1. What are the basic rules and limitations regarding the deductibility of travel expenses?
A travel expense must be ordinary and necessary, incurred while away from home, and incurred in the pursuit of business.
The expenses must be reasonable. In other words, the expenses cannot be “lavish or extravagant.” Travel expenses include costs of meals and lodging expenses incurred during the travel and additional rules apply to these specific items.
Also, the expenses must be incurred in connection with an existing business or the expansion of an existing business. Therefore, a deduction is not allowed for travel expenses incurred to acquire or to enter a new business.
When a personal automobile is used for business, additional restrictions may apply:
- All the expenses must be allocated between business use and nondeductible personal use.
- As an employee, use of your personal automobile is treated as business use only if that use is for the convenience of your employer and required as a condition of your employment.
2. If a business travel includes some personal activity, how does a deduction rule apply to travel expenses to and from another destination?
To be deductible, a main purpose of the travel should be for business activities. If the trip is primarily for personal activities, travel expenses to and from that destination are not deductible.
However, we see that a business trip to foreign country often includes some packages for personal activities. In this case, expenses related to travel to and from a foreign destination must be allocated between business and personal activities. The personal component is not deductible. If you travel domestically, this allocation rule does not apply.
3. Is the local transportation cost of traveling between the taxpayer’s residence and his principal place of business deductible?
No. This is a commuting expense and is not deductible. If a taxpayer has his place of business in his or her home, the taxpayer can deduct the cost to the client’s or customer’s place of business. If a taxpayer has no regular place of business and no office in his or her home, the travel to his first business contact is considered commuting.
4. Is transportation expense from your home to temporary work locations deductible?
Yes. If you have a regular place of work and sometimes travel directly from your home to temporary work locations, you can deduct the round-trip expense from your home to temporary work locations regardless of distance.
5. What documentation is required in order for travel and transportation expenses to be deductible?
In order to deduct travel expenses, you must comply with strict substantiation requirements for travel (and meals and lodging occurred during the travel).
Adequate records or sufficient evidence should be maintained for “each travel”:
- amount of travel and transportation expense,
- its time and place,
- its business purpose, and
- business relationship to the persons (if any) joined
You can deduct actual expenses incurred as a result of the business use of your vehicle. Deductible items include gas, oil, tolls, parking fees, insurance, and depreciation (if you own the car) or rent (if you lease the car).
Instead of figuring actual expenses, you can use the standard mileage rate, which is 53.5 cents per mile for travel during 2017.
6. How can I record vehicle business mileage log?
If you use your car for business purposes, you can deduct car expenses using one of the two methods: Standard mileage rate and Actual car expense method. Regardless which method you use, you should keep a vehicle mileage log and save documentary evidence such as receipts. A vehicle mileage log should contain following elements: date of travel, mileage traveled (including odometer reading), destination and purpose. Please see the example of a vehicle mileage log sheet.
New Bundle Service Packages
As we continue re-branding our organization, we have launched customized service packages for small business clientele. We understand small business owners and entrepreneurs need comprehensive accounting services yet often lack the budget and resources. Thus, we have created multi-tiered bundle packages to provide objective analysis and recommendations.
Starting from their financials, we use insight into their lifestyle to assists with decision making not solely based on profitability. Better service typically results in better profits over working longer hours. We redirect our client’s focus to help them attain desired success while achieving better work/life balance.
More details on packages will be available online shortly.
Asian Pacific American Heritage Month
With nearly 30 years serving the Baltimore Metropolitan community, AK and its original namesake, Albert T Kim, were recognized as 2017 recipients of the Baltimore County Asian American Excellence Award, at an event held in May, which is designated as Asian Pacific American Heritage Month.
The award is presented to individuals whose life work has successfully contributed to the socioeconomic vitality of the greater Baltimore County region, and whose efforts inspire others to strive for success. Migrating from South Korea in 1975, Mr. Kim has spent his life serving Baltimore. He was a member of the Woodlawn-Westview Rotary club for 20 years, serving as its President in 1999 and 2014. This club served the community by donating dictionaries to area elementary schools and hosting the annual “Service Above Self Awards.” As well, Mr. Kim was the President of the Korean American Society of Greater Washington, Vice President of the Sejong Scholarship Foundation of Maryland, Treasurer of the Security Woodlawn Business Association, and a Board Member of the Korean Society of Maryland.
For all the details check out the full press release: Asian Americans award pre notice 170426.pr
As well as the full photo gallery at: https://flic.kr/s/aHskUFFLkJ
Back Office Restructuring
Once a boutique business based around our fearless leader, Albert Kim, AK & Associates has expanded into a progressive group of accounting professionals. Our team approach to partner with clients as their external CFO is redefining roles to better support new and existing clients.
We are revitalizing our office with administrative restructuring and recruiting talent to position AK for continued growth and success. These fresh faces and new personnel bring energy and ideas as we redesign our website, expand our services, and branch into social media.
Please join us . and new personnel.
There is a disconnect between income and net worth. Earning more does not create contentment. Often those who make more spend more and foolish people almost always spend more than they earn, no matter how much! At the same time, those with less commonly save and amass wealth.
Many people think making more will make them happier; however, there is a disconnect between money and happiness. If there is a correlation, it would be a bell curve with the happiest people in the middle. Surveys report the highest percentage of people claiming happiness peaks below the notoriously desired six figure salary at around $75,000.
Both those with the least AND those with the most are the least happy.
3 Simple Tips:
So you might ask, if making more won’t help then what will. Well, here are some easy ways to boost your happiness today.
- Avoid extremes – having excess is just as dangerous as lacking enough. Keep only what you need!
- Avoid debt – indebtedness can cause physical and emotional bondage. While using credit may scratch the itch today, it restricts financial flexibility in the future. The long term costs of debt can be devastating!
- Share – sharing with others can bring great joy. Knowing we can help others is very rewarding. When we use our resources to lighten someone’s load, it creates joy for both us and those we help.