Government Paid Vacation
I’ve been getting phone calls the last couple weeks from Realtors® in north Alabama and the surrounding area. Summer season is about to begin here at the beach and people are looking at CE classes they can take so their vacation will be tax deductible. Occasionally, I send fliers about CE classes at the beach and reference that the classes qualify your vacation to be tax deductible. Some people don’t want to believe it or they’re afraid to try such a deduction. Why? It’s totally legal and it’s done all the time. Why do you think National Corporations always have their annual conventions in expensive resorts at the beach or near a casino?
As always I tell people they should talk to their personal accountant for clarification but I know what he’ll tell you. Let’s look at a real case scenario.
I offer a special license renewal CE package consisting of 15-hours of CE. This happens to be the exact requirement of the Alabama Real Estate Commission to qualify for license renewal. Also included in this special package is “Risk Management—That Delicate Balance,” which is also required by the Commission. Now for the good part, the total cost for all 15-hours CE is only $150 and only takes 15-classroom hours to complete. Now let’s say your family consists of a spouse and two children for a family total of four. You have collectively decided to spend a week’s vacation time at the beach eating sea food, soaking up the sun, and doing all sorts of fun days. You make reservations for 7 days and 6 nights at a fabulous condo on the beach. The total cost for the condo is less than $2,000. Let’s estimate the cost of food, and fun activities to be $1,000.
It’s time to balance your checkbook, but which one do you use; the business account or the personal account. You are going to the beach on business; aren’t you? OK, use the business account. Using the calculations above, the total investment (not costs) of your vacation is $3,150. Let’s also say you went over budget on your vacation and spent a total of $3,500. What difference does it make? The total amount is tax deductible; it’s a business expense! If you don’t claim it, you’re going to pay taxes based on $3,500 higher income. The question is; had you rather pay higher taxes or invest in a few hours education and provide your family a week at the beach, at the expense of the government?
I left out one important thing in this scenario. The family will spend a full week of fun and excitement but you will have to spend 9 hours one day and 6 hours another day in class. That’s a small price to pay for such a meaningful time for the entire family; isn’t it? As always, seek the advice your personal CPA.
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