You have to love “travel expenses” as a category of expenses for your business.
The primary purpose of your trip away from home must be for business purposes. If your trip is
for a business purpose then you are permitted to deduct the cost of transportation between your home
base and your destination.
In addition, you may also be able to claim costs of lodging, meals, and all related and necessary
travel expenses, not only for the days you engage in business activity, but for time you spend on
other activities while you are on your trip.
This will include sightseeing, trips, entertainment and meals while building a relationship or
enjoying other non business activities at your destination. The costs of recreational activities,
during the personal portion of your trip are not, however, deductible.
The cost of a vacation taken at a non business destination before or after reaching your business
destination may be deductible, but you will need to ensure that you qualify for these
deductions.
For U. S. Residents, your foreign trip will be considered entirely for business if you are
outside the U.S. for one week or less, or less than 25% of your time was spent on non business
activities. You may also be eligible if you had no substantial control over the trip or you can
establish that a vacation was not a major consideration for your trip.
If your foreign travel is entirely for business, all of your transportation, lodging, and meal
expenses are deductible. If your primary purpose was business, but your travel was not entirely for
business, your travel expenses must normally be allocated according to the number of business
days.
For non U. S. Residents, you will need to check with your tax advisor, as permitted expenses may
differ from those advised in this article.
Attendance at a convention connected with your business is deductible. However, you may not
deduct the cost of attending investment, political, social, or fraternal conventions. Sometimes, you
may quality for a deduction for post convention trips that include educational advancement. For U.
S. Residents, no deduction is allowed for the expenses of attending conventions outside the North
American area, unless the convention was directly related to your business and it was reasonable to
meet in a foreign location.
The North American area includes Canada, Mexico, Puerto Rico, U.S. possessions, U.S. Virgin
Islands, Guam, Samoa, and Trust Territory of the Pacific Islands. Conventions may also be held in
"eligible" Caribbean countries.
Cruise ship expenses directly related to the active conduct of a trade or business are deductible
up to $2,000 a year. All the ports of call must be in the United States or its possessions, and the
ship must be registered in the United States.
A written statement signed by an officer of the group sponsoring your foreign convention or
cruise must be attached to your return. In addition, you must attach your own statement showing the
total days spent at the convention, the number of hours each day devoted to business activities, and
a copy of the convention program. If at least 6 hours per day are scheduled for business activities
and you attend at least two-thirds of the total hours of scheduled activities, each day of the
convention or cruise will be considered a business day.
If you take your spouse along on a convention or business trip, his or her travel expenses are
non deductible personal expenses, unless (1) your spouse is also a partner in your business or an
employee of your or your employer's company, (2) your spouse's presence has a bona fide business
purpose, and (3) your spouse's expenses would be otherwise deductible. If your spouse does accompany
you for a business purpose, the amount by which your hotel expenses exceed the single rate and the
cost of your spouse's meals are not deductible.
Note: Taxation legislation differs between countries and each country may change their rules at
any time. The information provided in these newsletters is accurate at time of publication. You
should however seek specific information from your Tax Advisor or Taxation Department as it relates
to your own situation each year that you are required to provide Income and Expense Statements.
John Ritchie,
Copyright to this article belongs to John Ritchie.
http://www.johnritchieonline.com
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