$4,000 Tax Credit For Travel
If you are thinking of traveling once again, the government could give you a hefty financial incentive to do so.
Sen. Martha McSally has pitched a new bill, called the American TRIP Act, that would give people a $4,000 tax credit to take a trip. The vacation credit would apply retroactive to Jan. 1, which means that many people that were traveling early in the year, before the pandemic, would qualify.
The tax credit would increase to $8,000 for joint tax filers. There is also an additional credit of $500 for dependent children.
The tax credit will apply to travel within the United States and its territories after Dec. 31, 2019, and before Jan. 1, 2022, Fox News reports. You have to take a trip at least 50 miles away from your home to qualify. Eligible expenses would include lodging, transportation costs and entertainment.
A tax credit directly reduces the amount of money Americans owe to the IRS. So under the legislation, if an individual tax filer owes $15,000, for example, to the federal government in taxes next year and the person had spent $4,000 on a qualified trip, then the tax bill is reduced to $11,000.
This is similar to the Explore America Tax Credit proposal, that would also give Americans $4,000 tax credit towards travel.
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What if we were going to travel by plane when this this virus hit high during the time that we were suppose to fly. etc; jet blue and we had to cancel because the COVID-19. We we are unable to travel because of underlying medical conditions. We have not received our received a refund because jet blue said that it would honor or flight ✈️ when ever we were ready to re schedule or trip to New Jersey for our Aunts 80th birthday bash which we were unable to take the trip, but have not had our money returned to us because they will honor our ticket on another day. Will we still be able to recover our trip at a later date. Will we still be able to claim the $8000.00?
Although the bill is currently not approved I would assume as long as you keep records there’s a small chance you will receive a tax audit(at least for the credit) claiming any flight you have a receipt for regardless if you actually flew or not. I have a feeling many will even make charges, get a receipt, cancel/refund the flight, and claim it on taxes toward the credit. If IRS does an audit asking for receipt & proof that you actually flew (pics, other related charges etc.) I think that’s a deep dig for IRS but could happen if you abuse it so tread lightly. Much like AMEX flight credits for refunded travel some times you get them, sometimes the RAT pulls it back. .m
I’m sure all of the rules will be defined if it actually becomes a thing but any money spent outside of USA soil most likely will not be covered as US government is not likely to give us free money to help other countries they have other programs for foreign aid. But flying out of the USA on a US owned aircraft you could probably claim the airfare. Surely the point of this credit is for the government to apply some controls on how and where we spend it compared to the uncontrolled free stimulus check as many probably sent that money overseas to help family, nice gesture but does not help the USA economy unless the money is kept inside.
Excuse me P? This is a travel blog and most of us have or will travel this year. How is it useless?
How does it work if you used points for flights?
Not very well, same as if you tried to pay a credit card with a credit card, or if you tried to use your points to claim AMEX airline credit, or points at Hilton expecting to claim Aspire hotel credit. Points & miles are just another form of credit not treated as cash which is the same reason you don’t earn miles when you pay with miles.
I think this is a bad idea even though I (we all) would benefit greatly. But just stupid to pile on more national debt. That being said, if it happens, bring it on!
What about traveling out of country such as to Cancun or cruise to Caribbean
I think the Idea is to use the money to stimulate the U.S. economy, why would the government give U.S. taxpayer money to stimulate Mexico’s economy?
Some may have to play the tax game the make the credit work for them. If the TRIP os like the Solar credit you must earn enough taxed income to receive the credit. In my case my retirement is non taxable so to get the Solar or TRIP credit (unless different rules apply) I would have to generate enough taxable income to make money back receiving the credit. Ie. moving money from an IRA (pre-tax) to ROTH (after tax). The process of moving money generates income required to trigger the credit and the $$ you moved is now in a cleaner vehicle. Of course if your working paying taxes nothing to think about.
If it’s a credit, you will have a net negative taxes, no? Thats the way it works for some credits, like the college ones
Depends on the type of credit if its a “non-refundable credit” such as Solar install credit yes you need negative refund to benefit if it’s from the credit. If its a “refundable credit” such as EITC then the credit is added to your tax refund. Then every credit comes with qualifications. Best case TRIP credit is refundable with no income qualifications, if not there will be many spending believing they will get a credit to get their feeling hurt at the end of the year. My guess it would have max income qualifications much like the stimulus check. Regardless its something you must fully understand the rules on, not the headline before you start splurging, if not the IRS claw back team will come for you this time.
Interesting so basically if approved sound like you must keep all of your receipts (or at least CC statements) to basically file a travel claim in the form of a tax “credit” not a deduction. I’ll assume they will not consider traveling on points to have cash value as the bill is to encourage injecting cash spending in to the economy. Its basically the AMEX Platinum credit on super steroids for any travel related expenses. I can see many maxing out this credit regardless if they traveled or not playing the will I be audited risk, if so would then require you to produce the travel receipts. Bill sounds to good to be true but hopefully its approved!
What a useless credit
You won’t hear me complaining, I’ll gladly take my $8,000 of free money pay for travel using my CC also earning additional CC points, miles, hotel points etc…!!
chickens will come home to roost one of these days