Texas is a great place for business owners due to the lack of corporate state taxes. This allows business owners to focus their energy on getting federal deductions, including deductions for travel. Is a private jet charter tax deductible for business owners? It can be, and we’re here to explain how.
Breaking Down What “Normal and Necessary” Means
The first thing you’re going to notice when itemizing business tax deductions is the language, “normal and necessary.”
A business expense is considered normal when it not only covers an accepted business practice, but a practice that is typical for your business. In other words, if you have to travel for business often, a flight is a normal business expense.
For something like a private jet charter to be necessary, you’ll need to establish that the benefits outweigh the additional cost. For example, a private flight can save time, especially if the alternative involves long layovers. A private flight also provides complete privacy, making it feasible to conduct meetings while flying. If a private flight cuts down considerably on productivity loss, you can typically prove that it was necessary.
Determining the Primary Purpose of a Flight
The cost of chartering a private jet is generally only tax deductible when traveling for business. You shouldn’t deduct the cost of flights, private or otherwise, that are taken for personal or entertainment reasons.
What happens if you take a business trip but squeeze in some personal time?
Generally speaking, you’ll need to look at the relative time spent on business versus pleasure. For example, if you’re traveling to attend an industry conference or open a new office and spend an hour or two touring the city for fun, you’re still taking what is primarily a business trip. If, on the other hand, you spend a day conducting business but a week visiting with family and friends, you’re taking a primarily personal trip. The latter is not deductible.
In rare cases, chartering a jet for an employee taking a personal trip may count as a fringe benefit. However, this will almost always increase the employee’s tax burden while granting the employer a tax deduction.
Why Chartered Flights are Easier to Deduct
When you’re looking for information about tax deductible private flights, you’re bound to come across tons of information about deductions for business-owned jets. This leads many business owners to assume they aren’t eligible for deductions when chartering a private jet.
Not only is a private jet charter tax deductible, but it’s often even easier to calculate your deductible expenses when you charter vs. own. All you need to do is keep the receipts for all of your qualifying chartered flights and give them to your tax accountant. With a business-owned jet, you’d have to calculate the specific cost of fuel and other expenses used for each flight, which can be difficult to quantify definitively.
Are you ready to upgrade your business travel? Get estimates and learn more about the possibilities from North Dallas Aviation.