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As our clients plan their summer vacations we get calls about the potential to “write off” some of the costs as a business expense.  Just last week I extended my trip.  When the tax conference I attended in Seattle ended Friday evening, I took advantage of being on the west coast and flew down to San Diego for a visit with my daughter and additional training.   Check out the tax tips below to see if you too can deduct part of your personal trip as a business expense and enjoy!

Years ago I paddled in Jamaica Bay and in the Atlantic Ocean off Rockaway Beach in a 6 man outrigger canoe and participated with our club team in races on the east coast.  It was a lot of fun, a great workout and we saw dolphins and cool water birds.  Last weekend the Oceanside Outrigger and Canoe Club members graciously welcomed me to join them for a 10 mile recreational paddle in the Pacific.   We started in the marina where the boats were stored and after I was considered to have proper form and be “water safe” (able to hop back in the boat if it flipped), paddled past a dock with approximately 10 pelicans  and “seal buoy” where several seals were hanging out.  It was a bit scary but a lot of fun and I was so glad I was able to join them.  My daughter Jessie took this shot of us returning – that’s me in seat 4 …

Jessie and I took a walk around the marina a caught these seals hanging out on a dock …

I stayed a Jessie’s apartment; her dog Sampson slept with me; I think he misses me, she sent this photo of him sleeping on the quilt I used when I visited…

Oceanside CA is a great town to walk around in, with some nice beaches and a 3/4 mile long peer …

As nice as it was out west, I still love my east coast morning walks on the beach at sunrise, even when it’s overcast like today…

It looks like we may have some rain this weekend, so our gardens will be happy and hopefully you have some great indoor plans.

WEEKLY TAKE AWAY

It had been twenty years since I last paddled in a 6-man outrigger canoe, and even though I have great memories the closest club is a 90-minute trip in traffic.  I was really looking forward to paddling last weekend, but a bit concerned about my fitness level.  In our office we use a 90-day action plan to meet goals so I set up a personal fitness plan (in my head, not on an xl). I committed to working out 5 days a week for an hour a day using a cross training approach via the Concept II erg, Nordic Track cross country skier, elliptical and Peloton.  I also added in some yoga stretches a few days a week.   The mix of cardiovascular exercises, strength training, and flexibility exercises really made a difference and I felt great during my “training” and during the paddle.  They even invited me back so I must have done well.  I am planning another tip to California in October, maybe not quite 90 days from now, but maybe I should start another almost 90 day action plan this weekend and set it up on an Excel spreadsheet.

TAX ISSUES/TAX PLANNING

A Portion of Your Personal Travel May Be Deductible

IRS Tax Topic #511 Business Travel Expenses encompasses IRS code sections 162(a)(2), 274(d), and others included in IRS Publication 535 :

It is critical to

• Distinguish between business and personal expenses and properly document them in order to accurately allocate between the two.  Carefully allocate your expenses between the business portion and the personal portion of the trip. The expenses directly related to your business activities, such as attending meetings, conducting research, or participating in conferences, would be considered business expenses and may be eligible for a business deduction.
• Understand that only ordinary and necessary business expenses are deductible; establish a clear business purpose for the trip and separate personal and business expenses.
• Travel expenses include: airfare, train tickets, or car rentals, lodging can be deductible if the primary purpose of the travel is for business. If the trip involves both business and personal activities, only the business portion of the trip expenses are deductible.
• Travel meals are subject to the meals deduction, however the IRS provides a standard per diem rate for meals and incidental expenses incurred during domestic travel. Taxpayers have the option to use the per diem rate instead of keeping detailed records of actual expenses. The per diem rate varies based on the location of travel.
• Document, Document, Document.  It is crucial to keep detailed records of your itinerary, receipts, and any other documentation that supports the business purpose of the trip and the amount of each expense. This will help you during your tax filing and in case of an audit.

Remember that personal expenses incurred during your personal time, such as sightseeing, entertainment, or personal meals are not deductible.  As with any tax-related matters, we always recommend that you consult with a qualified tax professional to ensure that you structure your travel and allocate expenses correctly in accordance with the latest IRS guidelines and tax regulations.

