Tax Tips for Travel Advisors: What to Write Off and How to Stay IRS-Compliant

Tax season has arrived, and Americans now have until April 15 to submit their tax returns to the Internal Revenue Service (IRS). Travel advisors operate their businesses under unique circumstances – and no two travel agencies function exactly the same. This can raise many questions for advisors come tax time. 

To help travel advisors prepare to file their 2024 taxes, TMR spoke with Jennifer Hand, a former corporate accountant and owner of Jennifer Hand Travel Pro based in Alabaster, Alabama. Here are just a few tips for advisors to consider. 

Disclaimer: Below is the opinion of TMR and Hand, and it should not be considered to be providing tax advice or tax counsel. 

Get organized – and professional

First and foremost, organization is key when filing taxes. Travel advisors should maintain thorough bookkeeping throughout the year. Also, don’t comingle funds: Having an isolated bank account or credit card for all business expenses makes all the difference. 

When filing taxes, travel advisors want to show the IRS that they are legit businesses. This can mean having an updated online presence and company name across all platforms – because the IRS is on social media, too, for investigative purposes. 

“Social media, a website, a bank account with the company name, and a credit card – even if it’s just a personal credit card that only has your company stuff on it – things like that are proof of being a viable entity,” Hand said. 

Write off all business-related expenses

Any expense that helps advisors run their business and contributes to their bottom line can be written off on a tax return. But there is no one-size-fits-all for this, and it’s up to the advisor’s discretion. 

When considering what to write off, Hand reminds travel advisors that “education and training matter.” Don’t forget about things like educational tools, training courses, and marketing materials – even some subscription services can be written off. 

“There’s no definitive list because everyone operates in a different way,” Hand noted. 

Many travel advisors work from home nowadays, but not all claim their home office on their tax returns. This depends on whether the home office has its own dedicated space in the house. Wi-Fi and cable television in that space are possible write-offs. 

Remember to expense travel, but with caution

A common question among advisors might be: Do I expense my travel? FAM trips and other site visits can be written off on tax returns if they are directly related to products the business sells.  

However, travel advisors should exercise caution when they bring friends and family on these trips and only expense their own travel costs. These can include the travel advisor’s airfare, hotel stay, and international cell phone plans. 

“It all comes down to being conservative enough that it makes sense if you had to defend it but also being aggressive enough to take into consideration all the things that help the business run,” Hand said. 

Prove it with profitability

When in doubt, travel advisors should ask themselves: can I prove this write-off with profit? In addition to an organized set of books, the IRS is looking to see profit gained from the expense.  

“The best defense is that there’s return on investment,” Hand said. “Any expense you’re claiming, the proof is in the pudding – it’s in the revenue.” 

For the first few years in business, some travel advisors will not make a profit and that’s OK. But after three to four years, the government wants to see a business’s write-offs generating profit. 

“They will expect you to have ROI; otherwise, you are just expensing your vacation,” Hand said. “Don’t throw caution to the wind. It has to be justifiable.” 

Hire a trusted tax practitioner CPA

Don’t cut corners when it comes to filing business taxes. It may seem like a high price to hire a CPA, but in reality, a professional helps you save time and money. 

A tax practitioner CPA will take a travel advisor’s books and give their honest opinion about what can and can’t be written off. They will also help make sure there are no missed deductions. 

Ultimately, being smart about write-offs, organizing financials well, and trusting taxes to the professionals will help travel advisors protect their business and maximize their tax returns.