Publication 463 |
2000 Tax Year |
What Travel Expenses Are Deductible?
Once you have determined that you are traveling away from your tax
home, you can determine what travel expenses are deductible.
Deductible travel expenses include those ordinary and necessary
expenses you have when you travel away from home on business. The type
of expense you can deduct depends on the facts and your circumstances.
Table 1 summarizes travel expenses you may be able to
deduct. You may have other deductible travel expenses that are not
covered there, depending on the facts and your circumstances.
When you travel away from home on business, you should keep records
of all the expenses you have and any advances you receive from your
employer. You can use a log, diary, notebook, or any other written
record to keep track of your expenses. The types of expenses you need
to record, along with supporting documentation, are described in
Table 4 (see chapter 5).
Travel expenses for another individual.
If a spouse, dependent, or other individual goes with you (or your
employee) on a business trip or to a business convention, you
generally cannot deduct his or her travel expenses.
Employee.
You can deduct the travel expenses you have for an accompanying
individual if that individual:
- Is your employee,
- Has a bona fide business purpose for the travel, and
- Would otherwise be allowed to deduct the travel
expenses.
Business associate.
If a business associate travels with you and meets the conditions
in (2) and (3) above, you can claim the deductible travel expenses you
have for that person. A business associate is someone with whom you
could reasonably expect to actively conduct business. A business
associate can be a current or prospective (likely to become) customer,
client, supplier, employee, agent, partner, or professional advisor.
Bona fide business purpose.
For a bona fide business purpose to exist, you must prove a real
business purpose for the individual's presence. Incidental services,
such as typing notes or assisting in entertaining customers, are not
enough to warrant a deduction.
Example.
Jerry drives to Chicago on business and takes his wife, Linda, with
him. Linda is not Jerry's employee. Even if her presence serves a bona
fide business purpose, her expenses are not deductible.
Jerry pays $115 a day for a double room. A single room costs $90 a
day. He can deduct the total cost of driving his car to and from
Chicago, but only $90 a day for his hotel room. If he uses public
transportation, he can deduct only his fare.
Table 1. Travel Expenses You Can Deduct
Meals
Unless you meet the rules for business entertainment, you cannot
deduct the cost of meals if it is not necessary for you to stop for
sleep or rest to properly perform your duties. These rules are
explained in chapter 2.
50% limit on meals.
You can use either the actual cost of your meals or a standard
amount to figure your meals expense. (See Standard Meal Allowance
later in this chapter.) However, you can generally deduct only
50% of the cost of your unreimbursed business-related meals.
If you are reimbursed for the cost of your meals, how you apply the
50% limit depends on whether your employer's reimbursement plan was
accountable or nonaccountable. If you are not reimbursed, the 50%
limit applies whether the unreimbursed meal expense is for business
travel or business entertainment. Chapter 2
discusses the 50% limit in
more detail, and chapter 6
discusses accountable and nonaccountable
plans.
Lavish or extravagant.
You cannot deduct expenses for meals that are lavish or
extravagant. An expense is not considered lavish or extravagant if it
is reasonable based on the facts and circumstances. Expenses will not
be disallowed merely because they are more than a fixed dollar amount
or take place at deluxe restaurants, hotels, nightclubs, or resorts.
Standard Meal Allowance
You generally can deduct a standard amount for your daily
meals and incidental expenses (M&IE)
while you are traveling away from
home on business. In this publication, "standard meal allowance"
refers to the federal rate for M&IE (which varies based on where
and when you travel).
Incidental expenses.
These include, but are not limited to, your costs for the following
items.
- Laundry, cleaning and pressing of clothing.
- Fees and tips for persons who provide services, such as
porters and baggage carriers.
Incidental expenses do not include taxicab fares, lodging
taxes, or the costs of telegrams or telephone calls.
Federal employees should refer to the Federal Travel Regulations at
41 CFR 301 for changes affecting their claims for reimbursement of
these expenses.
The standard meal allowance method is an alternative to the actual
cost method. It allows you to deduct a set amount, depending on where
and when you travel, instead of keeping records of your actual costs.
