Conference Tax Deduction

[drccw]

Quick question.. well not so quick. taxes has got me thinking ahead...
I have a trip planned for this year to Europe. I am spending two weeks in Spain (yeah!) of that two week period, I have a 4 day conference planned. Any thoughts on handling deductions? The conference fee/hotel is taken care of but I am still paying for airfare (international and domestic to get to the conference from Madrid), transfers and meals. Any thoughts?

drccw

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[periopdoc]

You may deduct the fees that are directly related to the conference itself (conference fee, the hotel for the days that you are at the conference, and 50% of the cost of meals during the conference) unless these expenses are reimbursed by your work. Airfare for this situation is not deductible and neither are transfers.


Treasury Regulations, Subchapter A, Sec. 1.162-2

Sec. 1.162-2 Traveling expenses

(b)(1) If a taxpayer travels to a destination and while at such destination engages in both business and personal activities, traveling expenses to and from such destination are deductible only if the trip is related primarily to the taxpayer's trade or business. If the trip is primarily personal in nature, the traveling expenses to and from the destination are not deductible even though the taxpayer engages in business activities while at such destination. However, expenses while at the destination which are properly allocable to the taxpayer's trade or business are deductible even though the traveling expenses to and from the destination are not deductible.

(2) Whether a trip is related primarily to the taxpayer's trade or business or is primarily personal in nature depends on the facts and circumstances in each case. The amount of time during the period of the trip which is spent on personal activity compared to the amount of time spent on activities directly relating to the taxpayer's trade or business is an important factor in determining whether the trip is primarily personal. If, for example, a taxpayer spends one week while at a destination on activities which are directly related to his trade or business and subsequently spends an additional five weeks for vacation or other personal activities, the trip will be considered primarily personal in nature in the absence of a clear showing to the contrary.

Sorry.

- pod

 

[sevoflurane]

I believe that if you leave on say....Friday and your conference is Mon-Thursday... you can deduct 1/2 of your flight.

 

[sevoflurane]

Or you can get 2 one way tickets (there and back) If your conference is Mon-thursday and you leave on Friday, your one way ticket there is fully deductible. I'm pretty sure about this... but not 100%.

 

[drccw]

I'm going to be in Madrid most of the time, for personal reasons but will fly from Madrid to Mallorca...
So, my costs will be
1) Taxi to airport.
2) Airport flight from Madrid to Mallorca (return)
3) taxi to and from airport in Mallorca

So, still no dice?

drccw

 

[aneftp]

You are reading too much into how what the IRS considers an "ordinary" expense.

Seriously you could spend 4 days in conference and 10 days for non conference days. But you can heavy weigh your expenses towards the 4 day conference.

So you don't necessarily have to take a 4/14 day proportion deduction. It can really be closer to 8/14.

As long as you have receipts to say you were there, you will be fine.

Just don't go crazy and fly under the radar.

But to add for those who are self employed, the best way to fly under the radar is to keep your business expense deduction (especially for us anesthesiologists who can't really claim the expense of running a true office like our surgeon friends...I am not talking about home office either).

But if you keep your overall business deductions to less than 25% of your gross, you will fly completely under the radar with the IRS.

There are idiot doctors who moonlight and claim ridiculous deduction. Like this VA internal medicine doctor who was making $150K. As his side job, he moonlighted a few times and had about 20K in extra income. But the idiot claimed more than $50K in business deduction for 2 years in a row. So he was claiming a negative business income for 2 years.

IRS audited him and most of his deductions were personal trips not related to his moonlighting.

Just use common sense. If you do something out of the oridnary (Like my plastic surgeon friend buying 6 flat screen TVs) take pictures to show those TVs are in your office....he kept 3 of them in his office and took the other 3 home. He actually got audited for those TVs but had expenses and pictures to show the IRS he used them for his office and the IRS let him slide. That was 5 years ago when flat screens cost $3K each and not the 1K it costs now.

You gotta know how to play the IRS game.

 

[deleted126335]

Also not all international conference locations enjoy the deductabilty of domestic locations.Don't have a link, but I know this was true a few years ago when I tried to get my CME allowance reimbursed for an international conference.

 

[rsgillmd]

Can you deduct conference expenses even if you get a W2, if they are beyond what you get reimbursed for?

