Deducting Business Trips

May 19, 2009 | Subscribe to our RSS Feed

Deducting business trips, conventions, and trade shows

IRS auditors are suspicious of business conventions that look more like vacations. Follow all the rules and keep proper records to ensure you secure the valuable deductions:

• In order for a convention to be deductible, it must be connected to your business and the primary purpose of the trip must be business related. You can’t write of the cost of a 6 day trip if you only spend one day at a seminar and the rest of the time sight-seeing.
• Travel Costs: if the trip qualifies, you can deduct the travel costs to and from the location, the convention fees and the hotel bills. You can only deduct 50% of your meal expenses. If you do a small amount of sightseeing on the trip, you can’t deduct any of those associated expenses.
• You cannot write off the cost of bringing your spouse or other family members, unless they are employees of the company and have a legitimate business reason for making the trip.
• No deductions are allowed for meetings related to personal investments, political causes or other purposes. You can deduct educational conferences, but must show that attendance benefits your trade or business.
• Cruise conventions = stricter rules
  • You can only deduct the cost of business-related convention if the cruise involves a U.S. flagship and all ports of call are within the U.S. or its possessions.
  • There is a $2,000 annual limit on cruise conventions.
  • You must attach a written statement to your tax return that includes certain facts about the convention

(keep a copy of the convention agenda or program with your tax records. It generally shows the purpose of the event and can be used to prove to the IRS that the convention benefited your business)