Business Travel With Your Spouse
By Julian Block
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 set stringent guidelines for deductions of a spouse's travel expenses. Worse yet, legislation enacted in 1993 included a little-noticed measure that imposes far stricter requirements.
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 a business-travel deduction.
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 did not 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.
Now, there's no deduction whatsoever for travel expenses of your spouse. It makes no difference that 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 deductions for a mate's travel expenses. To qualify for the exception, these requirements must be met: (1) the spouse (or dependent, or any other individual) accompanying you on business travel is a bona fide employee of the outfit that pays for the trip; (2) the spouse undertakes the travel for a bona fide business reason; and (3) the spouse is otherwise entitled to deduct the expenses.
TIP. Some often-overlooked tax relief remains available for lodging costs even when your spouse, significant squeeze or someone else tags along only for fun. Claim a deduction for lodging based on the single-rate cost of similar accommodations for you, not half the double rate you actually paid.
EXAMPLE. You and your spouse go by car to a business convention in Orlando, where the two of you stay at a hotel that charges $200 for a double and $180 for a single room. Besides a deduction for the entire round-trip drive (the driving costs the same whether your spouse accompanies you or not), claim a per-day deduction for your hotel room of $180, rather than just $100, half of $200. To help safeguard your deduction in case the IRS questions it, remember to have the hotel bill note the single rate, or get a rate sheet.
TIP. Some of your spouse's meals might qualify as deductible business meals. An example: At the convention, you dine 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.