Turning a Business Trip Into a Vacation
Can you mix business and pleasure when claiming tax deductions for business trips? Only if you play by Uncle Sam's rules.
Thinking about attending a business convention and perhaps taking a personal vacation afterward? It is possible to do this and deduct the cost of travel to a trade show or convention if you follow certain tax rules. First of all, the expenses cannot be ones that will be reimbursed by the company. In addition, the convention must be directly related to your trade or business.
Another deduction to look into involves meetings on a cruise ship. You can deduct up to $2,000 annually of the expenses incurred while attending a business seminar or convention held on a cruise ship. "You can get a deduction for this as long as the cruise is held on a U.S. ship, all ports of call are located in the U.S. or a U.S. possession, and you report the details regarding the cruise on your tax return," says Bernie Kent, a partner with accounting and professional services firm PricewaterhouseCoopers HR Services in Detroit. For example, the IRS wants a written statement signed by you giving the total number of days you spent on the trip and the number of hours each day you attended scheduled business activities. You have to include a written program of the business activities. You must also attach a written statement signed by an officer of the organization or the group sponsoring the convention that includes a daily schedule of business activities and the number of hours you attended the business activities.
If you attend a seminar, convention or similar meeting outside North America, then you must establish that it is as reasonable for the meeting to be held outside North America as within North America, taking into account a number of specific factors, including the purpose of the meeting and the activities taking place.
The IRS says if you travel outside the United States for business, it is possible to deduct travel expenses incurred while getting to and from your destination. But if you decide to tack on a vacation, the IRS will expect you to allocate your travel expenses in proportion to the number of days you spend on nonbusiness activities during the trip.
There are, however, some situations in which you can deduct all of your business-related travel costs for a foreign trip. One example: If you stay outside the United States for a week or less, not counting the day you leave, but counting the day you return, then you can deduct all of your business-related travel expenses. For more information, read IRS Publication 463, available at www.irs.gov.
The regulations may seem cumbersome, but at least it's possible to take deductions for a business trip and still enjoy a few days of R&R.
Great Falls, Virginia, writer Joan Szabo has reported on tax issues for 17 years.