Last week I took a vacation with my wife and her family. During that week, I wondered if I snapped a few photos to sell online or wrote about the experience here on this blog, could I deduct any costs from my taxes?
So I did some Googlin’. And the answer seems to be maybe… But probably not. But it’s very much a gray area.
Travel Bloggers abound. My blog here is more of a technical one, although I’ll write about anything that suits my fancy. After all, my tagline is writing what I want. So it wouldn’t be a stretch to write about my travel experiences.
Or I could snap a few photos and list them on Shutterstock or through them on a tee or some other product.
Either of these things would be work, right?
Let’s see what my Googling came up with:
Business Insider’s article Can Bloggers, Instagrammers, and Influencers Deduct Travel Expenses emphasizes the fact that, in order to deduct any expenses, your “endeavor” (as they call it) has to be functioning as business. In other words, you need to keep detailed records and at least try to make a profit.
Financial Samurai talks about What Travel Expenses Are Deductible . He talked to his CPA, who told him that “All reasonable related travel expenses required to produce and sell your product” are deductible. Of course, who knows what’s reasonable?
Themeisle has a “listicle” entitled Tax Deductions for Bloggers: 11 Expenses You Can Claim in 2021 that seems to imply you can deduct your heart away. Don’t do that. Be reasonable and accountable.
And, of course, there’s the good ole IRS site. Specifically, three articles:
- Publication 463, Travel, Gift, and Car Expenses
- Topic No. 511 Business Travel Expenses
- How do you distinguish between a business and a hobby?
The first IRS article, Publication 463, mentions that ordinary and necessary business-related expenses are deductible.
So, to deduct the expense, it has at least three criteria:
- ordinary - is it common and accepted in your trade or business?
- necessary - is it helpful and appropriate for your business?
- business-related - is it even for your business?
With these thoughts in mind, let’s look through my trip last week - and, assuming it was a business trip - figure out what was deductible.
Fun fact: I’m not going to deduct any of these expenses from my taxes.
Getting to the Location
To get where we were going, we paid two tolls at four dollars each.
We also drove our van about 600 miles. At the standard mileage rate of 57.5 cents per mile, that means we “spent” $345 to drive down there. Note that if you use the standard mileage rate, you can’t deduct the cost of gas. Gas is computed in the standard mileage rate.
- $8.00 in tolls
- $110.00 for a hotel stay at Dawson Inn
- $25.17 for dinner at Wendy’s
- $21.81 for lunch at Chick-Fil-A
- $345 to drive down there
I booked my stay at Dawson Inn via the HotelTonight app. Get $25 off your first HotelTonight room if you spend $135 USD+ when you use my referral link: https://www.joehxblog.com/hoteltonight/
Which of these meet the three conditions? Or, rather, which ones don’t?
The two meals don’t count. First off, they were for my whole family. Since my wife and two kids are not employees, I can’t deduct the cost of feeding them.
The tolls, hotel stay, and mileage to get down there would have been the same even if I traveled by myself. Therefore, they were necessary.
Total potential deductibility? $463.
Staying at the Location
My wife and I had dinner at the Basnight’s Lone Cedar Cafe ($116.98) while her parents watched the kids. We also went and checked out The Lost Colony ($49.12 + $7 for popcorn and soda) outdoor play one night after the kids went to bed.
We spent money on the kids, too. We got ice cream at Surfin’ Spoon ($15.56) and pizza at American Pie ($24.84). We had to run to Food Lion ($43.78) a couple of times to get milk to drink diapers for my daughter.
None of the things I mentioned in the last two paragraphs are potentially deductible. Maybe if I wrote a review of one of them - say, The Lost Colony outdoor play - I could then deduct the cost of going there.
But they weren’t necessary for taking any pictures. Heck, photography was explicitly prohibited at The Lost Colony.
And diapers… Well, we needed those anyway, even if we never took the trip.
So, while we were there, nothing was potentially deductible.
The Trip Back Home
Back home we passed through two more $4 tolls. We also traveled another 600 miles - or $345 worth of driving. We didn’t stay in a hotel. These might be deductible.
The return home has a potential deductibility of $353.
So How Much? And what would that mean?
The trip there had $463 in potential tax deductions. The trip back had $353. The grand total was $816.
That make’s that $816 free, right? Since I could just “deduct it from my taxes”?
No. That means my taxable income would be reduced by $816.
And, assuming I’m in the 25% tax bracket (fun fact: there is no 25% tax bracket as I write this) it means I would save $204 off my taxes.
In other words, a tax deduction is essentially a 25% off coupon.
Oh, and since I just reduced my business expenses by $816, that’s less money I can through into my solo 401k.