Spousal Travel Expenses
It is not uncommon for a spouse to accompany a worker on a business trip. When this happens, are the spouse's expenses tax-deductible?
Generally, deductions are denied to a business for travel expenses paid or incurred for a spouse, dependent or employee accompanying the business owner on a business trip unless the (IRC Sec 274(m)(3)):
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Spouse, etc., is an employee of the taxpayer, and
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Travel of the spouse, etc., is for a bona fide business purpose, and
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Expenses would otherwise be deductible by the spouse, etc.,
Strategy - The law allows a deduction for the single rate for lodging and frequently there is no rate difference between one or two occupants. Thus, virtually the entire lodging expense for an accompanying spouse will be deductible. When traveling by car the law does not require any allocation because the spouse is also traveling in the vehicle. Thus, if traveling by vehicle the entire cost of the transportation would be deductible. That would generally also apply to taxis, Ubers and the like at the destination. The only substantial cost that is not allowed is the cost of the spouse’s meals, which even if they were deductible would be reduced by the 50% rule whenever it applies.