LIVE from Hawaii - How to write off your holiday travel! MJK

Hey, everybody. Live from Hawaii, right on the beach at the U.S. open Pro. No, I'm just joking. That's not for another month. But I'm here live on November 21st and want to talk about your travel write offs during the holidays. Now I'm traveling. I'm doing my fall workshop in Honolulu. This set was actually in Kaneohe for those of you local, but here on Oahu, this Saturday is sold out. The live broadcast is on December 7th, nationwide virtual. I'll tell you more about that later if you want, but today's about you. If you're a small business owner and you might be traveling for the holidays, Thanksgiving or Christmas, I want to teach you how you can write off a trip like this. And I'm riding off this trip. And it's a valid deduction under IRS rules for small business owners if you do it right. Now, I'm a CPA attorney here in my Hawaiian shirt. I've even got my camouflage hat on. I know many of you can't see me now. You can see me now you can't. Anyway, that's a dumb joke. Okay, so let's make it happen. Now I'm live. I've got a couple cameras over here that are also locked into YouTube and Facebook. So if you have a question, type it below. If you can't hear me well enough or if I'm bugging you, just mention it. We'll try to fix what we can. The waves are huge over here. We'll pan over there in a minute and show you some of the waves too. Okay, so travel write offs. Now, here's the key. Your travel could be 100% ride off if you incorporate it with business. Now, let me give first, I'll give you some ideas on what would be a business trip. But let's just talk about the hundred percent. I'm not talking about auto. If you're going to drive somewhere for your holidays, we can take an auto deduction. You may have some meals expense while you're there. That's going to be 50%. But your travel is 100% for things like airfare, hotel, Uber, Airbnb, taxi, gas for your rental car, valet. All of that can be 100% write off. Now, here's what the business needs to be if you're going to travel during the holidays. I've got five ways you can do this. First, couple it with a customer visit. Maybe there's a customer a client that you can meet with while you're there for Thanksgiving or Christmas. Also, think about maybe A vendor, someone you buy product from. Think of an affiliate or some sort of marketing partner that you might be able to strategically aligned with. Third, think of your annual corporate meeting. That's right after Thanksgiving dinner. We're going to be talking business and it's a great time to share your strategic plan or your ten year plan. I went live today on YouTube with how to write a ten year plan. It is an awesome video. My son did a great job with the video marketing for that and the editing. It is amazing. So go watch that 10 year plan. It's free right there on YouTube on how to build your 10 year plan. Well share that with your board of advisors or board of directors. So when you're at Christmas or holidays, Thanksgiving, say you're now my board of directors, my board of advisors. You don't have to have a corporation or LLC to do it. Fourth, you may be visiting a rental property. Go look at your rentals. You should be buying rentals where you travel. I've got rental property where I meet with my clients or my family and I'd love to have rentals where I'd like to go. And then number five, attend a conference. Some of you there's. I speak for several real estate groups, one of them being Renatus. I love great real estate education. A lot of times I have a meeting on a Thursday night or a Saturday. I'm going to be in Orange county on December 7th. We're almost sold out there. If you want to come in person, Hawaii, Philadelphia, Chicago. Those are other trips I make in the fall. Seattle, those are passed. But look ahead and see where could I go to a little conference to have my education experience for this for the fall before I kick off 2020. So there you go. Meet a vendor, meet a customer, attend a conference, have your annual board meeting with your family members and then number five, maybe visit a rental property. So those are all good reasons to couple your education, your business with a trip around the holidays. Then I want you to track your expense expenses again. Airfare, hotel. You can even take per diem amounts which we can talk about if you want. So do we have any questions out there on the blogosphere? All right, let me mention the per diem expense. The per diem is you get to take the bigger of your actual expense for food or whatever your per diem amount is. So you can go to the gsa.gov you can Google that. Gsa.gov for per diem, that's P E R D I E M amounts. So let's say you're going to Chicago, the per diem lunch amount might be $25 or 30 something and the dinner might be 40 or $50. Well, if you go to 711 and get a chili dog for dinner or some sort of Chicago dog or pizza and you don't spend the entire per diem amount, you can take the greater of the two. So I have some clients that say, well, I didn't go out to eat, but I can take the per diem amount. And you tell your accountant I was in charge of toggle for two days. So you take the per diem amount. That's a great way to take a write off. So if you don't keep receipts, you can say, I was in this town or city for two or three days. You can take the annual hotel cost or the average hotel cost or the average food cost for breakfast, lunch or dinner. And that's a great way. Another question that a lot of people ask is, well, if I'm going to be gone 10 days, can I really write off all 10 days? No. So what we want to do is look at the days you're doing business and the travel days are a write off and the day you do business. So let's say I travel on a Thursday, do business on a Friday, I get stuck there on the weekend, do business on Monday and then travel on Tuesday. I can write off the whole trip, but I have to make sure that I'm tracking what days are doing business and my travel days. But if I'm there for like two or three fun days, two or three business days, I'm going to split the trip in half and not write off all of my hotel. But I still may write off all my airfare because I had to get there. All right, we had a question.

