Ask the Experts: Are Trade Show Expenses Tax Deductible?
Running your own business and signing up for trade shows is exciting, but tax time can be confusing. If you are unsure about whether any of your trade show expenses are tax-deductible, you are not alone. Good news — there are many tax-deductible trade show expenses! Let’s go over some of the most common tax-deductible trade show expenses.
When you are attending trade shows where you will be spending the night away from home, or if you are taking clients out to a business dinner, save those receipts! You can deduct half of your meal expenses when the expense is deemed business-related.
Be sure to double-check with a tax professional to make sure all of your meal expenses are able to be deducted, or you may find yourself being audited by the eagle-eyed IRS. If you are unsure if your meal is considered business-related, it may be easier for you to use the standardized deductions, which are calculated per day.
If you’re overwhelmed by keeping such detailed records, you’re in luck. You can simplify keeping track of your tax-deductible trade show expenses by using standardized deductions. You will still need to keep your receipts, but it is a much easier way to file for your meal deductions.
Expenses incurred while traveling to and from a trade show, as well as lodging, are all deductible, as long as they are for business purposes and not a personal vacation.
Travel expenses include any kind of transportation, such as trains, taxis, and busses, airfare, expenses from using your own vehicle (keep track of mileage and maintain all gas receipts), and tolls and parking.
Fees associated with hotel stays are also tax-deductible, such as laundry and cleaning expenses, tips, and admission fees for business-related events.
During the Show
In-show tax-deductible trade show expenses are those that you incur while attending the trade show which are directly related to your business. Common write-offs include:
- Marketing expenses — this includes everything from running online ads to printing fliers. Even promotional materials like custom printed pens and T-shirts can be deducted!
- Equipment — equipment purchased and used solely for your business is tax-deductible. Common deductions include dedicated computers, printers, vehicles, and displays.
- Supplies — supplies are similar to equipment but are “used up” throughout the fiscal year. Common deductions for supplies include office supplies like toner, pens, highlighters, and staples.
- Registration fees
If you are going to any educational seminars or conferences related to your business while you’re at the trade show, those expenses are tax-deductible as well.
After the Show
Fifty percent of the cost of entertaining clients is also a tax-deductible trade show expense. Keep notes on which clients you were entertaining with any receipts for the outing.
After each show, thoroughly document and file all your receipts, with plenty of notes (where you were going, who you were entertaining, specific times, etc.). There are tons of new apps that make sorting receipts and filing your taxes a breeze. If you have an app that uses photos of receipts, simply take pictures of your expenditures as you incur them.
Things that Don’t Qualify
Trade show expenses that don’t qualify as tax deductions include things like:
- Traveling spouses (unless they also work for the business)
- Extravagant meals that are not considered normal for your industry
- Vacation travel that is not related to your business.
Trying to deduct your spouse’s travel expenses is a quick way to get audited and incur fees. Unless they play an integral part in your business and you are paying them wages, you cannot deduct their meals, lodging, or transportation expenses.
You want to make sure before you start filing your deductions that the trade show qualifies as a tax-deductible business trip. If the trade show is not directly related to your business but is instead for a hobby or something that you’re simply interested in, it is not tax-deductible.
Trade shows and other travel expenses can trigger an audit, so make sure everything you list has proper documentation — the proof of the burden is on you. If you do not have documents and receipts to back up the reasoning behind the deduction, you may be penalized.
It is, for this reason, a good idea to take photos of your receipts as you get them.
Hire a CPA
A Certified Public Accountant (CPA) takes the guesswork out of your taxes. They are well worth the fee to make sure everything is filed correctly and on time. If you are concerned that some of your expenditures are not a bona fide tax-deductible trade show expenses, a CPA will be able to distinguish the difference.