Can your cruise ship expense count as a tax deduction? That seems like an easy question, but the IRS actually has a pretty complicated set of parameters that you need to use to determine when cruise travel is a tax write-off.
Here’s the question we received at USTaxAid:
Q: My affiliate marketing group is planning a meeting on a cruise. If people attending, took notes, discussed business, could this trip be a tax write off?
A: First of all, you need to make sure there is a business purpose. If the training is preparing you for a trade or business, it’s not deductible. If the training is helping you with your business that already exists, you pass this test.
There is also a limitation that the IRS has for luxury water travel. There is a per diem that is allowed per day. So far, the 2015 numbers have not been updated. In 2014, the daily amount was:
1/1 – 2/28 $524
3/1 – 6/30 $676
7/1 – 8/31 $670
9/1 – 12/31 $748
If the cruise is held in international waters, there is a further restriction on deductibility. You can deduct up to $2,000 per year in that case, but only if you meet the following criteria:
- The meeting is directly related to your trade or business,
- The cruise ship is registered in the US
- All of the ports of call are in the US
- You attach specific information to your tax return.
This is a more complicated answer that you probably expected to a fairly straight-forward question.
Check with your tax advisor for your own unique set of situation.