Working on Vacation: Tax Tips and Implications 
Working remotely during a vacation or business trip can offer flexibility, but it also brings unique tax implications. It’s important to understand where business deductions end and personal expenses begin. Staying informed helps you stay compliant and make the most of potential tax savings.
July 28, 2025
Working on Vacation Tax Tips
Working on Vacation: Tax Tips and Implications 
Working on Vacation Tax Tips

Can I Combine Business and Leisure Travel and Still Qualify for Tax Breaks? 

The IRS recognizes that not all travel is strictly business or solely leisure. However, when travel combines both purposes, the distinction between business and personal time becomes critical for determining deductibility. And, yes, it’s up to you to identify the tax breaks and get the details right. 

The best course of action is to consult with your tax advisor to clarify how personal time affects the tax deductibility of business travel. Nuances such as the amount of time spent on specific activities, where and how you travel, and how expenses are billed can make a significant difference. 

Generally speaking, business owners can fully deduct reasonable transportation and lodging, and partially (at 50%) deduct meals and entertainment if more days are spent working than not, by at least 75%. If a trip is primarily for leisure, only expenses directly associated with work are deductible (like a business lunch, enhanced wifi, or the cost to rent space at a co-working facility for the day). 

What About Working from a Cruise Ship?

Love cruises? You don’t necessarily have to say goodbye to tax breaks while on the open seas, but special rules do kick in. 

If the trip is primarily for leisure, the same rules apply as above—only business-related expenses are eligible. However, if the cruise is connected to a business need (particularly if the cruise itself is the venue for a business conference or seminar), more can be deducted. The IRS allows a deduction of up to $2,000 per year for attending business-focused cruise trips as long as they involve only domestic U.S. cruise lines and points. Otherwise, a special per diem rate of twice the maximum federal daily expense rate applies. How expenses are incorporated into the bill affects your full or additional tax opportunities (for instance, whether meals and entertainment are included in the full package or are itemized), so pay attention to those details. 

And if you believe that working in international waters from a cruise ship or a different country is a great way to avoid having to pay federal income tax, think again. As a U.S. citizen or permanent resident, it doesn’t matter where you work: The IRS will want a cut of your “worldwide” income. That being said, you could look into certain foreign earned income exclusions and/or foreign income tax credits. 

What About Nexus When Working on Vacation?

Many employees and employers overlook state and local income tax rules when working remotely while traveling, particularly on short trips. But for those on payroll (which may include yourself) as well as the self-employed, working from a different state while on vacation, even temporarily, may create a “nexus” in that jurisdiction, potentially triggering additional income tax filing requirements. Working in foreign countries, too—even from a cruise ship docked at overseas ports—can create a local tax liability.

To avoid surprises at tax time, talk to your tax advisor before working out of state or out of the country. If you have an HR or payroll advisor, consult with them as well about any potential payroll ramifications and educate your employees on being clear and open about working while on vacation. Unplugging while taking time off is a great way to recharge, but it can also do wonders for business compliance.

By planning carefully, maintaining excellent records, and seeking professional advice, you can blend business and pleasure without running afoul of IRS regulations or state tax authorities.

Stay compliant—and reap legitimate tax savings—with preparation and clear boundaries between work and play. Feel free to contact us with questions. 