IRS Ends Unannounced Visits to Protect Agents

In IR-2023-133 dated July 24, 2023 the Internal Revenue Service announced it is stopping most unannounced visits to taxpayers’ residences and businesses by its revenue officers.  This decision was made due to the rising number of threats putting IRS employees’ safety at risk.  The IRS “will send an appointment letter, formally known as a 725-B, to taxpayers and schedule a follow-up meeting when a matter needs to be discussed. In some limited cases, however, revenue officers will still need to make unannounced visits, such as when the agency needs to serve a summons or subpoena, or when there’s an enforcement action like the seizure of assets at risk of being removed from the U.S. But those instances typically only occur a few hundred times a year, as opposed to the tens of thousands of unannounced visits that IRS revenue officers have generally needed to make every year. It won’t affect IRS Criminal Investigation employees, who can still make unannounced visits.”

Small Businesses Call on Congress to Approve Main Street Tax Certainty Act

The National Federation of Independent Business (NFIB) is urging Congress to pass the Main Street Tax Certainty Act. The 20% Small Business Deduction, or Section 199A, permits pass-through small businesses to deduct up to 20% of qualified business income. If not made permanent, the deduction will expire after 2025. The Main Street Tax Certainty Act is designed to make this vital tax deduction permanent, providing much-needed tax certainty for small business owners nationwide.

ECONOMY

Why the Federal Reserve Has Made Everything More Expensive to Make Things Less Expensive

“A little bit of science and a little bit of art go into slowing down the behemoth that is the U.S. economy. It seems like a contradiction: How would increasing the cost of monthly credit payments help to bring down the price of goods and services in the economy? By making it more expensive for consumers and businesses to borrow money, the federal reserve hopes to reduce overall economic activity — too much of which tends to cause inflation.”

Biden’s New Executive Order Encourages Manufacturers in the U.S.

President Joe Biden plans to sign an executive order while visiting Maine to encourage companies to manufacture new inventions in the United States.

Consumer Sentiment is Reported to be Improving

Last Friday, the Bureau of Economic Analysis (BEA) reported that personal consumption expenditures growth accelerated in June, rising to a record annualized rate of $18.4 trillion. This matters because consumer spending is the dominant driver of the U.S. economy, with personal consumption expenditures accounting for 68% of GDP. However, consumer behavior can be complex and nuanced.  Believe it or not, consumer sentiment is improving.

Agencies Request Comment on Proposed Rules to Strengthen Capital Requirements for Large Banks

Bank regulatory agencies requested comment on a proposal to increase the strength and resilience of the banking system. The proposal would modify large bank capital requirements to better reflect underlying risks and increase the consistency of how banks measure their risks.

Fed’s New Instant Payment System Could Be Trouble for PayPal, Venmo

If FedNow becomes popular enough, it could one day make trouble for apps like PayPal and Venmo, which serve as intermediaries to make fast payments between banks. Cash apps could eventually seem so slow or unnecessary that they become obsolete. For now, peer-to-peer payments apps seem safe, though, as analysts told NBC News that FedNow is “likely to benefit consumers and small businesses the most.”

GENERAL RESOURCES

• IRS resources for stimulus payments:
  • Use the Get My Payment tool to check on EIP payment status
  • Eligibility and general information about Economic Impact Payments
  • A list of frequently asked questions for stimulus payments
• IRS information about the Advance Child Tax Credit Payments
  • Portal to update information
  • A list of frequently asked questions on the advance Child Tax Credit Payments
• The best source for up-to-date and accurate health information is the Center for Disease Control (CDC)
• Our prior blog posts, videos and prior weekly newsletters
• Entrepreneur put together a listing of free tech resources for remote work
• The Consumer Financial Protection Bureau has warnings about COVID-related scams
• The New York Times has an online newsletter on K-12 and higher education
• The Wall Street Journal has a collection of articles on education
• The Louvre has digitized 482,000 artworks from its collection
• How to create a strong password

We sincerely hope that you and your family are well and remain well. If you have any questions or concerns, don’t hesitate to reach out to us. We are here for you.

If you need help with your accounting, want to create a tax minimization plan, want to discuss your business growth plan or your finances, are concerned about retirement goals or need to be held accountable for your 90 day action plan, contact us for a complimentary discovery session or an appointment to just get started

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