Six Tax Tips for Home-Based Agents

Haven’t filed your 2013 tax returns yet? If you’re a home-based travel agent, there’s still time to save money on your 2013 taxes – provided you have proper documentation.
 
Travel Market Report asked Meisa Bonelli, managing partner of New York City-based Millennial Tax  to share her tax tips for home-based travel professionals.

“Really, anything could be tax-deductible, based on your situation,” said Meisa Bonelli, who specializes in tax preparation and strategic business planning for home-based business owners and “solopreneurs.”

She emphasized six key areas where smart business decisions create opportunities for tax savings. Even if you’ve already filed your 2013 taxes, you can get started on your 2014 filing by making tax-savvy decisions and keeping accurate records.

#1. Meals and entertainment
Home-based business owners can deduct 50% of expenses incurred while entertaining customers, Bonelli said.
 
“There’s a great opportunity to build relationships with business travelers” by, for example, taking them out to dinner or to baseball games, she said.

She advised planning what you’re going to spend in advance. In addition, choose the types of clients you want to entertain based on their potential for helping to grow your business.

And remember to keep and organize all receipts.

#2. Home office
Starting this year, travel sellers who work at home can use the new Simple Safe Harbor program to take a home office deduction.

This is one area in which no recordkeeping is necessary. Simply deduct $5 per square foot for up to 300 square feet of a dedicated home office.
 
In the past, “people have been hesitant to take home office deductions,” Bonelli said. Among the reasons are concerns about being audited as well as having to depreciate that part of one’s home, which lessens the tax benefit you receive when selling your home.

#3. Individual travel expenses
You already know that you can claim deductions for legitimate out-of-pocket travel expenses, including for fam trips. But you can also deduct travel expenses that are incurred on an individual trip, provided if it benefits your business.

“If you take two weeks of the year for traveling and write a one-page business plan, it’s not far-fetched to deduct the costs of the trip, because it benefits your business,” Bonelli said.

The precedent for this type of deduction was set by a man who spent $55,000 traveling around the world and wrote a book about it a few years ago, according to Bonelli. The IRS ultimately allowed him to deduct his costs because he wrote about his travels.

Bonelli reminded business owners that they must document the trip in advance and keep all receipts.

#4. Education and conferences
Bonelli urged agents to “attend as many conferences as you can afford. All expenses [related to your attendance] are deductible, even dry cleaning and laundry services.”

You can even plan to attend two conferences back-to-back, or a conference and an individual trip, and deduct travel expenses for the time in between the two when you travel directly from one to the other.

The key is determining whether taking these deductions saves you more money than flying home and flying out again a few days later.

#5. Networking
While the Internet and social media have made it possible to network online, there’s nothing like face-to-face meetings. And any business expenses you incur while networking are 100% deductible, Bonelli said.

So go ahead and rent booth space for that conference. Attend that local networking event. Drive that preferred client to the airport. It’s all part of your business development.

#6. Retirement planning
As independent contractors, home-based travel agents don’t have access to company 401k retirement plans, “so you need to sit down with a tax professional and plan your retirement as much as you can,” Bonelli said. “It will lower your tax liability.”

If you don’t have a retirement plan, she said, “you’re literally wasting money that the government is allowing you to put aside.”