July 29, 2025

Photo purchased from Adobe Stock

July 28, 2025

Client Spotlight

A terrifying home invasion involving men with masks and guns set Pam Wood on an unexpected path to business ownership in 1981….
What happens when you combine a passion for creating, a knack for business, and deep family values? For Scott Klingler, owner of MergeWorks, it resulted…
Bessie M. Irizarry loves embracing a good challenge. It’s one of the many reasons she’s earned respect as a female engineer and business owner in…
San Antonio native Mark Lopez can’t recall a time he didn’t envision himself following the footsteps of his father, a project manager, into the construction…
Siew Pang knows that the key to unlocking the American dream can be discovered by embracing unexpected opportunities….
If you’re a San Antonian, you may not want to imagine your weekend without brunch at the city’s beloved Magnolia Pancake Haus….
Greg Thompson has long respected money and how it can catalyze greater things….
You may not be aware of it, but Don Lasseter has helped you throw a party. How do we know that? He’s the franchise owner…
Land surveyors aren’t known for exceptional customer service. But why shouldn’t they be? David Breaux set out in 1998 to prove that treating customers right…
When Lance Rose sees a business need, he fills it. That’s how he and Terri, his wife of 30 years, have evolved into the proud…
Matt and Lara Bruhn met while in graduate school at Harvard. He served as an officer and F-15C pilot with the U.S. Air Force….
Growing up in Piedras Negras, Coahuila, Mexico—just south of Texas along the Rio Grande—Oscar E. Flores dreamed of becoming a designer….

Blogs and Articles

$125,000 Business Inventory Tax Exemption Heading to Texas Voters

$125,000 Business Inventory Tax Exemption Heading to Texas Voters

Read More

Beware of Modern Ponzi Schemes

We’ve entered a new era of Ponzi schemes. A record number of the scams have been estimated in 2023 alone, an amount that doubled in...

Beware of Modern Ponzi Schemes

Read More

Bankler Partners, LC, Expands into a New Name and Space

This is a pivotal moment for our firm. The transformation to Bankler Partners and move to our new, modern space represents our dynamic growth and...

Bankler Partners, LC, Expands into a New Name and Space

Read More

Digital Assets and Your Taxes

You may have reveled in the Wild West days of cryptocurrency and other digital assets, but we’re entering an era of meticulous record keeping and...

Digital Assets and Your Taxes

Read More

The Goldilocks Rule for Tax Withholding

If you’re like half of Americans this year, you are more dependent on your tax refund to pay for necessities than you have been in...

The Goldilocks Rule for Tax Withholding

Read More

How Inherited Assets Affect Your Taxes

Inheriting assets can be a financial blessing, but it also raises essential tax questions that many heirs overlook. How you manage those assets can have...

How Inherited Assets Affect Your Taxes

Read More

Getting Hit by Someone Else’s Bankruptcy

Finding out that another business or individual who owes your business money has declared bankruptcy can feel like a kick to the stomach....

Getting Hit by Someone Else’s Bankruptcy

Read More

Welcome to Texas: Cutting Tax Ties with Your Previous State

San Antonio is currently one of the fastest-growing metro areas in the nation. If you’re among our new residents, welcome! Before you enjoy the tax-friendly...

Welcome to Texas: Cutting Tax Ties with Your Previous State

Read More

Reaching the Unreachable IRS

Reaching the IRS has always been challenging. With the IRS workforce reduction continuing, many believe your odds of reaching a warm body to resolve a...

Reaching the Unreachable IRS

Read More

How Is Costco Gold Taxed?

Gold, silver, and other precious metals have emerged as standout assets in today’s unpredictable economy due to their ability to remain somewhat independent from stock...

How Is Costco Gold Taxed?

Read More

Yes, You Do Still Have to File Taxes

Early filing numbers are measurably down this year, data security concerns are high, and IRS staffing is in disarray. But if you’re considering scrapping it...

Yes, You Do Still Have to File Taxes

Read More

Retirement Plan Perks for Texas Small Businesses

Retirement Plan Perks for Texas Small Businesses

Read More

Top 6 Worst Social Media Tax Tips

Top 6 Worst Social Media Tax Tips

Read More

What’s Happening with the Corporate Transparency Act?

In March 2025, the Financial Crimes Enforcement Network (FinCEN) issued an interim final rule removing the requirement for U.S. companies to report beneficial ownership information...

What’s Happening with the Corporate Transparency Act?

Read More

Love & Marriage & Your Business Assets

Love & Marriage & Your Business Assets

Read More

Now Accepting New Clients

Let’s Start the Conversation

Let’s take a look at your finances together. We offer a complimentary 1-hour call to review your past tax returns. If we see a way to help you, we will.