If you use the standard meal allowance, you still must keep records to
prove the time, place, and business purpose of your travel. See the
recordkeeping rules for travel in chapter 5.
There is no optional standard lodging amount similar to the
standard meal allowance. Your allowable lodging expense deduction is
your actual cost.
Who can use the standard meal allowance.
You can use the standard meal allowance whether you are an employee
or self-employed, and whether or not you are reimbursed for your
traveling expenses. You cannot use the standard meal allowance if you
are related to your employer as defined next.
Related to employer.
You are related to your employer if:
- Your employer is your brother or sister, half brother or
half sister, spouse, ancestor, or lineal descendant,
- Your employer is a corporation in which you own, directly or
indirectly, more than 10% in value of the outstanding stock, or
- Certain relationships (such as grantor, fiduciary, or
beneficiary) exist between you, a trust, and your employer.
You may be considered to indirectly own stock, for purposes of
(2), if you have an interest in a corporation, partnership, estate, or
trust that owns the stock or if a member of your family or your
partner owns the stock.
Use of the standard meal allowance for other travel.
You can use the standard meal allowance to prove meal expenses you
have when you travel in connection with investment and other
income-producing property. You can also use it to prove meal expenses
you have when you travel for qualifying educational purposes. You
cannot use the standard meal allowance to prove the amount
of your meals when you travel for medical or charitable purposes.
Amount of standard meal allowance.
The standard meal allowance is the federal M&IE rate. For
travel in 2000, the rate is $30 a day for most areas in the
United States. Other locations in the United States are designated as
high-cost areas, qualifying for higher standard meal allowances.
Locations qualifying for rates of $34, $38, $42, or $46 a day are
listed in Publication 1542.
If you travel to more than one location in one day, use the rate in
effect for the area where you stop for sleep or rest. If you work in
the transportation industry, however, see Special rate for
transportation workers, later.
50% limit may apply.
If you are not reimbursed or if you are reimbursed under a
nonaccountable plan for meal expenses, you can generally deduct only
50% of the standard meal allowance. If you are reimbursed under an
accountable plan and you are deducting amounts that are more than your
reimbursements, you can deduct only 50% of the excess amount. The 50%
limit is discussed in more detail in chapter 2,
and accountable and
nonaccountable plans are discussed in chapter 6.
Standard meal allowance for areas outside the continental
United States.
The standard meal allowance rates do not apply to travel in Alaska,
Hawaii, or any other locations outside the continental United States.
The federal per diem rates for these locations are published monthly
in the Maximum Travel Per Diem Allowances for Foreign Areas.
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Your employer may have these rates available, or you can purchase
the publication from the:
Superintendent of Documents
U.S. Government Printing Office
P.O. Box 371954
Pittsburgh, PA 15250-7954.
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You can also order it by calling the Government Printing Office at
1-202-512-1800 (not a toll-free number).
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Per diem rates are also available on the Internet. If you have a
computer and a modem, you can access domestic per diem rates at:
www.policyworks.gov/perdiem
You can access
foreign per diem rates at: www.state.gov/www/perdiems
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Special rate for transportation workers.
You can use a special standard meal allowance if you work in the
transportation industry. You are in the transportation industry if
your work:
- Directly involves moving people or goods by airplane, barge,
bus, ship, train, or truck, and
- Regularly requires you to travel away from home and, during
any single trip, usually involves travel to areas eligible for
different standard meal allowance rates.
If this applies to you, you can claim a $38 a day
standard meal allowance ($42 for travel outside the continental
United States).
Using the special rate for transportation workers eliminates the
need for you to determine the standard meal allowance for every area
where you stop for sleep or rest. If you choose to use the special
rate for any trip, you must use the special rate (and not use the
regular standard meal allowance rates) for all trips you take that
year.
Travel for days you depart and return.
For both the day you depart for and the day you return from a
business trip, you must prorate the standard meal allowance. You can
do so by one of two methods.
- Method 1: You can claim 3/4 of the
standard meal allowance.
