In continuing our series on travel deductions, let's discuss how you can deduct that cruise you've been wanting to take!
First off, you cannot deduct a cruise you take for pleasure purposes! You must have a business reason to be on that boat - whether it's a convention or seminar on the boat or using the boat to travel to your business destination. In this article, we will discuss the rules & limits for each...
On-Boat Conventions & Seminars
You can deduct part of the cost of a cruise if you attend a business convention, seminars, or similar meetings directly related to your business. However, there are some major restrictions: You must travel on a U.S. Flagged ship that stops only in ports in the United States or its possessions, such as Puerto Rico or the U.S. Virgin Islands.
You also must attach a signed note to your tax return from the meeting or seminar sponsor listing the business meetings scheduled each day aboard the ship and certifying how many hours you spent in attendance. Your annual deduction for attending conventions, seminars, or similar meetings on ships is limited to $2,000.
Transportation by Cruise Ship
In addition to planes, trains & automobiles - you can also take a boat to your business destination! This isn't very common these days, but it can be done.
Unlike ground and air transportation which places no daily dollar limits on your deduction, when you travel to your business destination by boat you are limited to a daily per diem amount. Currently at $734 a day. Your business destination must also be in the North American Area - examples: Caribbean Islands, Canada, & Mexico.
For example, let's say I took a 6-day cruise to Puerto Rico to attend a business seminar at a cost of $5,200. I could only deduct a maximum of $4,404 (6 days x $734).
Bon Voyage? Not so fast...
Before you book your cruise, please give us a call... this tax strategy is filled with little rules that, if ignored, could take away the tax deductions!