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Travel Expenses paid via company

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Paul David

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For those of you who travel, do you ever claim expenses via your company either as a Director or employee?

I'm thinking of spending a month or two in Spain working and would like to put the expenses through the company.
 

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eliquid

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For those of you who travel, do you ever claim expenses via your company either as a Director or employee?

I'm thinking of spending a month or two in Spain working and would like to put the expenses through the company.
Def @CareCPA topic.

I'd like to know what @CareCPA says, but I generally travel for business every year and its a business expense.

I go to things like conferences, summits, visit clients and talk work with them, check out competitors, etc.

I have several clients in South Florida and many events take place in South Florida too.

I would think you would need to be doing business with others in Spain in some capicity, daily if not every other day to pull that off.

However, I am not a tax expert and none of my comments should be taken as such.
 

CareCPA

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Thanks for tagging me @eliquid

Note: OP lists England in his profile, my answer here is for the US. I assume most of it will be similar in England, but can't guarantee that.

Like most things in the tax world "it depends."

If you have a job that can be done from anywhere, and are just doing work while you're traveling, it's likely not a business trip. Just like those of use with remote businesses that work from home can't write off our entire lifestyle, neither can a digital nomad.

However, if you are traveling abroad for a business reason, then yes, it can be written off. If you are going to a conference in Spain, then it could be a business trip.
If you need access to items physically located in Spain to do your work, then it could be a business trip (i.e. you're doing historical research for your business, and a book you need is only accessible in Spain).
If you're visiting a manufacturer and working out a new process, then it could be a business trip.

The IRS says you can write off any "ordinary and necessary" business expense - most people get caught on the "necessary" part.

All of that said, I'm sure it's not too hard to find an accountant who would let you write off the whole trip without asking any questions. But ultimately, if you get audited, you need to be able to support that it was ordinary and necessary for business purposes.
Of course, with the US audit rate so low, this is then up to each person's risk tolerance.

(Side note, one firm I was at, the question was raised: If you need to buy a gun to protect yourself when you visit your tenants to collect rent, can you write that off as a tax deduction?
I believe the conclusion was that it wouldn't be considered "ordinary" even if it was necessary. However, I'd love to see it to go court and get a ruling)
 
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Paul David

Paul David

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Thanks for tagging me @eliquid

Note: OP lists England in his profile, my answer here is for the US. I assume most of it will be similar in England, but can't guarantee that.

Like most things in the tax world "it depends."

If you have a job that can be done from anywhere, and are just doing work while you're traveling, it's likely not a business trip. Just like those of use with remote businesses that work from home can't write off our entire lifestyle, neither can a digital nomad.

However, if you are traveling abroad for a business reason, then yes, it can be written off. If you are going to a conference in Spain, then it could be a business trip.
If you need access to items physically located in Spain to do your work, then it could be a business trip (i.e. you're doing historical research for your business, and a book you need is only accessible in Spain).
If you're visiting a manufacturer and working out a new process, then it could be a business trip.

The IRS says you can write off any "ordinary and necessary" business expense - most people get caught on the "necessary" part.

All of that said, I'm sure it's not too hard to find an accountant who would let you write off the whole trip without asking any questions. But ultimately, if you get audited, you need to be able to support that it was ordinary and necessary for business purposes.
Of course, with the US audit rate so low, this is then up to each person's risk tolerance.

(Side note, one firm I was at, the question was raised: If you need to buy a gun to protect yourself when you visit your tenants to collect rent, can you write that off as a tax deduction?
I believe the conclusion was that it wouldn't be considered "ordinary" even if it was necessary. However, I'd love to see it to go court and get a ruling)
Do you think it makes a difference that I’m actually an employee of the company rather than owner or director?
 

Walter Hay

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I traveled extensively overseas while operating both of my major businesses and on some occasions even took a teenage son with me.

When they accompanied me I allowed 1 day at each destination for touring, such a spending a day at Disneyland in Tokyo.

I kept a detailed diary of business activities, including such things as taxi fares, the names of companies and contacts I visited, and in some cases details of shops and markets that I visited looking for products that were not on the export market.

In my accounts I had a column for personal expenses, where the cost of activities such as elephant rides in Thailand were shown. When my wife and children accompanied me as often happened, I showed some accommodation costs as private expenditure.

My accountant remarked that I had the cleanest set of books he had ever seen. I was never audited in over 40 years in business. I was based in Australia, where the tax office are very enthusiastic about auditing.

The moral of the story is: Keep a diary, and show private expenditure when paid out of company funds.

Walter
 

CareCPA

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Do you think it makes a difference that I’m actually an employee of the company rather than owner or director?
I would think it's the same philosophy.

If one of your employees was traveling, what expenses would you reimburse them for? This should be a good indicator of what you can consider a business expense.
 

biophase

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Do you think it makes a difference that I’m actually an employee of the company rather than owner or director?
I don’t think that it would fly if you are the owner and you direct yourself as an employee to go to Spain for work for no apparent reason.

I think you know the real answer is that this is not a required business trip for your business.
 
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Paul David

Paul David

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I don’t think that it would fly if you are the owner and you direct yourself as an employee to go to Spain for work for no apparent reason.

I think you know the real answer is that this is not a required business trip for your business.
Technically my Father is the owner of the company and i'm the employee.
 

eliquid

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Technically my Father is the owner of the company and i'm the employee.
Still wouldn't pass the test with most authorities ( here in the US that is ).

If your "father" directed you to go to Spain for no apparent reason, it would fall back on him potentially during an audit or investigation. Would you want that?

.
 
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Paul David

Paul David

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Still wouldn't pass the test with most authorities ( here in the US that is ).

If your "father" directed you to go to Spain for no apparent reason, it would fall back on him potentially during an audit or investigation. Would you want that?

.
Yes I think it's looking like a "grey" area even over here in the UK.
 

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