Foreign Travel Expense Limits Don't Apply to North America

By Marcia Richards Suelzer, Toolkit Staff Writer

Business conventions can serve a number of valuable purposes, from keeping current with developments in your line of work to uncovering business opportunities and partners. The value of attending conferences is often enhanced by the fact that such expenses may be deductible business expenses.

If you travel to attend a business convention, you can deduct your travel expenses if you can show that your attendance benefits your trade or business. These rules apply to workshops, conferences and seminars, as well as actual conventions.

Example. Caroline, an interior designer, attends the Window Covering Association of America trade show in Kentucky. She returned with renewed enthusiasm for her profession and with knowledge regarding several new vendors. Caroline can deduct her expenses because attending the show benefits her business.

Conventions held on cruise ships or in foreign countries are subject to stricter scrutiny and limitations. In order to deduct expenses you paid to attend a convention outside of the United States, you need to prove that

• the convention was directly related to your trade or business and
• that it was as reasonable to hold the meeting outside the North American area as in it.

However, there is a way to enjoy an exotic locale without triggering the foreign convention rules: be aware of what countries are considered within the "North American area." For purposes of convention travel, a North American area" includes the obvious: the United States, its possessions, the Trust Territory of the Pacific Islands, Canada and Mexico. However, it also includes countries that have an information agreement in place with the United States and that meet might certain tax law requirements. The IRS recently updated and republished the list of these countries, many of which are tourist meccas that you might not think of as North American. They are:

• Antigua and Barbuda
• Aruba
• Bahamas
• Barbados
• Bermuda
• Costa Rica
• Dominica
• Dominican Republic
• Grenada
• Guyana
• Honduras
• Jamaica
• Marshall Islands, Republic of
• Micronesia, Federated States
• Netherlands Antilles
• Palau, Republic of
• Panama
• Trinidad and Tobago

As winter settles in over much of the country, keep the definition of "North American" in mind as you scan your mail looking for opportunities to sharpen your business skills and expand your business knowledge.