- Method 2: You can use any method that you
consistently apply and that is in accordance with reasonable business
practice.
Example.
Jen is employed in New Orleans as a convention planner. In March,
her employer sent her on a 3-day trip to Washington, DC, to attend a
planning seminar. She left her home in New Orleans at 10 a.m. on
Wednesday and arrived in Washington, DC, at 5:30 p.m. After spending
two nights there, she flew back to New Orleans on Friday and arrived
back home at 8:00 p.m. Jen's employer gave her a flat amount to cover
her expenses and included it with her wages.
Under Method 1, Jen can claim 2 1/2 days of the
standard meal allowance for Washington, DC: 3/4 of the
daily rate for Wednesday and Friday (the days she departed and
returned), and the full daily rate for Thursday.
Under Method 2, Jen could also use any method that she applies
consistently and that is in accordance with reasonable business
practice. For example, she could claim 3 days of the standard meal
allowance even though a federal employee would be limited to only 2 1/2 days.
Travel in the United States
The following discussion applies to travel in the United States.
For this purpose, the United States includes the 50 states and the
District of Columbia.
The treatment of your travel
expenses depends on how much of your trip was business related and on
how much of your trip occurred within the United States. See Part
of Trip Outside the United States, later.
Trip Primarily for Business
You can deduct all of your travel expenses if your trip was
entirely business related. If your trip was primarily for business
and, while at your business destination, you extended your stay for a
vacation, made a nonbusiness side trip, or had other nonbusiness
activities, you can deduct your business-related travel expenses.
These expenses include the travel costs of getting to and from your
business destination and any business-related expenses at your
business destination.
Example.
You work in Atlanta and take a business trip to New Orleans. On
your way home, you stop in Mobile to visit your parents. You spend
$630 for the 9 days you are away from home for travel, meals, lodging,
and other travel expenses. If you had not stopped in Mobile, you would
have been gone only 6 days, and your total cost would have been $580.
You can deduct $580 for your trip, including the cost of round-trip
transportation to and from New Orleans. The cost of your meals is
subject to the 50% limit on meals mentioned earlier.
Trip Primarily for
Personal Reasons
If your trip was primarily for personal reasons, such as a
vacation, the entire cost of the trip is a nondeductible personal
expense. However, you can deduct any expenses you have while at your
destination that are directly related to your business.
A trip to a resort or on a cruise ship may be a vacation even if
the promoter advertises that it is primarily for business. The
scheduling of incidental business activities during a trip, such as
viewing videotapes or attending lectures dealing with general
subjects, will not change what is really a vacation into a business
trip.
Part of Trip Outside
the United States
If part of your trip is outside the United States, use the rules
described later in this chapter under Travel Outside the United
States for that part of the trip. For the part of your trip that
is inside the United States, use the rules in this section. Travel
outside the United States does not include travel from one point in
the United States to another point in the United States. The following
discussion can help you determine whether your trip was entirely
within the United States.
Public transportation.
If you travel by public transportation, any place in the United
States where that vehicle makes a scheduled stop is a point in the
United States. Once the vehicle leaves the last scheduled stop in the
United States on its way to a point outside the United States, you
apply the rules under Travel Outside the United States.
Example.
You fly from New York to Puerto Rico with a scheduled stop in
Miami. You return to New York nonstop. The flight from New York to
Miami is in the United States, so only the flight from Miami to Puerto
Rico is outside the United States. Because there are no scheduled
stops between Puerto Rico and New York, all of the return trip is
outside the United States.
Private car.
Travel by private car in the United States is travel between points
in the United States, even though you are on your way to a destination
outside the United States.
Example.
You travel by car from Denver to Mexico City and return. Your
travel from Denver to the border and from the border back to Denver is
travel in the United States, and the rules in this section apply. The
rules under Travel Outside the United States apply to your
trip from the border to Mexico City and back to the border.
Travel Outside
the United States
If any part of your business travel is outside the United States,
some of your deductions for the cost of getting to and from your
destination may be limited. For this purpose, the United States
includes the 50 states and the District of Columbia.
