How To Maximize Your Deductions For Travel And Convention Expenses
One question often asked by Network Marketing / MLM business owners is How Much Can I Deduct for Travel
, Hotel, Meals and Convention Expenses?This is an area which the IRS auditors watch closely. To avoid unwanted IRS attention, you need to know how this deduction works. It can be especially important if you attend your companys national or international conventions on a regular basis.
For conventions within North America, the cost of travel, lodging and the convention ticket itself are all deductible, just like the cost of any other business trip. Just be sure the convention will qualify as one that benefits your business. In general, company-sponsored conventions will qualify. On the other hand, conventions for political, social, or investment purposes will not qualify.
For tax purposes, North America includes not just the U.S., Canada, and Mexico, but much of the Caribbean and many other great vacation destinations as well.
For business travel within the United States, you can deduct 100% of your transportation costs as long as you spend more than half of your time on business activities while at your destination.
For example, say you fly to Las Vegas for a four-day convention. Afterwards, you stay three extra days there taking in the shows, etc. Because you spent over half your time on business, the cost of your flight is entirely deductible. You may not deduct your hotel, meals, or other expenses during your vacation days, however.
More stringent rules apply if you attend a convention outside the North America, as broadly defined for tax purposes. You can take the deduction only if the convention is directly related to your business (rather than merely benefitting it in general terms), and there is justification for the convention to be held outside of North America rather than here.
As a general rule, avoid attending a foreign convention unless theres is a darn good reason for it in your particular situation. If the convention is in Paris, for example, then your claim to a tax deduction has a stronger chance of standing up to IRS scrutiny if your company is licensed to do business in that country, and also if you can document to the IRS that you are actively working to launch new representatives there.
For more details on convention-related deductions, Network Marketing professionals get a copy of IRS Publication 463, "Travel, Entertainment, Gift and Car Expenses
Jim Flauaus, President / CEO of Anchor Accounting & Tax, is a Network Marketing / MLM tax specialist. He connects with Home Business owners and Network Marketers across the country and around the world via phone, email, and fax to help them plan and prepare their income tax returns. Visit his website http://www.anchoraccountingandtax.com to learn more, and to register for the free special report, "3 Key Ways to Save Thousands of Dollars on Your Tax Return This Year.
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