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6 ways to turn your travel into tax deductions

Most people know that they can deduct a certain percentage of their expenses for business travel, but there are actually several other travel-related tax deductions that can take a bite out of your 2015 tax bill.

It might seem hard to believe, but 2015 is starting to wind down. While that means the holidays are near, it also means that if you were hoping to take more tax deductions when you file next spring, the time to make important decisions is now.
 
One area that’s often overlooked when it comes to making tax-related spending choices is travel. Most people know that they can deduct a certain percentage of their expenses for business travel, but there are actually several other travel-related tax deductions that can take a bite out of your 2015 tax bill. 
 
1. Donate travel related items
While the rules regarding charitable deductions are strict, and have changed over the years, you can still claim deductions when you donate boats and other big-ticket items. However, you cannot deduct a donation of the use of a vacation home. If you offer the use of your vacation home as an item in an auction, for example, you cannot deduct the fair market value of that donation, due to IRS rules stating that the value of the right to use a property is less than a contribution of your entire interest in the property. However, making such a donation does help generate publicity for your property and may lead to more interest in renting it from you, which can help boost your bottom line.
 
2. Buying a vacation rental property 
So you don’t own a vacation property to donate? No worries — if you buy one, it can have some tax advantages. Again, IRS rules are tricky here, so it’s best to consult with a tax professional, but depending on how often you use the property, you may be able to deduct either the mortgage interest or losses you incurred as a result of owning the property. If you rent the house for fewer than 14 days, you can deduct mortgage interest and property taxes only. If you rent for more than 14 days, you have to claim rental income, but you can deduct rental expenses and losses as well. If you stay in the house yourself for more than 14 days or 10 percent of the amount of time the house is rented, you can deduct rental expenses, but not losses. 
 
3. Tack on a vacation to a business trip 
No, you can’t deduct your trip to Disney World because you had some meetings in Orlando beforehand. First, all travel expenses need to be related to business and meet the IRS definition of business travel. Second, you cannot deduct the expenses for anyone who isn’t involved in the business. However, if you happen to be traveling to Orlando and you want to bring the family along, as long as they stay in the same hotel room, you can deduct at least part of that expense on your taxes. If you drive, you can deduct the mileage as well — even if the kids are in the car. So while you can’t necessarily spend a few days hanging out in Vegas after a conference and deduct all of your expenses, if you plan it right, you might be able to deduct a few things.
 
4. Use weekends to your advantage 
Want to get out of town for the weekend? Plan your trip so that you have meetings on Friday and Monday. You can spend Saturday and Sunday at your leisure, but because your trip overlaps the weekend, your lodging and transportation expenses will be deductible. 
 
5. Volunteer 
When you incur out-of-pocket expenses — including travel — in the service of a legitimate charity, those expenses are tax deductible. So if you spend time helping to build schools in South America, maintaining the Appalachian Trail, or working with scientists from a nonprofit organization in the Caribbean, you may be entitled to a deduction. Before you plan a trip, though, confirm the organization’s nonprofit status, and understand that the primary purpose of your trip is to volunteer.
 
6. Take the scenic route
Because you can deduct mileage when you drive for business (either your own or a rental vehicle), you may want to take the long route to visit places that you’ve always dreamed of along the way. For example, you might decide to drive along the scenic California coast between San Francisco and Los Angeles or along Route 1 on the East Coast. Just keep track of your mileage to be sure you get the deduction. 
 
Before you take any deductions, of course, you should consult with a qualified tax professional to ensure your deductions are legal. Also, keep meticulous records including mileage logs and receipts to avoid problems in the event of an audit. If you do, though, you can help offset the costs of your travel with a healthy tax deduction next April. 

 

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