You can deduct your
travel expenses including travel, lodging, and meals for yourself when you
attend a convention within the United States if you can show that attending the
convention benefits your business. These rules apply to workshops, conferences
and seminars, as well as actual conventions.
You can satisfy the
business relationship test by showing that your business duties and
responsibilities tie in to the program or agenda of the convention. The agenda
doesn't necessarily have to deal specifically with your duties or
responsibilities - a tie-in is enough. You must, however, show some kind of
income-producing purpose for attending the convention. In any case, you won't
be able to deduct any non-business expenses (sightseeing, for example) you
incur while attending the convention.
The rules become far
stricter when the convention is held outside North America or on a cruise ship.
Basically, you can not deduct expenses that are essentially allowing you to disguise
a vacation as attending a convention. This is especially true of investment conventions and seminars or
where the purpose of the convention attendance is simply to receive materials
to be viewed at the taxpayer's leisure However, the IRS
recognize that at least some of these trips are for bona fide business
purposes.
Here's more you need
to know:
Conventions held outside North America. In order to be able to deduct expenses
for attending a convention outside the North American area, the convention must
be directly related to your business and it must be as reasonable to hold the
convention outside North America as in it. For example, it would be reasonable
to hold the convention outside North America if many of the convention's
attendees lived overseas.
You must also satisfy
the requirements for deducting business travel expenses outside the U.S..
However, there is a
way to enjoy an exotic locale without triggering the foreign convention rules:
be aware of what countries are considered within the "North American
area." For purposes of convention travel, a North American area"
includes the obvious: the United States, its possessions, the Trust Territory
of the Pacific Islands, Canada and Mexico. However, it also includes countries
that have an information agreement in place with the United States and that
meet certain tax law requirements.
The IRS maintains a
list of these countries, many of which are tourist meccas that you might not
think of as North American, mainly the Caribbean Islands.
Conventions
held on cruise ships. The following
requirements must be met before you can deduct expenses incurred for a
convention or seminar held on a cruise ship:
·
The convention must be
directly related to the active conduct of your business.
·
The cruise ship must
be a vessel registered in the U.S.
·
All of the cruise
ship's ports of call must be located in the U.S.(or its possessions).
·
You must attach to
your income tax return a written statement signed by you that includes the
total days of the trip (excluding the days you spent traveling to and from the
ship's port), the number of hours each day that you devoted to scheduled
business activities, and a program of the scheduled business activities of the
meeting.
·
You must attach to
your income tax return a written statement signed by an officer of the
organization or group sponsoring the convention that includes a schedule of the
business activities of each day of the convention, and the number of hours you
attended the scheduled business activities.
If you meet the
requirements, you can deduct up to $2,000 annually of the expense of attending
a seminar or convention on a cruise ship. In the case of a joint return, a
maximum of $4,000 would be deductible if each spouse attended qualifying cruise
ship conventions.
So now you know!
