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Tax Tip Tuesday: When Can You Deduct a Cruise?

Stephen Fishman
Tax expert and contributor MileIQ

Sea cruises can be fun. But can they also be tax deductible? Like with many things tax, the answer is “it depends.” Forget about getting a tax deduction for a pure pleasure cruise. You may, however, be able to deduct a cruise, at least part of the cost, if you attend a business convention, seminar or similar meetings directly related 
to your business while on board. A personal investment or financial planning seminars don’t qualify.

But there is a major restriction: In order to deduct a cruise, you must travel on a U.S.-registered ship that stops only in ports in the United States or its possessions, such as Puerto Rico or the U.S. Virgin Islands. If a sponsor promises you’ll be able to deduct a cruise, investigate carefully to make sure it meets these requirements.

If you go on a cruise that is deductible, you must file with your tax return a signed note 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. Make sure to get this statement from the meeting sponsor. Your annual deduction for attending conventions, seminars or similar meetings on ships is limited to $2,000.

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Deducting Unusual Business Expenses

The United States tax code allows for many unusual but legitimate business expenses, including tax deductions, tax credits, and exemptions. If something is used to benefit your business and you can document the reasons for it, you generally can deduct it off your business income.

In Seawright v. Commissioner, a couple ran a junkyard. They put out food to attract wild cats to control snakes and rats, making the junkyard safer for customers.

If you are changing jobs and meet several tests, IRS says you can deduct moving expenses. The IRS says you can even deduct moving expenses for your pet, and they are not even subject to alternative minimum tax.

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