Can I deduct business trip expenses for my spouse?

The rules for deducting a spouse’s travel costs are very restrictive. First of all, to qualify, your spouse must be your employee. This means you cannot deduct the travel costs of a spouse, even if his or her presence has a bona fide business purpose, unless the spouse is a bona fide employee of your business. This requirement prevents deductibility in many cases.

If your spouse is your employee, then you can deduct his or her travel costs if his or her presence on the trip serves a bona fide business purpose. Merely having your spouse perform some incidental business service, such as typing up notes from a meeting, is not enough to establish a business purpose. In general, it is not sufficient for his or her presence to be “helpful” to your business pursuits, it must be “necessary.” In most cases, a spouse’s participation in social functions, even as host or to establish general goodwill for customers, is not enough to establish a business purpose. Furthermore, if there is a vacation element to the trip (i.e., if your spouse will be spending time sightseeing, etc.), it will be more difficult to establish a business purpose for his or her presence on the trip. On the other hand, a bona fide business purpose will exist if the reason for your spouse’s presence is to care for a serious medical condition that you have.

If your spouse’s travel satisfies these tests, the normal deductions for business travel away from home can be claimed. These include the costs of transportation, meals, lodging, and incidental costs such as dry cleaning, phone calls, etc.

Even if your spouse’s travel doesn’t satisfy the requirements you may still be able to deduct a substantial portion of the trip’s costs. This is because the rules don’t require you to allocate 50% of your travel costs to your spouse. You need only allocate any additional costs you incur for him or her. For example, in many hotels the cost of a single room is not that much lower than the cost of a double. If a single would cost you $150 a night and a double would cost you and your spouse $200, the disallowed portion of the cost allocable to your spouse would only be $50. And if you drive your own car or rent a car, the cost will be fully deductible even if your spouse is along. Of course, if public transportation is used any separate costs incurred by your spouse would not be deductible.

For more information or if you need advice on how to deduct your business trip expenses, please contact us.