What You Need To Know About Vacation Tax Deductions

Going away for Spring break? Your travel plans might be starting for the year so make sure you know if you’re able to turn that trip into a tax deduction.

Perhaps the easiest way to claim a tax break on a vacation is by attending a seminar or conference related to your current profession.

Work activities you can write off for taxes can include:

  • seminars and conferences
  • meeting a potential client or business partner
  • or doing research in your field.

This is a win-win as you’re improving yourself while enjoying the destination of your dreams. It’s necessary to spend four or more hours a day in professional development and you’ll also need records of attendance.

But that leaves 20 hours for surfing, sailing, and fun! Before leaving on your trip you must have at least one work-related engagement planned and set. This allows you to fulfill the IRS “prior set business purpose” rule.

If the primary purpose of your trip is work, then you can write off your travel costs.  When looking at travel expenses, airfare and driving are both covered. Airfare is covered for you but not family or friends who accompany you.  

However, if the destination is close enough to drive, then $0.50 a mile is allowed. When driving you may bring other passengers with you and the mileage is still deductible.  Days spent traveling are counted as work days as well.

Lodging stays for the work days are also tax deductible.  As an added bonus, bookending the weekend between Friday and Monday work days allows for the lodging and food expenses accrued over the weekend to be covered.

Reimbursement is allowed for you only. If a second room or room with additional beds are required to house your family, you will only be reimbursed at the rate for a single room.  

Your personal meals are deductible at 50%, but if you bring the family on the trip their meals aren’t included. With the exception of lodging, receipts are not required for expenses less than $75.  

However, documentation, such as a travel diary, will be needed to claim the deduction. When in doubt, more is better to make sure you can claim your trip. The key is thorough documentation throughout the trip.  

Trips outside of the United States have some additional considerations, as do conventions. IRS Publication 463 contains additional details on deductible expenses on a work/play vacation.


Jerry Lapp

 If traveling to Nepal or high mountain trekking is on your bucket list, check out Skychasers!  Based right here in Lancaster, PA, but with tons of expertise in the Nepali region, this is the best place to go for your next travel adventure!

Jerry has been in the adventure travel business for four years.  He’s taken outdoor ed courses, but most of his training was experiential in Nepal prior to starting the Skychasers business.  His first visit to Nepal was in 1999 to trek the Himalaya. He and his then girlfriend, now wife, both loved it there and decided to stay.  They got permanent visas, jobs, and eventually got married and their oldest daughter, Anabelle, was born in Nepal. The family lived and worked in Kathmandu managing a Nepalese silver jewelry exporting company, Yak & Yeti Enterprises, that was founded as a fundraising arm of a large Tibetan Buddhist monastery in the Kathmandu Valley.

Jerry had five weeks of vacation time and he used almost all of it on treks in the Himalaya, sometimes heading out alone or with his wife . . . they even took Anabelle trekking to the Everest Region when she was only seven-months-old, setting her up in a Pack ‘n Play for naps and bedtime in lodges along the trail.  Trekking the Himalaya became second nature through this time and more enjoyable every time he got into the mountains.

During this time, Jerry became fluent in the Nepali language, supplementing plentiful practice with off and on tutoring sessions.  In 2003, he completed his college degree with a year of study abroad in Kathmandu. He also learned to read and write Nepali for the first time, although he jokes that these skills never caught up to his conversational abilities and remain at a pre-kindergarten level to this day.  Here’s “Jerry” in the Nepali script, known as Devanagari . . . जेरी

जेरी says he loves the freedom of designing treks that stretch his and his trekkers’ abilities.  In turn, it’s rewarding to watch trekkers gain confidence by the day, sometimes by the hour, when they conquer fears, or summit an 18,000 ft pass, a 20,000 ft mountain, or make it to Everest Base Camp.  Jerry is a firm believer in the power that stretching mind or body has to reshape our lives for the better.

Jerry shares the credit for what makes an expedition with Skychasers great with his Sherpas.  He works with a marvelous group of Sherpas and there’s no doubt that they’re improbably gifted with the ability to instill confidence in trekkers.  Their preposterous physical skills (for example, people-carrying 🙂 provides a great backup should anything go wrong and they’re almost always blissfully optimistic.

In addition to the outstanding team of sherpas, Jerry tries to give trekkers something to write home about every day.  He is able wow guests by going to the hidden treasures, strange places, weird sites, and exotic places that only the locals know about.  Because of the years Jerry has spent in Nepal he has a lot of friends on the trekking routes, especially in the Everest area, so people get to drink tea in a friend’s home, or join in on a local festival.  That’s also a testament to the extremely social nature of Nepal’s people!