How much of your travel expenses you can deduct depends in part
upon how much of your trip outside the United States was business
related.
Travel Entirely for Business or
Considered Entirely for Business
You can deduct all your travel expenses of getting to and from your
business destination if your trip is entirely for business or
considered entirely for business.
Travel entirely for business.
If you travel outside the United States and you spend the entire
time on business activities, you can deduct all of your travel
expenses.
Travel considered entirely for business.
Even if you did not spend your entire time on business activities,
your trip is considered entirely for business if you meet at least one
of the following four exceptions.
Exception 1 - No substantial control.
Your trip is considered entirely for business if you did not have
substantial control over arranging the trip. You are not considered to
have substantial control merely because you have control over the
timing of your trip.
You are considered not to have substantial control over your trip
if you:
- Are an employee who was reimbursed or paid a travel expense
allowance,
- Are not related to your employer, and
- Are not a managing executive.
"Related to your employer" was defined earlier in this chapter under Standard Meal Allowance.
A "managing executive" is an employee who has the authority
and responsibility, without being subject to the veto of another, to
decide on the need for the business travel.
A self-employed person generally has substantial control over
arranging business trips.
Exception 2 - Outside United States no more than a
week.
Your trip is considered entirely for business if you were outside
the United States for a week or less, combining business and
nonbusiness activities. One week means seven consecutive days. In
counting the days, do not count the day you leave the United States,
but do count the day you return to the United States.
Example.
You traveled to Brussels primarily for business. You left Denver on
Tuesday and flew to New York. On Wednesday, you flew from New York to
Brussels, arriving the next morning. On Thursday and Friday, you had
business discussions, and from Saturday until Tuesday, you were
sightseeing. You flew back to New York, arriving Wednesday afternoon.
On Thursday, you flew back to Denver. Although you were away from your
home in Denver for more than a week, you were not outside the United
States for more than a week. This is because the day you depart does
not count as a day outside the United States. You can deduct your cost
of the round-trip flight between Denver and Brussels. You can also
deduct the cost of your stay in Brussels for Thursday and Friday while
you conducted business. However, you cannot deduct the cost of your
stay in Brussels from Saturday through Tuesday because those days were
spent on nonbusiness activities.
Exception 3 - Less than 25% of time on personal
activities.
Your trip is considered entirely for business if you were outside
the United States for more than a week, but you spent less than 25% of
the total time you were outside the United States on nonbusiness
activities. For this purpose, count both the day your trip began and
the day it ended.
Example.
You flew from Seattle to Tokyo, where you spent 14 days on business
and 5 days on personal matters. You then flew back to Seattle. You
spent one day flying in each direction. Because only 5/21
(less than 25%) of your total time abroad was for nonbusiness
activities, you can deduct as travel expenses what it would have cost
you to make the trip if you had not engaged in any nonbusiness
activity. The amount you can deduct is the cost of the round-trip
plane fare and 16 days of meals (subject to the 50% limit), lodging,
and other related expenses.
Exception 4 - Vacation not a major consideration.
Your trip is considered entirely for business if you can establish
that a personal vacation was not a major consideration, even if you
have substantial control over arranging the trip.
Travel not entirely for business.
If you do not meet any of the above exceptions, you may still be
able to deduct some of your expenses. See Travel Primarily for
Business, next.
Travel Primarily for Business
If you travel outside the United States primarily for business but
spend some of your time on nonbusiness activities, you generally
cannot deduct all of your travel expenses. You can only deduct the
business portion of your cost of getting to and from your destination.
You must allocate the costs between your business and nonbusiness
activities to determine your deductible amount. See Travel
allocation rules, below.
You do not have to allocate your travel expenses if you meet one of
the four exceptions listed earlier under Travel considered
entirely for business. In those cases, you can deduct the total
cost of getting to and from your destination.
Travel allocation rules.
If your trip outside the United States was primarily for business,
you must allocate your travel time on a day-to-day basis between
business days and nonbusiness days. The days you depart from and
return to the United States are both counted as days outside the
United States.
