As tax season is in full swing and many Americans are preparing their 2020 taxes, we got a question from one consumer regarding a special tax credit. He had heard that he might be able to deduct $4,000 from his taxes to cover vacation travel expenses in 2020. But before he filed, he asked TrustDALE to confirm this fantastic tax credit. So let’s set the record straight on the tax credit our consumer is asking about.
The Explore America Tax Credit
There is no question that the travel and restaurant industries are some of the hardest-hit sectors of the economy during the coronavirus pandemic. While some restaurants have been able to open in limited ways, the food and travel industries are serving a greatly diminished consumer demand.
The Explore America Tax Credit was first proposed in June 2020. At the time, travel had come to a near standstill. A second stimulus package was in the early stages of negotiation. President Trump and some lawmakers were eager to help the ailing travel industry and get Americans traveling again.
As early as May 2020, the president met with representatives of the travel industry to discuss ways to save the industry. One idea that emerged from that meeting was the Explore America Tax Credit. The proposal was for a temporary tax credit for 50% of travel-related expenses up to $4,000. The credit would be applicable for tax years 2020 and 2021.
What Happened to the Tax Credit?
The Explore America Tax credit kicked around the halls of Congress for a while but never made it into any legislation. The idea quickly faded and was not brought up again. The bill faced some major challenges, not the least of which is that it was designed to encourage travel at a time when the CDC was urgently instructing Americans to stay and home and avoid travel. It turns out that getting Americans traveling again was not going to be the most prudent and effective way to save the travel industry.
The Bottom Line: Can I Take the Deduction?
The bottom line that no, you cannot take the deduction. The reason is simple: it doesn’t exist. The tax credit never even came close to becoming law. Of course, content lives forever on the internet, so you can still find plenty of outdated videos, articles, and social posts about this proposed tax credit. But don’t expect to use it to reduce your tax burden for 2020.