Okay, this question's from Tico Blaine. When traveling for family events and I happen to go driving for investment properties, how do I expense that part of the trip?

Okay, this is a great question. He said, I'm there with family for Thanksgiving or Christmas and then I drive around and look for investment property. Great question, Tico. Here's the hard part, everybody. Shopping for rental property is not a write off. Now, if you make it a legitimate offer within a few weeks or months later on something you looked at, I'm going to go back and write that trip off. But if you're like, oh, I went to Hawaii and I went around and looked at investment property, well, I can't write off my trip to Hawaii to just look for property. So Tico, what you want to do is track what you look at, make sure you make a legitimate offer on a property later, and then I can go back and write off that trip. But try to do a corporate meeting, education experience or something like that. Question over on YouTube, how much?

Dave Anderson asked, how much is the max for per gsm?

Dave asked, how much is the maximum per diem? Well, it's based on your city, so you want to go to the gsa.gov Maximum Travel write off and it'll have the food amounts and hotel amounts and they're kind of geographically located. So if you're going to be up in the northwest, you look at Seattle or Portland, you're going to be in the east, you might look at, you know, Boston or New York and then all over the place, Dallas, whatever. So, Dave, they're going to vary based on the city you go to or the closest city you're at. And there's going to be an average hotel night for weekdays and weekends and then breakfast, lunch and dinner in those areas. And I have a lot of clients, Dave, that'll say, yeah, I didn't keep any receipts, but I went to Seattle for business three times this year. I was there an average of three days. Every time I went, well, then I'll just take it times three for the hotel and the food and you get the greater of what you spent for the per diem. So go to gsa.gov and then look at that location.

Other question okay, this question's from Stephanie Carpenter. How would you reconcile per diem when