To figure the deductible amount of your round-trip travel expenses,
use the following fraction. The numerator (top number) is the total
number of business days outside the United States. The denominator
(bottom number) is the total number of travel days outside the United
States.
Counting business days.
Your business days include transportation days, days your presence
was required, days you spent on business, and certain weekends and
holidays.
Transportation day.
Count as a business day any day you spend traveling to or from a
business destination. However, if because of a nonbusiness activity
you do not travel by a direct route, your business days are the days
it would take you to travel a reasonably direct route to your business
destination. Extra days for side trips or nonbusiness activities
cannot be counted as business days.
Presence required.
Count as a business day any day your presence is required at a
particular place for a specific business purpose. Count it as a
business day even if you spend most of the day on nonbusiness
activities.
Day spent on business.
If your principal activity during working hours is pursuit of your
trade or business, count the day as a business day. Also, count as a
business day any day you are prevented from working because of
circumstances beyond your control.
Certain weekends and holidays.
Count weekends, holidays, and other necessary standby days as
business days if they fall between business days. But if they follow
your business meetings or activity and you remain at your business
destination for nonbusiness or personal reasons, do not count them as
business days.
Example 1.
Your tax home is New York City. You travel to Quebec where you have
a business appointment on Friday. You have another appointment on the
following Monday. Because your presence was required on both Friday
and Monday, they are business days. Because the weekend is between
business days, Saturday and Sunday are counted as business days. This
is true even though you use the weekend for sightseeing, visiting
friends, or other nonbusiness activity.
Example 2.
If, in Example 1, you had no business in Quebec after
Friday, but stayed until Monday before starting home, Saturday and
Sunday would be nonbusiness days.
Nonbusiness activity on the way to or from your business
destination.
If you stopped for a vacation or other nonbusiness activity either
on the way from the United States to your business destination, or on
the way back to the United States from your business destination, you
must allocate part of your travel expenses to the nonbusiness
activity. The part you must allocate is the amount it would have cost
you to travel between the point where travel outside the United States
begins and your nonbusiness destination and a return to the point
where travel outside the United States ends. You determine the
nonbusiness portion of that expense by multiplying it by a fraction.
The numerator of the fraction is the number of nonbusiness days during
your travel outside the United States and the denominator is the total
number of days you spend outside the United States.
Example.
You live in New York. On May 4 you flew to Paris to attend a
business conference that began on May 5. The conference ended at noon
on May 14. That evening you flew to Dublin where you visited with
friends until the afternoon of May 21, when you flew directly home to
New York. The primary purpose for the trip was to attend the
conference.
If you had not stopped in Dublin, you would have arrived home the
evening of May 14. You did not meet any of the exceptions that would
allow you to consider your travel entirely for business. May 4 through
May 14 (11 days) are business days and May 15 through May 21 (7 days)
are nonbusiness days.
You can deduct the cost of your meals (subject to the 50% limit),
lodging, and other business-related travel expenses while in Paris.
You cannot deduct your expenses while in Dublin. You also cannot
deduct 7/18 of what it would have cost you to travel
round-trip between New York and Dublin.
You paid $450 to fly from New York to Paris, $200 to fly from Paris
to Dublin, and $500 to fly from Dublin back to New York. Roundtrip
airfare from New York to Dublin would have been $850.
You figure the deductible part of your air travel expenses by
subtracting 7/18 of the round-trip fare and other
expenses you would have had in traveling directly between New York and
Dublin (850 x 7/18 = $331) from your total expenses
in traveling from New York to Paris to Dublin and back to New York
($450 + $200 + $500 = $1,150).
Your deductible air travel expense is $819 ($1,150 - $331).
Nonbusiness activity at, near, or beyond business
destination.
If you had a vacation or other nonbusiness activity at, near, or
beyond your business destination, you must allocate part of your
travel expenses to the nonbusiness activity. The part you must
allocate is the amount it would have cost you to travel between the
point where travel outside the United States begins and your business
destination and a return to the point where travel outside the United
States ends. You determine the nonbusiness portion of that expense by
multiplying it by a fraction. The numerator of the fraction is the
number of nonbusiness days during your travel outside the United
States and the denominator is the total number of days you spend
outside the United States. None of your travel expenses for
nonbusiness activities at, near, or beyond your business destination
are deductible.
