TAX DEDUCTIONS MAKE A BUSINESS CONFERENCE MORE AFFORDABLE!

Going to a business conference can be a welcome change in your life and can bring a rush of new ideas and perspectives that really makes a difference. Any new approach or understanding could enhance not only profitability but also your enjoyment of the work! You might get excited looking at the keynote speakers or dreaming about the wonderful location and workshops that are right on-target for you, but sometimes the price-tag makes you catch your breath. There’s not only the conference registration fee, but also the hotel, additional meals and the transportation to get there. While you are used to spending money on booth fees and travel to go to shows, those expenses are easier to justify when you know you will have a good chance of coming out way ahead at the end of the show. It’s clearly worthwhile. This education and conference stuff is another thing, you may worry.

Nevertheless, I really encourage all business owners to get to some kind of business-oriented conference regularly to keep them inspired and creative in the running of their business. So, to encourage you, I’ll spell out the rules for the tax-deductibility of these expenses. I’m pretty sure you’ll find you easily pass all the tests. Then you can see that the tax benefit of the deduction can reduce the cost of a very beneficial break!

For these expenses to be deductible, the whole trip needs to be an "ordinary and necessary expense" of your business. If the program is at all oriented to helping you be more successful (and therefore generate more taxable income, of course), there should be no question that you meet this test. Of course, if you aren’t really in business, that could be a problem. If you are "only" engaged in a hobby, then a conference would not be a deductible business expense. On the other hand, if your business has been a little marginal and showing tax losses, attending a business conference would be good proof that you are really trying to make your business fly. This would be good ammunition if IRS were to challenge your "business or hobby" status.

Your business purpose for attending such a conference will include an educational component. IRS spells out that education expenses are deductible if they are incurred to maintain or improve a skill required in your trade or business. Again, I am confident that you will be able to meet this test, since you are in business and always need to improve your business skills!

The usual rules apply to the deductibility of the transportation and lodging costs. However, there is a funny twist for the meals. As you know, your meals are now only 50% deductible (as of 1994). So, if the conference registration fees include some meals, you will be faced with the need to allocate some of the fees to your travel meals expenses, which of course will be only 50% deductible, not 100% like the rest of the registration fees. If you live nearby, the meals portion then would be non-deductible.

Travel Expenses

Here’s a brief summary of the travel expense rules for you, though you may want to review them in detail with your tax advisor if you’re not clear how they will apply to your unique situation.

Transportation Expenses - The cost of getting there and back

Your transportation expenses are fully deductible if the principal purpose of the trip is for business. As long as you aren’t planning a long vacation before or after the conference, this shouldn’t be a problem. It’s o.k. if you want to spend a few extra days visiting or being a tourist. You just need to be able to say you wouldn’t have made the trip if there hadn’t been this particular conference you needed to attend. Remember, you must keep the receipt for the airline ticket.

Lodging Expenses - The hotel cost

Again, you must keep the receipt. What’s deductible is the cost of a single room, for you. If your spouse came along for a vacation, their share is not deductible, but you can deduct the higher single rate though you paid for a double.

Overnight Meals Expenses

Assuming you will be away from home overnight, all your meals are deductible, too. Of course, they’re now only 50% deductible (new for 1994), but we’ll take what we can get. Receipts are only needed for meals costing $25 or more.

Meals included in the Conference Fee