you're Stephanie says how do you reconcile this in your books when what you spent was less than per diem? So what I do, Stephanie, is I'd say here's how I do it. I use my business debit card when I'm traveling. So I'm here in Hawaii and we're actually going to go to what's called Ted's Bakery here for lunch. It's my favorite place to go for lunch and I'm going to treat myself today. So I'm going to go to Ted's Bakery and when I spend it, I'll put it on my business card. Well, when I go to do my accounting, I'll look at oh, the per diem for Hawaii was a lot more than what I spent at Ted's Bakery. So what I do is I classify what I spent as a draw. So it wasn't a write off. And then I do a journal entry and I debit for it. I debit the expense dining and credit isn't a contribution for the per diem amount. Now Stephanie, that may have seemed complicated, but if you have any accounting experience or you tell your accountant, I want you to just do a journal entry for the amount of the per diem for my different trips, then what they'll do is take what you actually spent and call it a draw or as a non expense. And what you're doing is replacing it with the perven. Accountants know how to do it. Once you figure it out, it's pretty easy. But Stephanie, it's a journal entry to replace what you actually spend with the perven. So it's pretty sweet. Okay, so one last thing is a lot of people say, what is a business day? Like, do I have to work all day? No, the IRS says it's four hours a day. So if you go to work on your rental for four hours or you go to a conference for four hours, I can write that whole day off. Now if you had a critical meeting, like say I fly to Seattle and I meet with a client, then I stay the next day and go look at a rental property. And then the next day I do a conference for three hours or four hours, I could call those full business days because they were a critical meeting those days, even if it wasn't for four hours long. So make sure you keep good records in your calendars. And if any of you have a question about travel expenses, throw it out right now. One thing that we do as a family, which is kind of fun is when I go to my mom's, she hates to cook, so we take the business card because my mom lives on rental property income. So we'll take the business part on the rental property and we'll go to Costco and get everything pre made ready to go in the oven. Then we'll come back, eat the food and you'll say, well, Mark, that's Thanksgiving dinner. You can't write that off. Oh yeah we do. Because after dinner we all sit around and have a family meeting and talk about the business. My mom's rental property and the business paid for the lunch. So just because it's Thanksgiving doesn't mean it wasn't a family meeting to talk about family business. So you be creative. You know, I have fun with this. So every time you travel, try to make it a business experience and keep good records. Don't pay cash, use your debit card. I usually take cash out of an ATM and I'll write for my trip to Denver and it was business. And then I can use that cash for tips. And valet and hotel and things like that. Now auto, travel, dining are all separate, so do your best to keep them separate as well. Well, everybody, I want to show you some big waves. Check these out. These are huge right here. We're right down from Foodland over here. Sunset beach is a little further down there. Surfers surfing over here at Waimea Bay with a jet Ski out there to safe save the people that are about ready to kill themselves on the rock. So if you've never been to Hawaii, this is November, December weather, killer surfing. I'm gonna try to get out surf later this evening and tomorrow my workshops on Saturday. And I'm not gonna be surfing waves this big. I'm still a fat old guy, but I'm gonna get out there and do the best I can. So everybody, everybody enjoy your holidays. Thanks for catching this live broadcast. Any other questions? Yes, one more.

Can I write off my wife's and kids travel expenses when they accompany me on a business trip?

First name number nine says, can I write off my spouse and children when they travel with me for business? It depends. And the wife is involved in the business now? It depends. For example, my amazing son is holding the camera. I've got a daughter in law holding another phone over here. And my daughter is holding another phone answering questions. And my son in law. What are you doing? Oh, he's holding the lights. He's got the lights. Yeah. He's a grit, a key grip. So these people are critical in my business. In fact, they're all going to be at my workshop on Saturday helping check people in, sell a few books and we're going to have a luau for lunch at my workshop. Some of you are like, Mark, I can't afford to go to Hawaii for your workshop. Listen, My workshop is 200 bucks. I try to make it very affordable. Put it on your calendar for next year. But this is all a write off because their family helped me. Now if my kids were five years old, a three year old, I may have a hard time writing them off, but my spouse, you're right, Jennifer, your family might be on the camera helping with the video, helping with the workshop. You're on your board of advisors, directors. So number nine, I want you to integrate your spouse and all of you, your kids into the business, help have them help you out wherever you're going. If you're working on rental property, they're cleaning, they're fixing, they're repairing, they're mowing lawns, whatever, like that. So it's a great idea. Any Other questions. Okay. Yeah, from Stephanie again, Stephanie, thank you for your questions.

Fuel for a rental is 100%. What about fuel for your own personal car while traveling?

Okay, so Stephanie says if I rent a car and I'm traveling, the rental car at Hertz is a write off and the gas I use for the rental car is a write off. But what happens if I drive my own car to go to a workshop in another state where I'm at Thanksgiving going to visit moms? She said, is the fuel for that rental. Sorry, is that fuel for my personal car write off? It depends on how you're writing off your car. You could be doing mileage or actual. If you're doing mileage, the fuel is not a write off. This year it's $0.58amile. So think about it. I mean, if you drive 500 miles for things to giving and have your corporate meeting, you're going to get a two or three hundred dollars write off. That's not too bad. If you are doing the actual method, then I get to write off the fuel and repairs and maintenance and depreciate the car. Now what I recommend to everybody is get over to my website, markjkohler.com go to the blog and type in auto. And Stephanie, I have an article this year that's great. And I give you seven methods to write off your auto. So check out which method works for you. So it may depend on whether you can actually write off the actual gas versus mileage, no matter where you go for business, not just alone. Take a long travel trip during the holidays. Another question.

