Deducting the Costs of a Spouse on a Business Trip

Deducting the Costs of a Spouse on a Business Trip

06/18/2018 Tags: Announcements, In the News

The rules for deducting a spouse's travel costs are very restrictive. To qualify, your spouse must be your employee. Therefore, you cannot deduct the travel costs of a spouse, even if his or her presence has a bona fide business purpose, unless the spouse is an actual employee of your business. This requirement prevents deductibility in most cases.

If your spouse is your employee, you can deduct his or her travel costs if his or her presence on the trip serves a bona fide business purpose. Merely having your spouse perform some incidental business service, such as typing up notes from a meeting, is not enough to establish a business purpose. In general, it is not sufficient for his or her presence to be "helpful" to your business pursuits--it must be "necessary." In most cases, a spouse's participation in social functions, even as host or hostess, is not enough to establish a business purpose. That is, if their purpose is to establish general goodwill for customers or associates, it is usually insufficient. Further, if there is a vacation element to the trip, i.e., if your spouse will be spending time sightseeing, etc., establishing a business purpose for his or her presence on the trip will be more difficult. On the other hand, a bona fide business purpose exists when your spouse's presence is necessary to care for a serious medical condition that you have.

If your spouse's travel satisfies these tests, the normal deductions for business travel away from home can be claimed. These include the costs of transportation, meals, lodging, and incidental costs such as dry cleaning, phone calls, etc.

Even if your spouse's travel does not satisfy the requirements, however, you may still be able to deduct a substantial portion of the trip's costs because the rules do not require you to allocate 50% of your travel costs to your spouse. You need only allocate any additional costs you incur for your spouse. For example, in many hotels, the cost of a single room is not that much lower than the cost of a double. If a single would cost $150 a night and a double would cost $200, the disallowed portion of the cost allocable to your spouse would only be $50. If drive your own car or rent a car, the cost will be fully deductible even if your spouse is along. Any separate costs incurred by your spouse for public transportation and meals are not deductible.

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