for a double room at the hotel, you're allowed to deduct the cost of a single room, even if that's more than half the cost of a double.
Usually, business travel expenses are paid by the company via an accountable plan, with any reimbursements tax-free to employees. Give us a call if you need help. We can help with the tax logistics of your business travel.