Example.
Assume that the dates are the same as in the previous example but
that instead of going to Dublin for your vacation, you fly to Venice,
Italy, for a vacation. You cannot deduct any part of the cost of your
trip from Paris to Venice and return to Paris. In addition, you cannot
deduct 7/18 of the airfare and other expenses from New
York to Paris and back to New York. You can deduct 11/18
of the round-trip plane fare and other travel expenses from New York
to Paris, plus your meals, lodging, and any other business expenses
you had in Paris. (Assume these expenses total $900). If the
round-trip plane fare and other travel-related expenses (such as food
during the trip) are $800 from New York to Paris, you can deduct
travel costs of $489 ( 11/18 x $800), plus the full
$900 for the expenses you had in Paris.
Other methods.
You can use another method of counting business days if you
establish that it more clearly reflects the time spent on nonbusiness
activities outside the United States.
Travel Primarily for Vacation
If you travel outside the United States primarily for vacation or
for investment purposes, the entire cost of the trip is a
nondeductible personal expense. This is true even if you
spend some time attending brief professional seminars or a continuing
education program. You can, however, deduct your registration fees and
any other expenses you have that are directly related to your
business.
Example.
The university from which you graduated has a continuing education
program for members of its alumni association. This program consists
of trips to various foreign countries where academic exercises and
conferences are set up to acquaint individuals in most occupations
with selected facilities in several regions of the world. However,
none of the conferences are directed toward specific occupations or
professions. It is up to each participant to seek out specialists and
organizational settings appropriate to his or her occupational
interests.
Three-hour sessions are held each day over a 5-day period at each
of the selected overseas facilities where participants can meet with
individual practitioners. These sessions are composed of a variety of
activities including workshops, mini-lectures, role playing, skill
development, and exercises. Professional conference directors schedule
and conduct the sessions. Participants can choose those sessions they
wish to attend.
You can participate in this program since you are a member of the
alumni association. You and your family take one of the trips. You
spend about 2 hours at each of the planned sessions. The rest of the
time you go touring and sightseeing with your family. The trip lasts
less than 1 week.
Your travel expenses for the trip are not deductible since the trip
was primarily a vacation. However, registration fees and any other
incidental expenses you have for the five planned sessions you
attended that are directly related and beneficial to your business are
deductible business expenses. These expenses should be specifically
stated in your records to ensure proper allocation of your deductible
business expenses.
Luxury Water Travel
If you travel by ocean liner, cruise ship, or other form of luxury
water transportation for business purposes, there is a daily limit on
the amount you can deduct. The limit is twice the highest
federal per diem rate allowable at the time of your travel.
(Generally, the federal per diem is the amount paid to federal
government employees for daily living expenses when they travel away
from home, but in the United States, for business purposes.)
Daily limit on luxury water travel.
The highest federal per diem rate allowed and the daily limit for
luxury water travel in 2000 is shown in the following table.
2000
Dates |
Highest Federal
Per Diem |
Daily Limit
on Luxury
Water Travel |
Jan. 1-Jun. 14 |
$ 244 |
$ 488 |
Jun. 15-Sep 15 |
253 |
506 |
Sep. 16-Dec. 31 |
244 |
448 |
Example.
Caroline, a travel agent, traveled by ocean liner from New York to
London, England, on business in May. Her expense for the 6-day cruise
was $3,000. Caroline's deduction for the cruise cannot exceed $2,928
(6 days x $488 daily limit).
Meals and entertainment.
If your expenses for luxury water travel include separately
stated amounts for meals or entertainment, those amounts are
subject to the 50% limit on meals and entertainment before you apply
the daily limit. For a discussion of the 50% limit, see chapter 2.
Example.
