What you can deduct from your income taxes as a home-based travel business
You can reap many wonderful tax deductions when running a legitimate home-based travel business. Unfortunately too many home-based agents end up paying too much in taxes every year because they’re unaware of the small-business deductions that are available. Here’s a list of some of the things you can deduct from your income taxes when running a home-based business.
Host agency fees: If you join a host agency or purchase a franchise, you can claim expenses such as start-up costs, monthly hosting fees or franchise fees as deductions.
Business supplies: Save all receipts for any supplies you purchase for your business, including computer paper, business cards, stationary, pens and paper clips.
Postage and shipping expenses: All postage costs, shipping fees or shipping supplies may be claimed as deductions. Keep the receipts when mailing confirmations, invoices or other documents to your clients.
Advertising: Most advertising can be claimed on your taxes. Keep all receipts for any newspaper ads you run. If you join a networking group, this is considered advertising and can be deducted as such.
Automobile expenses, gas receipts and mileage: The IRS allows you to take certain deductions for each mile you drive when conducting business for your travel agency. Remember to log your miles every time you drive to see a client, travel to a supplier seminar, drive to the airport to go on a fam trip or go to the post office to mail business-related documents.
Give-aways: Keep receipts and a list of any promotional items you give away at tradeshows or other venues. Gifts that you give clients also can be written off.
Phone bills and Internet access: If you have only one telephone line, the IRS is usually not going to believe that you use this only for your home business, since they consider the first phone line personal. A second phone line installed in your house will be 100 percent tax deductible. Internet service fees are deductible as a percentage depending on how much it’s used for business versus personal use.
Banking and accounting: All bank fees and check printing for your business account are deductible.
Tax preparation expenses: You can deduct the cost of having your taxes prepared. Any accounting software that you purchase to help prepare your taxes for your business, such as QuickBooks, is also deductible.
Computers and other equipment: If you purchase a new computer for business use, the cost of the computer may be claimed. You can also claim depreciation for three years after any equipment was purchased.
Insurance costs: You may be eligible to deduct the cost of your health insurance premiums on your taxes. You’re not allowed to deduct the insurance costs of your family members unless they’re employees of your business. The cost of errors and omissions insurance is also deductible.
Home office deduction: Your office at home and related expenses are allowable deductions, according to IRS guidelines. To qualify, your home must be the primary place where your business is conducted. In addition, the office space must be used exclusively for your business. Although the IRS has become more lenient toward these types of deductions, keep in mind that this is the one deduction that carries a cost with it, since when you sell your home, you may owe taxes on any depreciation costs that have been deducted.
Entertaining: You can take a deduction when you entertain clients while conducting business, even if it’s just over a meal or coffee. You are allowed to deduct 50 percent of the cost of meals and entertainment.
Travel expenses: The most important deduction of all is your own travel. When you’re traveling for your business, keep all receipts for airfare, lodging, food, entertainment, etc. If you’re on a legitimate fam trip, it also is deductible, but be prepared to provide site-inspection forms, the fam invitation and even material documenting a trip or two that you booked to the destination.
In the end, any deduction you can’t back up with a receipt or other documentation will not be allowed in the case of an audit. Make sure to save your receipts for at least seven years—the period advised by the IRS. I’m by no means a tax advisor, so please confirm these suggestions with your accountant or CPA. They may be the key that can help put a little extra cash back into your pocket...
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