Summer is around the corner, and you know what that means: Vacation time! A perfect time to get away from it all for a little bit and refresh yourself in a new environment. Time to have an adventure or two before getting back to your daily grind. It can also be a time where you could shoot yourself in the foot by making some major vacation tax mistakes if you’re not careful.
At Hacker Accounting, we want you to have a safe and happy vacation that’s free of tax mistakes. Here are some of the top vacation tax mistakes people make and how you can avoid them.
Not Saving Receipts
People dig themselves into financial holes on vacation because they don’t track their expenses. Make sure you keep a record of everything you spend on vacation. You may be able to deduct some of it later, but you need to be able to back it up. The IRS scrutinizes vacation and travel deductions closely, because this is one of the areas where people tend to make the most mistakes or get over zealous with their write-offs.
One of the biggest vacation tax mistakes people make is not protecting their personal information or belongings. When you’re on vacation, you’re at your most vulnerable for identity theft. Keep a close eye on your valuables while you’re abroad. Make sure any electronics are safely stowed away and password protected- This includes your cell phone. Don’t leave your wallet, passport, or anything containing identifying information lying around where anyone else can access it. All it takes is for you to turn your back for a minute and an identity thief can make off with your social security number.
You should also make provisions to have your mail picked up or held while you’re gone. Piled up mail is an indicator thieves use to pick their targets. Your mail could also be used against you: Bank statements and other pieces of mail could be all a thief needs to pretend to be you. Identity theft can wreck your credit rating and cause you a lot of headaches and grief when it’s time to do your taxes.
This is where people can get into some serious tax trouble. Be very, very careful about deducting anything from your vacation. A lot of people try to write off their traveling as a business expense. Remember these tips to keep you from making a big tax mistake: You can only write off your vacation as a business expense if it can be proven that you did it for your work. If you end up going to an amusement park or dining at a fancy restaurant on your own while on your business trip, you cannot write those things off as a business expense unless you can show that it was for work. You also cannot write off expenses incurred by spouses, friends, and family that you bring with you unless they are also part of your business.
Looking for more vacation tax tips? Give Hacker Accounting a call at 602-375-5251.