In the previous example, Caroline's luxury water travel had a total
cost of $3,000. Of that amount, $1,600 was separately stated as meals
and entertainment. Caroline, who is self-employed, is not reimbursed
for any of her travel expenses. Caroline computes her deductible
travel expenses as follows.
Meals and entertainment |
$1,600 |
50% limit |
x .50 |
Allowable meals & entertainment |
$ 800 |
Other travel expenses |
+ 1,400 |
Allowable cost before the daily
limit |
$2,200 |
Daily limit for May 2000 |
$488 |
Times number of days |
x 6 |
Maximum luxury water travel deduction
|
$2,928 |
Amount of allowable
deduction |
$2,200 |
Caroline's deduction for her cruise is limited to $2,200, even
though the limit on luxury water travel is higher.
Not separately stated.
If your meal or entertainment charges are not separately stated or
are not clearly identifiable, you do not have to allocate any portion
of the total charge to meals or entertainment.
Exceptions
The per diem rule does not apply to expenses you have to attend a
convention, seminar, or meeting on board a cruise ship. See
Cruise ships, under Conventions Held Outside the North
American Area.
Conventions
You can deduct your travel expenses when you attend a convention if
you can show that your attendance benefits your trade or business. You
cannot deduct the travel expenses for your family. If the convention
is for investment, political, social, or other purposes unrelated to
your trade or business, you cannot deduct the expenses. You cannot
deduct nonbusiness expenses.
Your appointment or election as a delegate does not, in itself,
determine whether you can deduct travel expenses. You can deduct your
travel expenses only if your attendance is connected to your own trade
or business.
Convention agenda.
The convention agenda or program generally shows the purpose of the
convention. You can show your attendance at the convention benefits
your trade or business by comparing the agenda with the official
duties and responsibilities of your position. The agenda does not have
to deal specifically with your official duties and responsibilities;
it will be enough if the agenda is so related to your position that it
shows your attendance was for business purposes.
Conventions Held Outside
the North American Area
You cannot deduct expenses for attending a convention, seminar, or
similar meeting held outside the North American area unless
the meeting is directly related to your trade or business. Also,
it must be as reasonable to hold the meeting outside the North
American area as in it. If the meeting meets these requirements, you
also must satisfy the rules for deducting expenses for business trips
in general, discussed earlier under Travel Outside the United
States.
North American area.
The North American area includes the following locations.
American Samoa |
Kingman Reef |
Baker Island |
Marshall Islands |
Barbados |
Mexico |
Bermuda |
Micronesia |
Canada |
Midway Islands |
Costa Rica |
Northern Mariana |
Dominica |
Islands |
Dominican Republic |
Palau |
Grenada |
Palmyra |
Guam |
Puerto Rico |
Guyana |
Saint Lucia |
Honduras |
Trinidad and Tobago |
Howland Island |
USA |
Jamaica |
U.S. Virgin Islands |
Jarvis Island |
Wake Island |
Johnston Island |
Reasonableness test.
The following factors are taken into account to determine if it was
reasonable to hold the meeting outside the North American area.
- The purpose of the meeting and the activities taking place
at the meeting.
- The purposes and activities of the sponsoring organizations
or groups.
- The homes of the active members of the sponsoring
organizations and the places at which other meetings of the sponsoring
organizations or groups have been or will be held.
- Other relevant factors you may present.
Cruise ships.
You can deduct up to $2,000 per year of your expenses of attending
conventions, seminars, or similar meetings held on cruise ships. You
must, however, establish that the meeting is directly related to your
trade or business. All ships that sail are considered cruise ships.
You can deduct these expenses if all of the following requirements
are met.
- The cruise ship is a vessel registered in the United
States.
- All of the cruise ship's ports of call are in the United
States or in possessions of the United States.
- You attach to your return a written statement signed by you
that includes information about:
- The total days of the trip, excluding the days of
transportation to and from the cruise ship 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 attach to your return a written statement signed by an
officer of the organization or group sponsoring the meeting that
includes:
- A schedule of the business activities of each day of the
meeting, and
- The number of hours you attended the scheduled business
activities.
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