In his own words, Jerry describes why a trip with Skychasers is truly a unique experience unlike other:

“Traveling to Nepal and trekking the Himalaya is pretty intimidating for many people, even experienced hikers.  To ease these worries, I arrange group travel on beautiful airlines from major East Coast airports, so no one has to travel alone.  Paraphrasing a quote from Haley on Modern Family, “it’s the Himalaya; if it were easy, everybody would do it”. Yes, this is true, the Himalayas are a nice challenge for anyone, but the rewards are tough to beat.  And, I design 90% of my treks to be accessible to anyone who can commit to a bit of conditioning work beforehand. There’s usually no camping . . . our daily destination is typically a family-run lodge in a small village; evenings go by quickly swapping trekking war stories with other hikers from all over the world while eating around a yak dung fueled potbelly stove.”

Jerry would love to see more younger travelers take advantage of his trip and is negotiable on discounts.  To discuss your next adventure you can contact Jerry by email or phone at jerry@skychasersworld.com or 717.682.5265.  Their website also provides a good overview of what is available.  Skychasers is active on social media as well and can be found on instagram @skychasersworld or facebook Skychasers on Facebook.


Mike Gingerich

As small business owners, we’ve talked about which hats to wear to create the most successful operation.  Some jobs you can take on yourself and others are best left to someone with the expertise in that field. Unless you enjoy unleashing your creative side and have time to keep current with social media marketing, these tend to be some of the best areas to outsource.  This is where Mike Gingerich and Digital Hill can help!  They offer website development, website tools and software, as well as online and social media marketing strategy and management to their clients.  Digital Hill has completed more than 500 projects!

Mike has the experience to create exactly what you need with 10 years in online marketing. He received his MS degree in Organizational Development and Leadership from Shippensburg University.  Mike shared that when he went to college, there was no such thing as social media so he’s learned on the fly. He has a passion for technology, so working with website and social media keeps him on the leading edge where he likes to be.

In addition to the work he does through Digital Hill, he has a podcast, Halftime Mike, which is a monthly resource on web/social media/business/fitness/life mission topics.  Mike does 2 weekly Facebook Live shows about online marketing trends.

His aim through his work in business and life is to add value and help businesses and organizations set themselves apart.  To this end he has written a 30 day guide to becoming a better leader which can be found at www.mikegingerich.com/lead.  

Shop local!  Mike is here in Lancaster working at the Candy Factory when he isn’t out training for triathlons and long distance races.  

Online you can find him at:

MikeGingerich.com

@Mike_Gingerich on Twitter

facebook.com/mikegdigital

@mikegingerich on Instagram


Bankruptcy and Foreclosures

When life doesn’t go as you had planned, and either bankruptcy or home foreclosure is necessary, what are the tax implications?  

Cancelled debt is generally considered taxable income, but fortunately bankruptcy is a big exception to that rule.  However, expenses accrued as the result of bankruptcy cannot be itemized and claimed as deductions either. When filing bankruptcy, there are several important tips to remember regarding taxes.  It is usually best to file your taxes for the year before your file bankruptcy, if you are going to owe money.  If you have already filed taxes and received a refund, do not use your tax refund to pay bills. Do keep receipts of how any refund money is spent because the information will be needed during bankruptcy proceedings.

When your home forecloses there is a possibility for taxable income in any gains that are achieved from the sale of the foreclosure or through the taxable cancellation of debt income.  However, as in the case of bankruptcy, losses from foreclosures are not reportable as tax deductions.

What is the difference between a short sale and a foreclosure?  Both occur when the homeowner cannot continue to make mortgage payments.  In the case of a short sale, you sell the home for less than your owe on it and the mortgage company forgives the remaining balance.  This differs from foreclosures which involve the mortgage lender actually taking possession of the home and canceling the entire balance due.  When this happens you are liable for the taxable income on the capital gain from the foreclosure.

IRS website includes tools to calculate cancellation of debt income and gain from foreclosure.  There are a high number of different scenarios possible when it comes to taxes and bankruptcy or foreclosure.  If you are looking for more specific information related to your own unique situation, the IRS website also contains a publication on bankruptcies as they relate to taxes.  ITP Taxes, LLC is also available to help answer your specific questions as they arise!


Brittney Hippensteel

We are very pleased to introduce you to Hamilton Wax Co….the quintessential “Shop Local, Shop Small Business” company.  Hamilton Wax Co has been in business for a year, based in Lancaster’s west end neighborhood of Hamilton Park.  Named after the neighborhood, this small business is run out of an 850 sq. ft. home that was built in the 30’s for the Hamilton Watch Factory workers and their families. The owner’s love for beautiful home goods, and simple design is where this dream began.

