Tax-Deductible Business Travel Expenses: Mixing Business and Pleasure the Smart Way

SPW writes: Conferences and Business cruises are a great way to make the most of your career – from a career perspective, as well as a personal one. Many conferences are customized to offer the optimal tax deduction while offering vacation-like landscapes and luxuries. The IRS has begun to scrutinize these deductions in recent years, but there are some easy ways to ensure your trip will be covered.

Our Recommendations for an Audit-Proof Conference Deduction

We advise you attend established conferences – for simplicity’s sake and peace of mind. The conference should mention on the brochure that it will be tax-deductible, and the topic needs to relate directly to your business. A dentist could not justify attending a financial retirement conference, but he/she could substantiate a dental conference.

Ensuring Your Business Conference Is Tax-Deductible

Established conferences know they need to prove their attendees worked full days. They also want to structure the day so you have time to sit back, relax and enjoy the destination. Trainings/seminars are often offered early, giving you time to relax in the afternoon and evening. If you are unsure whether the IRS will be satisfied by the conference, we recommend keeping track of the hours you work and documenting your productivity extensively.

The IRS allows you to claim entertainment costs for you and one “closely connected person.” Spouses clearly count under this term, but we have not found any direct indication that children fall or do not fall in this category.

Tax Restrictions on a Business Cruise

Business cruises are tax-deductible, but there are very specific rules to follow.

1. The trip’s ports of call must be in the U.S. or U.S.-owned.
2. The conference topic must be directly related to your industry
3. Documentation may be required to substantiate work hours
4. You must retain an official schedule of the events you attend
5. Business cruise deductions are limited to $2,000 per taxpayer per tax year

If you want to set up a tax-deductible business cruise, we recommend speaking with a CPA first.