Many individuals feel confident about spending money on conventions because they think convention attendance is tax deductible. If that is what you think, you might want to think again. Not all conventions are tax deductible. Let us consider some ways in which you can qualify for tax deduction when you attend a convention.
Which parts of a convention is tax deductible
Undoubtedly, one of the most common expenses of a business is the travel expense. It can get quite confusing when trying to figure out what expenses are eligible for tax deductions. When you identify these expenses, you can plan your official trips quite easily, and even merge family vacations with the conventions, whenever possible, but always consult your tax accountant first before you leave.
As mentioned earlier, your travel expenses are tax deductible. This is irrespective of any mode of travel you use. Apart from this, half of the cost that you incur on food and beverages while travelling, is also deductible. Other expenses include your hotel expenses, baggage charges, and local transportation charges. If you are using your own car, the cost of gas and other needful maintenance associated with the upkeep of the car is also included. Your laundry expenses, telephone charges, and rental of any other communication services for work related purposes are all tax deductible. In Canada refer to the following list from the Canada Revenue Agency of business expenses, and in the United States refer to Publication 535.
What does not qualify for a tax deduction?
Clubbing your family vacation with a convention is not tax deductible. If you decide to take a friend or your spouse to the convention, their expenses will be included in the deduction, only if they are involved in the business in some way. So, it is important to keep these pointers in mind, to avoid problems at the time of auditing. If you are unsure take a look at the IRS convention expense and if you are from Canada, it’s outlined here from Canada Revenue Agency. IT-131R2
If you are travelling in pursuit of a new job, or starting a new business, it will not be treated as a tax-deductible expense. This can be added to your business start up expense, and can be claimed over the next six months. Expenses that are eligible for tax deductions are also expected to be reasonable, necessary, and ordinary. If you have extravagant expenses, they might not qualify for a tax exemption.
The IRS is cautious about those who try to pass-off their personal leisure trips as a work related travel. If you do travel for leisure purposes, and have spent time in the particular destination attending a business meeting, you might be able to deduct your personal expense, excluding that of your family’s. The amount of time you spend for work purposes and for leisure will be compared to determine the primary purpose of travel. If the trip you made is for personal reasons, and business activities just happened to coincide, you cannot deduct your travel expense to the destination. Again, always check with a tax accountant to ensure that you meet the criteria to support your travel convention expense claims.
It is important to know that only 50% of your meal expense is deductible. If you are going to be away from you home for a long period of time, you can choose to deduct 50% of a Standard Meal Allowance (SMA). Planning a trip keeping all these factors in mind will help avoid problems and have peaceful trip.
