Article Posted on 09/13/2019
When people travel for business, we sometimes receive questions regarding deducting the cost of certain travel expenses when the trip includes the person’s spouse. Here is a summary of the rules related to business travel with a spouse.
For self-employed people, to deduct all the travel expenses of the spouse, the following conditions must be met:
- The spouse must also be your employee
- Their presence on the trip must serve a bona fide business purpose
- Their presence must be more than ‘helpful’ to your business purpose, it must be ‘necessary’. Asking them to perform minor services (taking notes at a business meeting) or social services (serving as hostess at a business function) generally will not establish a business purpose.
- If a vacation element to the trip exists, it must be relatively minor when compared to the overall trip. Establishing the business purpose of the spouse becomes more difficult if the trip is partially personal in nature.
If these conditions are met, all the normal business travel expenses of the spouse are deductible. This includes transportations costs, the 50% meal deduction, and the costs of lodging.
However, even if these tests are not met it is important to remember that a substantial portion of the costs of the business travel may still be deductible. The tax law does not require an allocation of 50% of all travel costs to your spouse. Only the additional costs of the trip that are incurred because your spouse is on the trip are disallowed. For example, if you rent a car the cost is still fully deductible because no additional cost was incurred by having a second person. If the cost of a single hotel room is $150 and the cost of a double hotel room is $200, then only the $50 difference is disallowed as a deduction.