There is a cost of doing business. These costs are often deductible and business travel is not the exception. Anything that relates to your business is fair game: meals and lodging, transportation, dry cleaning, and etc. So long as these expenses are ordinary and necessary expenses of traveling away from home for your business, profession or job according to the IRS.

There is however a huge gray area for many filers when it comes to international travel as the IRS is particularly watchful when it comes to these expenses.

You can deduct all of your travel expenses of getting to and from your international business destination if your trip is entirely for business. The great news is even if you didn't spend your entire time on business activities, your trip is considered entirely for business according to the IRS. If you meet at least one of the following four exceptions:

1. If you don't have entirely substantial control over arranging the trip.

The fact that you control the timing of your trip doesn't, by itself, mean that you have substantial control over arranging your trip. If your boss tells you to go than you have to go, right? So long as you are not related to the employer or an managing executive.

2. If you're outside of the United States for no more than a week.

You can deduct the cost of your round-trip flight if you plan to travel for seven consecutive days combining business and nonbusiness activities. You can also deduct the cost of your stay on the days where you conducted business.  

For the purpose of this rule the day you depart the U.S. does not count toward your seven days, but the day you return does.

3. If your spend less than 25 percent of time on personal activities.

Your trip is considered entirely for business if you were outside of the U.S. for more than a week and spent less than 25 percent of that time on nonbusiness activities.

For example you flew from Seattle to Tokyo, where you spent 14 days on business and five days on personal. You spent 1 day flying in each direction. Because five of 21 is less than 25 percent you can deduct the cost of the round trip plane fare and 16 days of meals (subject to 50 percent limit), lodging and other related expenses.

4. If your vacation is not a major consideration.

Your trip is considered entirely for business if you can establish that a personal vacation wasn't a major consideration, even if you have substantial control over arranging your trip.  If you decide to take your fiancé to the Eiffel Tower be prepared to make a strong case to the IRS.

Satisfying any one of the four tests summarized above will make your international business trip considered entirely for business meaning you can deduct all expenses for transportation related to and from your foreign destination.   

Published on: Nov 14, 2017
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