Libman Tax Strategies July 2019



JULY 2019

A Little-Known Trade Secret Want to Legally Write off That Family Vacation to Hawaii?

If your family is anything like mine, the second the school year is officially over, your spouse and kids start planning some legendary summer vacations. If this hasn’t already started for you this year, trust me, it’s coming soon! Even though they have lived their entire lives in sunny California, my boys love the beach, so, whenever the opportunity for a family trip comes up, you can bet they are begging to go to Hawaii to swim with the turtles. If you’ve vacationed in those small tropical islands just across the pond, then you know that compared to other sandy beaches throughout the world, Hawaii can be a little pricey. But that’s no reason for your kids to unpack their bags. Let me tell you how you can legally write off that family trip to Hawaii this year. According to the IRS, anything and everything can be considered deductible as long as there is a business-driven purpose behind it. 1. GET TO WORK In order to write off your vacation, the very first step you need to take is making sure you have some type of business. I see how this step can seem both simple and difficult from various perspectives. If you either don’t already have an established business or aren’t sure if your vocation counts, give me a call, and we’ll get this step taken care of. 2. IMPORTANT ACRONYMS When you decide it’s time to start a new business, you’ll have to explore the various business structures available, such as a DBA Directions for the Perfect Family Vacation (from your favorite local tax strategist):

and LLC. One of the most common questions I run into is “What is the difference between a DBA and an LLC?” While it’s all quite complex, here’s a quick breakdown.

DBA is simply an acronym for “doing business as.” It is sometimes referred to as a trade name, fictitious business name, or assumed business name. A DBA allows a business to operate under a name that is different from its legal name, whereas a limited liability company, or LLC, means a business is operating as a distinct and separate legal entity from its owners. While LLCs require more formalities than a DBA, they have fewer restrictions than corporations.

If you need help deciding between these options, setting them up, or establishing an employer identification number (EIN) — which you’ll definitely need — give me a call!

3. IMPORTANT PARTNERSHIPS Once you have established some kind of business, you’ll need to create a general partnership with the other immediate members of your family (spouse and kids). The law states you can’t write off the money you spend bringing your kids with you on vacation, but if you make your kids part-owners of your business, then you can write off their financial portion of the vacation. You don’t have to incorporate; you just need a general partnership where everyone is technically an owner. If you get stuck, let me know! 4. MONEY FUNDS The next step is to open a business bank account. Transfer money into that account, then find a conference in Hawaii (or any other travel location) hosting an event or conference for you to attend. For IRS purposes, if you’re taking a trip in the U.S., you’ll need to spend at least four hours at this event/conference, document it, and then pay for everything through the business bank account in order to write it off. 5. KEEP TRACK Lastly, you’ll need some kind of documentation to verify you attended this event or conference. You can use a certificate of completion or log any associated email correspondences. In short, try to find a way to track your time spent working. 6. BOTTOM LINE While these steps might sound fairly simple, they are easy to mess up. The bottom line is you should give me a call, so we can work together to ensure you have all aspects in order and enjoy your Hawaiian vacation the way you deserve to!

-Adam Libman

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