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Are Convention and Seminar Expenses Tax Deductible? Part 2

October 04, 2022

Heading to a conference for work? You may be able to deduct certain expenses. Here’s part 2 of what you should know.

The Tax Code allows you to deduct the cost of attending work-related conventions, conferences and seminars but your attendance at these functions must be related to your business and they must benefit your business activities. We explore the rules for conventions held outside North America here. Don’t miss Part 1 where we cover the basics.

What if the convention is held outside North America?

Special rules apply if you attend conventions outside of North America. The IRS looks for a good reason for attending a conference overseas and it questions if you could have attended a similar conference in North America. If you attend a business convention outside "North America" (defined as the United States and its possessions (including Puerto Rico), the Trust Territory of the Pacific Islands, Canada and Mexico), keep materials to show why its foreign location was necessary.

No deduction is allowed for expenses allocable to a convention, seminar, or meeting held outside the North America area unless the taxpayer establishes that the meeting is directly related to the active conduct of his or her trade or business, and it is reasonable for the meeting to be held outside the North American area. However, costs incurred attending conventions where the host is a designated beneficiary country, it has a bilateral or multilateral agreement in effect providing for the exchange of tax information with the United States, and it has not been found to discriminate in its laws against conventions held in the United States may be deductible.

Special rules governing travel outside the United States, the one-week threshold, and the 25-percent threshold also apply in certain situations. These rules apply to individual travelers, including employees and persons traveling under reimbursement or expense allowance arrangements. When a traveler engages in substantial amounts of nonbusiness activity while traveling outside the United States for at least a week, the travel expenses must be allocated.

Any exceptions to the rules?

If the trip outside the United States is for one week or less, or if the time spent on personal activities is less than 25 percent of the total time away from home, no allocation is required and all expenses are deductible.

If the foreign trip is longer than a week (seven consecutive days counting the day of return but not the day of departure) or 25 percent (allocated on a day-to-day basis to business) or more of the time away from home is spent for personal reasons, deductible travel expenses are limited to those that are allocable to the taxpayer’s business or management of income-producing activities.

How is the non-deductible portion computed?

When travel expenses must be allocated between business and nonbusiness days, the nondeductible portion of the travel expenses is computed on a time basis, usually based on the proportion of non-business days to all travel days, unless the taxpayer establishes that another method more accurately reflects the portion of time outside the United States that is attributable to nonbusiness activity.

Questions? Contact us.

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