Now I know you're watching this video with high hopes
How can I write off that Disney Cruise Norwegian Princess Royal Caribbean carnival? I get it
They're wonderful going on a cruise is a great experience. How could we get a tax write-off? Well, it's difficult but possible
So I'm gonna do my best to break it down
Now let me explain why this is important in my initial disclaimer
you
Want to make sure that if you're gonna try to write off a cruise talk to your CPA first before you go spend on this
because I've had any
terrible example of a client of mine who is a dentist and he promised all of his staff that if they
Hit a certain sales goal. He would take him on a cruise and he thought this was great
He made him the promise. He took him on the cruise
They met the goal and then he came to me and said hey, I want to write this off
I was like, oh my gosh
there's a lot of restrictions and rules on this and you don't want to include it in their w-2 and
I had a lot of bad news for him. So again before you try to write off a cruise if that's the main objective
You need to talk to your CPA because they not be may not be comfortable writing this off on your tax return
All right
I'm gonna give you the bad news first and then work to what I think is the best recommendation
Here at the end save the best for last if you will
So let's run through it number one hundred percent deduction, but the most difficult way to write it off
In order to write off a hundred percent of the cruise
you've got to treat it as
Travel just as if it was an airplane or a train ride
You're going to use the cruise to get to your conference. So it's it's travel 100 percent just like airfare
so if you've got a workshop or a conference in Puerto Rico or in London and you're gonna take a cruise ship from
New York to London or maybe from Miami to Puerto Rico have your conference then get on the cruise ship and come back?
Then the cruise ship is like travel, but it's got to be direct it
Can't be a lot of fun and games along the way
Shore excursions all that good stuff in my career of 20 years as a tax accountant lawyer
I have never seen a client pulled out off, but some may and that's a hundred percent deduction
Number two the IRS allows for a two thousand dollar annual deduction for any business travel cruising now
There's got to be a business purpose. So you're gonna have at least four hours a day of training on the cruise ship
there's gonna be a convention of some sort with business training and
$2,000 does it sound like a lot but it might work out cuz here's why here's the catch
It has to be a us-based ship
Registered in the US and all the ports of call have to be in the United States
So this might work if you were to do kind of a northeastern river cruise or right off the coast
Maybe out of Boston or somewhere and you go out and it's a short two to three day cruise and $2,000 might work
So that's a possibility. But again, it's a u.s
Ship US ports are called business purpose and a $2,000 limit
But it is an option number three per diem deduction
Now this is probably going to be the most common and I've had clients use this strategy
It's not great because you can't write off a hundred percent of the cruise unless it falls within these per diem rates
But here's the deal you get two times the average
travel
deduction for this area of the country you might be departing from and it's going to range from about
Six hundred to eight hundred dollars per day for a travel expense
Now a couple caveats that does not include meals
so you've got to look at what the
Prorated cost of the meals on the cruise ship they are and then take only 50% of the meals
Next you've got to be able to show that the primary purpose of the cruise was
Business training a workshop convention and do at least four hours of business a day
So four hours or more of training in the cruise ship which might ruin a good cruise
But that's the rule so you've got to be doing
business on the cruise ship and
you get this per diem limit per day and you have to carve out the meals and you get 50% of the meals and
Then you've got wallah a write-off while you're on this cruise ship, but if you don't do business every day
You've got to come back to this prorated
pro-rata
Type of division of the day's you're on the cruise and which days were personal in which days were business again meeting with your CPA
In advance to kind of carve out what the write-off might look like
But that's probably the most common way to write off these
International cruises where there's business training on the cruise ship and these per diem daily limits
Number for a few ancillary items number one. This is a good thing
Keep in mind that the travel to get to the port of call where you take off on your business cruise. Assuming it's a
valid business cruise that airfare to get to Miami to get on the ship or Fort Lauderdale
Let's say for example is a hundred percent right off because you've got to pay for the trip to get there and then get on
The cruise ship from that point and the meals are still a write-off during that travel period to get there
But they're limited by fifty percent
Also, another important point is entertainment is no longer a write-off under the tax cuts and Jobs Act until at least 20 23 and Congress
Revisit it
so that means if you're on the cruise ship and you do a short skirt on or you pay for some extra entertainment of some
Sort and I know cruise ships are mostly all-inclusive
But they do nickel and diming for something that entertainment is not going to be a write-off
Even if you're with a customer or client, don't try to write it off under marketing
You're gonna get hit so be careful with that now, I promise you the best for last the best way
I think this is the ideal way to write off cruise
Make it a personal trip and use business miles
That you may have accumulated on your American Express card to redeem and pay for the cruise
see the cruise itself isn't a write-off but the redemption of
miles on your credit card of some sort and when you transfer them over and redeem them for a cruise is
Tax-free the redemption of miles or points on a credit card are not taxable income
So the trick would be use your credit card for a bunch of business expenses rack up the miles
Use the miles to pay for the cruise and make it a personal trip
Don't try to write it off white ruin a good cruise by going down into the belly of ship
Having some workshop or training four hours a day make it a personal trip
But Redeem miles to do it and even for the airfare to get to the port O'Call
that my friends is I think the best way to try to
Get a tax deduction for the cruise is to redeem points that are tax-free to pay for it
Thanks so much for watching that video and I want to be your source for tax and legal strategies
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