By Dave Horwedel, CEO of Torchlight Tax
If you run your own business and travel for work, you might be wondering if you can deduct the expenses of bringing your spouse along. If your spouse is truly working, and you document it correctly, the answer is generally “Yes.”
When Your Spouse Is Also Your Employee
Make sure your spouse has a genuine business purpose for the trip, and you should be fine.
If your spouse is an administrative assistant for your business or does sales, make sure your spouse is paid as an employee for the work done on the business trip.
If you do purely fun activities on the trip, like night clubbing or sightseeing, these expenses are not deductible. However, if you fly to Vegas and work during the day, and take an evening off, regular business and travel expenses are fine.
When Your Spouse Isn’t an Employee
If your spouse isn’t an employee for your business, you can assign your spouse as a temporary employee for the trip. This may require using a payroll service and tracking hours if paid hourly.
If you are a sole proprietor filing married filing jointly, and your wife works in the business, her actual business expenses on the trip are likely deductible—even if she is not a formal employee.
A “Qualified Joint Venture” can also be filed, which allows each of you to file a separate Schedule C.
LLCs and corporations can also be used here. An LLC can be treated as a sole proprietorship (aka disregarded entity), a partnership, an S corporation, or a C corporation.
If your wife comes on a trip to work, her expenses can be legitimately deducted if you do the administration correctly.
Corporations generally have requirements to have formal employees with payroll tax filings and W-2s, etc. So, if you and your wife are working in your corporation, you may need to pay both of you on a W-2, regardless of your travel expenses.
There are many variants of these strategies. Maybe you are a business consultant, and your spouse has a company that does administrative office support. Both parties could establish LLCs or corporations, with your company covering business travel expenses and providing payment for administrative support to the spouse’s company.
This makes the whole transaction business to business.
This may be overkill. The point is that there are many ways to document legitimate business expenses. We at Torchlight Tax can assist you so you know how to do this.
Facts and Circumstances
The IRS has a phrase they like to use—“facts and circumstances.” In other words: what is really going on?
If you want to spend a week in Hawaii and bring your spouse along for fun, then this does not support a deduction.
If you are hosting an event or attending a conference there, and your spouse is going to be working with you for real, this does support a deduction.
An ounce of protection is worth a pound of cure. Holding a daily meeting with your spouse, assigning work tasks and documenting it, tracking the work completed, and recording work hours will probably be enough to satisfy the IRS. If you are audited and you can show this, you should be fine.
Suppose both you and your spouse worked 40 hours per week while out of town, your travel expenses should be covered. Just don’t include the nightclub tab as a business expense!
Keep a daily expense record on a computer or in a book while you are on the trip.
If these conditions are met, you can deduct the usual business travel expenses such as transportation, meals, hotel stays, and incidental costs like dry cleaning or business calls.
One Last Point
Taking your spouse along with you on a business trip is a great idea. Separations are not necessarily good for a marriage.
Actually, working together on a business trip can benefit both your marriage and your business. Not everyone can do this. But if you can work together on a business trip and still have time for fun on your off hours, great.
Our job at Torchlight Tax is to legally save your tax dollars without cheating or putting you at risk, while making the tax filing process as pleasant as possible. So, if you and your spouse can travel to pleasant locations for business purposes, legally save tax dollars, and have fun, this aligns with our purpose.
Contact Torchlight Tax for a free consultation at 1-877-758-7797 or email info@torchlighttax.com.
Visit www.torchlighttax.com or our YouTube channel for hundreds of tax and asset protection tips.
Disclaimer: This content is intended solely for general informational purposes and does not constitute professional advice in areas such as accounting, tax, finance, investment, or law. Neither the author nor the distributor accepts any responsibility for actions taken based on this information. The content does not provide a comprehensive overview of any subject. Always consult a qualified professional before making decisions related to your business, finances, or legal matters.