Brittney Hippensteel has a BFA in Graphic Design, but loves all kinds of art.  In addition to creating quality hand crafted candles, Brittney is a full time Graphic Designer.  She enjoys package design, photography, and social media marketing. As a self taught candle maker she has fulfilled her dream to make something tangible – outside the computer generated graphic design world.

Hamilton Wax Co offers 5 classic scents in 9 oz jars or 8 oz tins.  Holiday and seasonal scents are available as well. The candles are richly scented, soy wax candles poured in small batches. All candles are proudly vegan and phthalate free. Orders can be placed by visiting the Hamilton Wax Co website or locally at the following vendors:

Sophie Stargazer – 323 N Queen St, Lancaster, PA 17603

Realm and Reason – 213 W King St, Lancaster, PA 17603

To get in touch with Brittney, please check out Hamilton Wax Co on facebook and instagram.  She can be reached by email at hello@hamiltonwaxco.com with specific questions.  Subscribe to Hamilton Wax’s eNewsletter through their website, and receive 15% off your first order!  

 

 


Workplace Tax Deductions

Chances are your career brings some tax deductions that you didn’t even know about!  Of course, with the new December 2017 tax law, it makes sense for most people to stick with the standard deduction than itemize each year.  But if you find yourself in the group of taxpayers for whom those itemized deductions are higher than the standard deduction, here are some workplace deductions that you can claim!

If you are self employed, the number of work deductions available are generally higher.  Some examples of these savings include your home office costs, car for business, and health insurance.  Included in health insurance are premiums paid on medical and dental insurance.

If you pay dues to a professional society as a result of your career, those can be deducted.  Union dues and expenses are also available for deduction.  The portions that are paid towards benefits or pension funds are not deductible.

Travel costs can also be deducted including mileage from your your place of employment to another work site.  These deductions are most common in careers such as sales, midwifery, residential service providers and the like.  Among the available travel type deductions are the cost of a passport if needed for a business trip and parking garage fees.

Work clothes, or uniforms, are one of the most common employment related deductions.  These can be taken when the uniform is required for your job and it is not suitable for wear in situations outside of your workplace.

Teachers from grade K to 12 who work 900+ hours a school year, can deduct up to $250 for expenses that are not reimbursed.  These expenses could include books, supplies, and computer equipment. Save those receipts!

As usual, we turn you over to the IRS or your tax preparer for more in depth info if needed on this topic.  The IRS has a comprehensive list with links to numerous different industries and their tax considerations.  Our office is open for questions as well as you plan for this tax season or the future!

 


Matt Landis

Introducing this week’s Local Businessperson, Matt Landis!  Matt has practiced law for 7 years since graduating from Widener Law Commonwealth in 2010.  He has his undergraduate degree from Susquehanna University as well. In September 2014 Matt transitioned from a firm in Harrisburg to Russell, Krafft & Gruber, LLP (RKG) and he’s been there ever since. His favorite part of his job at RKG is helping entrepreneurs and business owners achieve their goals. Matt works with a wide variety of businesses, learning how they work and how he can help them achieve their business goals.

If your company needs help with business law issues such as entity formation and governance, contract drafting and negotiation and business transactions, RKG is the place to turn.  They also assist clients with estate planning and administration, domestic relations, litigation and municipal law. Why choose RKG instead of another firm? Matt says his firm prides themselves in their flexibility in communicating with clients.  RKG also has alternative fee arrangements available for many types of projects. This provides an option aside from the traditional hourly billing model. They offer flat fees for many services, and also have a subscription option geared towards business owners and entrepreneurs to encourage proactive resolution of potential legal issues and predictable costs for businesses.

To find out more about how RKG can help your business achieve its next goal, call 717.293.9293 or send an email to mjl@rkglaw.com.  From there the firm is flexible and can be available to consult via phone or in person.  They can meet with you at one of 3 local offices or travel to a place that is convenient for the client.  Video conferencing is a popular option as well when necessary. For more information about this local business you can visit their website www.rkglaw.com  or their blog at www.lancasterlawblog.com.  RKG keeps their blog updated frequently with information on legal topics that may be of interest to clients and the community.

 


Your Family Budget

If you’ve tried to create a budget for yourself and stick with it, you know how challenging it can be.  Trying to expand that budget to include a family of four or more, only compounds this challenge.  We have several tips to help get you started with the task, and hopefully follow through!

Experts recommend starting any budget plan with a goal in mind.  There are a multitude of possible goals depending on your family’s current situation.  For some, that goal might be to pay off debt.  Others may be saving for a dream vacation.  A college education.  Retirement.  Whatever your goal might be, do the research ahead of time to determine how much money you will need to save and a timeline for when they money is needed.

