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It’s common for families to plan a vacation around a parent’s out-of-town seminar, training session, conference, or regional meeting. Having one traveler’s expenses covered can make all the difference towards making a vacation affordable.
MAKE SURE
the event has a legitimate business/church purpose
only employee’s expenses are reimbursement
only the expenses directly related to the event are reimbursed
BE PREPARED FOR THE TAX HIT
Any expenses that are reimbursed that are NOT related to a legitimate business purpose and NOT related to the employee’s attendance should appear on the employee’s Form W-2 as taxable income.
USING THE RULES
If the spouse and/or children of the attendee are also employees, AND have a legitimate business reason for attending the event, then all the direct expenses in order to do so would also be reimbursable with no tax consequences.
RULE OF THUMB
If the attendee’s spouse was working and the kids were in school and the employee still needed to attend the seminar, then the event most likely has a legitimate business/church purpose.
The directly related costs are getting to and from the event, entry into the event, meals out that are normally eaten at home, and lodging during the event.
KEEP IN MIND
Sometimes an employer (church) chooses to reimburse expenses, knowing that it will trigger taxable income. Keep in mind that the tax expense on the cost of a vacation will be less than the entire cost of the vacation.