Love Canada? Reasons to make it a business adventure
There are IRS rules that govern trip inside and outside the United States. However, a trip to Canada is not an international destination. Rather, Canada is part of the tax-defined North American area for conventions, meetings and seminar purposes. That’s good news for business travel because it makes it easier to establish and meet the same standards that apply to business trips within the United States.
Rules that apply to a foreign country
Canada is, however, still a foreign country. Therefore, foreign travel rules apply for trips outside the United States lasting one week or less, excluding the day of departure. But, here’s the good news for a business trip! You can write off the cost of travel to and from Canada if you work one day or more while on this trip. That’s huge.
In addition to the cost to get to and from Canada, you may deduct the costs of sustaining life while on the road for the days that you work. That means, if you work only one day on your trip to Canada, you would qualify to write off the day you travel, the day you work, and the day you travel home. That would result in two nights lodging and 3 days of expenses.
Business trip to Canada
For the work rule to apply, you need to work at least four hours and one minute for each day you claim as a workday. But, don’t lose this benefit by cheating the work rule. You will not be able to count taking email or phone calls about your business as out-of-town travel work. You can only deduct work time in Canada if the work is the REASON you went on a trip to Canada in the first place.
Here’s an example for a trip to Canada. You plan a trip to Canada to attend a one-day business seminar. In that trip, it costs $500 for airfare, $75 on taxi fares and $50 for food getting to and from Canada. In addition, you spend $80 on food and $100 on lodging. These costs are all deductible because:
- your trip to Canada is part of the North American area for conventions, seminars and meetings.
- your time there is for less than one week, excluding the day of departure.
- the purpose of your trip is business-specific (business seminar) and you are spending 8 hours in the seminar.
There are further rules that allow for more deductions if you use the “sandwich rule”. Therefore, if you’re planning a trip to Canada, make sure you call us so we can give you the best advice on how to establish the correct deductions. Planning is crucial to saving you money!
Paragon Accounting & Tax Solutions loves saving our small business customer’s money on everyday deductions! We specialize in tax, accounting and payroll needs for businesses in Canton, GA; Woodstock, GA; Marietta, GA; Alpharetta, GA; Kennesaw, GA, Milton, GA and Roswell, GA.