 

[periopdoc]

Yes, if you itemize your deductions. Fill out form 2106/ 2106 EZ and enter the results as unreimbursed employee expenses on line 21 of the 1040a Schedule A.

The deduction is not as valuable for W2 as it is for 1099 since 1099 can take the cost as a business expense making it a dollar for dollar reduction in income rather than a percentage deduction.

See Topic 514 - Employee Business Expenses

for more info.

- pod

 

[aneftp]

If you live in a high state income tax state like California New York Maryland New Jersey and make more than $200k, chances are that you will be hit with the AMT that disallows misc deductions if your are a w2. So that's something to consider if your are in the AMT range.

Gotta love to hate the AMT and watch for it's pitfalls.

 

[RabbMD]

Im pretty sure if you are a w2 unreimbursed business expenses such as conderences are reported on schedule a. Thus in order to deduct them you must itemize. In addition these business expenses are subject to a 2% agi floor. Ie if your agi is $250,000 then you can only deduct your miscenaneous expenses if you exceed $5,000 in miscenaneous deductions. So if you have $5,500 in expenses only $500 is deductible.

 

[periopdoc]

Whoops. Rabb caught my mistake. The deductions calculated on the form 2106/ 2106EZ are entered on line 21 of the Schedule A, not line 21 of the 1040A (the line for your adjusted gross income). My post is now corrected.

Of course we would all be a lot happier if our adjusted gross income was the same as our business expenses, but I doubt the IRS would find it humorous.

- pod

 

[rsgillmd]

Thanks Rabb and Periop. 🙂

 

[pgg]

Not to hijack anything, but my griping doesn't really justify an entirely new thread.


So, as I'm writing huge checks to the fed and Virginia today (I underpaid my estimated quarterly taxes), CNN is running some story about how 45% of Americans don't pay ANY income tax.

Laaaaaaame.

 

[gaspassertw]

Along the same lines....

I have been considering buying an iPad to be used mostly for reading anesthesia texts and journal articles during my residency. Would I be able to write this off as a business expense?

 

[RabbMD]

Along the same lines....

I have been considering buying an iPad to be used mostly for reading anesthesia texts and journal articles during my residency. Would I be able to write this off as a business expense?

Same thing. On a schedule c if you are a 1099 or if you are a w2 as a uncompensated business expense subject to itemizing and a 2% agi floor.

 

[aneftp]

Along the same lines....

I have been considering buying an iPad to be used mostly for reading anesthesia texts and journal articles during my residency. Would I be able to write this off as a business expense?

Yes, as self employed you can write off your ipad or any computer purchase as long as it's primarily used for "business expenses" cough cough...you know what I mean.

Last year I wrote off a $2400 top of the line iMac and a 3G ipad along with my iPhone 4. I also have a blackberry for "personal" use on a separate line which I do not write off.

As a w2, you can write off those expenses but as others stated you are limited to the 2% AGI rule.

And new for 2011 for those self employed, you can take 100% of a section 179 deduction rather than depreciating it over 3 years. So go ahead and buy that 6000 pound gross SUV (regardless of gas prices). There is a limit of what you can deduct on the SUV but still great that you can take the 100% deduction this year and not have a depreciate it.

 

[pgg]

And new for 2011 for those self employed

Speaking of 2011 self employed, didn't they pass a 1 year payroll tax break?

What are those details, and how will they affect 1099 income this year?

 

[RabbMD]

Speaking of 2011 self employed, didn't they pass a 1 year payroll tax break?

What are those details, and how will they affect 1099 income this year?

Same break as w-2s. Soc sec payroll tax from employees is 4.2% this year instead of 6.2%. It has the same 106,500ish cap (I am going from memory here, so its plus minus a few thousand since this changes yearly usually).
1099s pay both their employer and employee soc sec tax portions (and can deduct i think 1/2 their soc sec tax on their sched c, but since ive never been a 1099 these details are fuzzy to me). Thus 1099s pay 4.2% for their employee soc sec portion and the full 6.2% employer portion. I am not sure if this year there are special rules for the employer deduction on schedule c since usually 1/2 is the full employer portion paid, and this year 1/2 is only 5.2% not 6.2% because of the one year 2% lower employee soc sec tax break.