Another Strategy To Make Your Travel Tax-Deductible
June 2023 ISSUE June 1, 2023Tax Individual
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As you finalize your summer travel plans, make sure they’re as cost-effective as possible. In the past, we’ve recommended three strategies to ensure that all travel is practice related (tax-deductible) to improve your profitability and eliminate nondeductible personal travel costs. Here’s a fourth.
The first strategy is to coordinate your family vacations around in-person continuing education (CE) meetings. If you can’t locate an in-person CE event where you’re traveling, here’s a second strategy that can work. Attend a live, online CE event while on your trip. However, you must spend at least four hours a day in live (not taped) online classes that maintain or improve your job skills and qualify for CE credits. This will make the cost of the CE tuition, travel, hotel, and meals all tax-deductible business expenses under Section 162. But beware—the IRS maintains that merely reviewing recorded CE videos online, available to be viewed at your convenience, will not qualify.
A third option—contact a dental colleague practicing in your desired location to arrange an office visit. From a non-tax standpoint, some of the very best ideas for improving practice productivity and profitability have come from visiting dentists in non-competing areas. To properly document this, send a letter confirming your appointment, spend at least four hours on a particular day observing and note-taking, and follow up with a thank you letter/email outlining what you learned from the experience and inviting your colleague to visit your practice as well.
A fourth strategy is to conduct a Board of Directors meeting at your desired location. To document this, have a written agenda of corporate business items to be discussed, spend at least four hours on that day in business discussions among the directors, and thereafter document the meeting with appropriate corporate minutes reflecting the items discussed and actions taken or planned.
We review our Tax and Business Planning clients’ personal spending by category, and compare it to the cumulative average for all dentists and specialists that we’ve worked with. Our results reveal that the average doctor is spending almost $1,000 a month ($886) on personal travel/vacation. If these expenses could be converted to tax-deductible travel as discussed above, the average doctor could save over $4,000 in federal and state income taxes annually.
The McGill Advisory content Is provided For informational purposes only And does Not constitute legal, accounting, Or other professional advice.
Copyright © 2023 John K. McGill & Company, Inc.