Next you will want to decide whether to do an online budgeting worksheet or go with paper, pencil, and a calculator.  With this decision, it is best to keep it simple!  Choosing a budgeting tool that is too cumbersome means you will be more likely to abandon the budget long term.  There are several very simple online budgeting programs available.  You can select from a variety of excel type spreadsheet that can be set up as you like it.  If you want to go with a budgeting tool that has already been set-up for you, Kiplinger’s has a very easy to navigate sheet on their website. This budgeting program lets you delete or add your own expenditure categories as needed.

It’s time to start tracking your money, both in and out. With money out, list bills or expenses in their order of importance, greatest need first down to least.  For most people this begins with either your mortgage or monthly rental cost.  When planning for regular monthly expenses, budget high based on the most you’ve ever paid for that particular bill.  After you’ve calculated the total amount of money you spend on needs each month, compare that to the amount of income earned each month.  

The hard part is then figuring out which of the wants to cut out when necessary.  It is also important to budget money towards credit card debt every month.  Make sure you pay at least a little more than the minimum amount due each month so that you are putting a little towards the actual debt and not just paying off the interest.  Finally, be sure to budget in a certain amount each month towards the goal you set at the beginning of your budget planning.  This amount will be based on how much money you need to reach your goal and when it is needed.  However, in months where other needs take precedent or money is tight, it might not be possible to allocate funds towards this goal, depending on how crucial it is to your situation.

Creating and sticking with a budget can be a challenge, but it can also be incredibly rewarding.  Beginning to follow a plan is a great step towards reaching your financial dreams!


Saving for College with 529 Plans

accomplishment, ceremony, college

529 plans, also known as Qualified Tuition Plans,  are not a new thing but they have certainly evolved since their introduction in 1996.  These savings plans for higher education are attractive for many reasons and they have a number of tax benefits.  Earnings grow federal tax free and are not taxed when withdrawn for educational expenses.  In addition, many states offer a tax deduction for contributions made to state managed 529 plans during the year.  The IRS website has a Q&A page on 529 plans that answer almost any question in a very simple manner.  

Anyone can utilize a 529 plan regardless of income or age!  At this point, almost every state offers at least one 529 plan but you are not limited to the plans of your state.  To see what is available and determine the best 529 for you, check out savingforcollege.com.  Many plans charge administrative and maintenance fees, application fees, and a number of other fees.  Make sure you familiarize yourself with the plan’s fee structure before committing.   

Anyone can make contributions to your 529!  This can be helpful in the case of aunts, uncles, and grandparents who like to make donations towards college.  Contribution amounts are limited to the amount needed to cover the financial costs of schooling.  If you make a gift or combined gifts greater than $14,000 to one beneficiary in a year, you might be subject to gift taxes.  

With the new tax law changes introduced in December 2017, there are actually some good additions to the depth of 529 plans.  One of these benefits is being able to use 529 plans to cover private elementary through high school tuitions up to $10,000 per year.  Previously 529 plans were only to provide for secondary schooling.  This change definitely makes life easier for anyone struggling with the costs of private schools for younger children.   

Due to the nature of 529 plans – with so many different options available combined with so many unique situations encountered by college students, the questions and answers surrounding these plans are limitless.  If you have additional questions about 529 plans and their impact on your taxes, please feel free to contact our office!

 


Irene Mouchlizis

When tax time rolls around, do you find yourself uncertain whether you will owe money or receive a refund?  Being able to estimate these numbers annually can help when you are budgeting for something big, trying to pay off some debt, or making any other financial planning decisions for your business.  

Assisting clients by allowing them to plan for taxes throughout the year is one of the things Irene Mouchlizis loves about her job and it is a great reason to turn to her for your bookkeeping needs!   In her own words, Irene says “I love being able to help clients become more organized and aware of how their business is doing. By becoming more organized, they are better able to make sound business decisions and predict what their tax situation will be, so they are not surprised at year end.”  Irene has worked with several non-profit clients as well.  She enjoys helping these organizations to strengthen the community in which we live!

Irene has been running her own business, Bookkeeping N Beyond LLC, for 4 years now.  Prior to that she worked at an accounting firm, utilizing her bachelor’s degree in accounting.  Irene has years of training and expertise in bookkeeping, payroll services, and cash management – including bill pay and invoicing.  When you remove these time consuming pieces from your own business plate, you can better focus on what you do best.  Irene points out that not every business will have the same needs.  She can work with you to determine which services would most benefit your individual organization and customize to fit your specific areas of need.  

Get in touch with Irene to schedule an appointment today!  She can be reached at 717-333-6989 or irene@bookkeepingnbeyondllc.com.  Additional information can also be found by going to her website at  www.bookkeepingnbeyondllc.com