Getting out and seeing the world can be a beautiful thing. It can expand your horizons, deepen your appreciation for other cultures, and get you unstuck out of mental ruts and give you a new perspective on your life. Anyone who can afford to travel should at some point. But traveling abroad can be a financially tricky proposition: There are a lot of common mistakes people make on vacation that can come back to bite them when they get home.
At Hacker Accounting we know how to keep your finances from getting lost while you’re traveling. Here are our three financial tips for traveling abroad. Keep these in mind the next time you hop on a plane and you’ll have nothing to worry about when you get back.
Keep Your Receipts
We can’t stress this point enough: Keep your receipts. Keep ALL of your receipts while traveling. Regardless of whether you’re on vacation or on a business trip, it can be easy to lose track of your expenses while you’re traveling. Being in unfamiliar environments, exploring new cultures: It can be so overwhelming and distracting that it makes you forget to keep up your good financial habits.
Make sure that you record every expense you make on the trip. Keep records of mileage if you’re driving, living expenses, everything. If you’re traveling for business, keeping detailed records of all work-related expenses will save you a lot of headaches when you have to file your taxes next year.
Make Reasonable Deductions
If you’re traveling for business purposes, be careful with your deductions. One of the biggest things that the I.R.S hits people with is inappropriate deductions. If you’re traveling with companions, keep in mind that you can only deduct their expenses and presence if they are a part of your business. If you bring your spouse with you on a business trip and they don’t work for the company, you cannot deduct their expenses.
Keep this last tip in mind, because this is one of the biggest mistakes that people make come tax time: Report any income you make while traveling. If you’re doing business on your trip, you need to report any income you make.
This includes business conducted in a foreign country! Just because you made money on foreign soil doesn’t mean that you aren’t obligated to report to the I.R.S. To the tax authorities, income is income, period. It doesn’t matter when or where it is made: What matters is that it gets reported.
Related: Top Tax Lessons From The Movies