Okay, this is from Tico. If I use my personal account while traveling in the past year, can I still write off those meals?

Great question. Tico says, Mark, I didn't use my business card or my business account to ride off expenses while I was traveling, but I was traveling for business. Am I screwed? No, you are not. What I want you to do is go back into your personal account, your American Express, your visa, your MasterCard, Capital One, whatever card you use for business, even though it wasn't through your business account, it was a personal account, and write them down, do a little spreadsheet, give it to your accountant at the end of the year and say, hey, these are all the expenses, expenses I had traveling for business. And your accountant's gonna go, all right, what was that? Business, you know, what did you do? And as long as your account's like, okay, sounds good, Our office, we're gonna be all over that. We're gonna write that off as an expense. And Stephanie, that's where we would do a journal entry so your accountant knows how to book it into your business so that it's actually a write off. Okay.

Okay. Another question from Sky. Is it too late to start an HSA account for 2019? Self directed, as a small business, I

like sky bringing up an HSA question. That's a health savings account and I love health savings accounts. And she said, is it too late to start one this year? No. But there's a couple qualifying important points. Let's say this first. An HSA is like a IRA for healthcare. You actually have until April 15th of next year to start it, fund it, and get a write off this year. So you sky, you've got four or five more months to fund it. The question is, can you start it legally? You have to have a high deductible health care plan this year, in 2019, by December 1st. So if you're in the enrollment period right now, and I'll be doing a strategic tax and legal webinar next month, next week, in the evening, two days before Thanksgiving, it's like 19 bucks and I go through healthcare for an hour. So sky, you might want to go to my website and sign up for that. It's just $19.95 for a night and I hyper focus with my computer screen on this topic. So you can open an hsa. You just have to have that high deductible plan by December 1st this year and then you can fund it all the way up until April 15th of 2020 and get a write off this year. I love it. I have an hsa. You can self direct it. If anybody wants to open one that you can self direct, go to www.directedira.com directed ira.com that's where my HSA is. And I actually own a rental property in my hsa. Okay, we'll do one more question and then we're going to wrap it up.

Okay. Well, Stephanie wants to know, is your workshop available? Vi.

Yes. So Stephanie, ma', am, throwing me out there a sweet softball. I love it. My annual workshop online live with a live Q and A and a workbook is only 99 bucks. I do it every year. This is my ninth year and it's on December 7th. And you get a live private YouTube link to watch the broadcast on December 7th. And if you miss any part of it or can't make it, it's recorded. And so whether you attend in person or you watch it live, you get a recording. And I go through four topics how to build your business even if you're just starting or have a mature business. The legal structuring for your business, new tips for the year, the year end tax tips that I love for this year in 2019. And number four, bringing it all together with wealth building strategies, with self directing with 401k HSAs. And right now we're doing our setup of a 401k, $200 off and you get an hour with an attorney right now in November. So get to my website, markjkohler.com you can sign up for the webcast, 99 bucks and have your family over. Anybody in your house can watch it with you. I can't stop you. So have some food, have some hors d' oeuvres and watch me live on December 7th. 99 bucks and you can sign up at my website. Thanks everybody for watching. It was a great little opportunity to share Hawaii with you here hopefully. I'm gonna go get probably some garlic shrimp at TED Bakery right now and I'll be living the dream. And I'm working hard just like you and I put in the hours. Don't give up everybody. It's hard. I'll be back in the office all next week before Thanksgiving myself. So keep working hard. Thanks so much for watching. This is Dylan behind the camera. Don't forget to wish Mark a happy birthday because today is his birthday. It is my birthday today. Thanks everybody. It.