If you’re a healthcare professional traveling for continuing medical education (CME), you might be wondering if any of the expenses are tax-deductible. They can be tax-deductible, depending on your employment status, the primary purpose of your trip, and whether they’re business-related.
In this guide, you’ll learn if and how you can write off travel expenses for continuing education.
How Your Employment Status Affects If and How You Can Write Off CME Travel Expenses
Your employment status determines whether you can write off CME travel expenses on your taxes. Here’s how:
- Self-employed physicians, independent contractors, and medical practice owners can deduct CME travel expenses as a business expense.
- W-2 hospital-employed physicians generally cannot deduct unreimbursed employee business expenses. However, some employers reimburse these expenses through their accountable plan or educational assistance program.
- Those with a mix of income types should consult a tax professional about their options. Missing a legitimate tax deduction or claiming one when you’re not supposed to can be costly.
Establishing the Primary Purpose of Your Trip
If your employment status allows you to write off CME travel expenses, you’ll still need to establish the primary purpose of your trip as business-related, as required by the IRS. Generally, you can prove that your trip is primarily for business if more than 50% of your total time is spent on business activities.
For example, if you spend 4 days attending a medical conference and 1 day vacationing, your trip’s primary purpose is considered business. However, if you are going to a 1-day conference and spending 4 days on vacation, your trip’s primary purpose would be considered personal instead.
You should keep any documentation that attests to the primary purpose of your trip. Examples of proof include CME certificate of completion, conference agendas, and attendance records.
What Kind of Travel Expenses Are Tax-Deductible?
If your trip qualifies as business-related, you may deduct the following expenses that are specifically for CME:
- Transportation, such as plane tickets, train tickets, car rentals, mileage expenses, taxis, and rideshares
- Lodging and accommodations, such as hotel or rental costs for the nights required for conference attendance
- Meal expenses are 50% deductible
- Conference registration fees
- CME course materials, textbooks, and resources
If you are a W-2 employee and your employer is reimbursing your expenses through an accountable plan, you cannot also deduct these expenses on your tax return.
What Expenses Are Not Tax-Deductible
Not every expense on your trip can be deductible. Specifically, the IRS does not allow you to write off personal expenses, such as:
- Entertainment and leisure activities, like sightseeing and tours not related to business
- Meals unrelated to business
- Expenses for your spouse or family unless they’re also a qualifying healthcare professional
Properly Documenting Your CME Travel Expenses
Careful documentation is key to substantiating CME travel deductions. Even legitimate expenses may not be deductible if you don’t have the proper documentation. A detailed record also makes it easier when it’s time to file taxes and can protect you from the risk of an audit. You should keep records of the following:
- Conference registrations
- Official conference agendas
- CME certification of completion
- Transportation, lodging, and meal receipts
- Daily schedule detailing your business and personal days
- Credit card or bank statements
If you want to easily track and allocate personal and business expenses, consider using separate credit cards or bank accounts. You’ll spend less time going over all your expenses later and you’ll have exact statements to refer to.
You can also digitize any physical documents and save them online in the same folder along with other proof for the trip.
Tips on Combining Continuing Education and Travel
While traveling for CME and fun is exciting, there is a lot to consider to successfully write off business-related expenses. Here are 4 tips on how to maximize deductions for your trips:
Plan Out Business and Personal Days
Figure out what your schedule looks like during your trip. You should be realistic when dividing your time between business and personal activities, so you don’t overestimate deductible days. This can also help you establish the primary purpose of your trip. If you are going to a 2-day conference, you should avoid planning to stay at the destination for 4 days of vacation.
Consider What Expenses Are Deductible
While you don’t have to know exactly which expenses can be tax-deductible, it helps to have an idea of what to deduct. For example, if you’re traveling with your family, you should keep in mind that your family’s expenses cannot be written off, which means you don’t have to worry about documenting those expenses.
Use a Dedicated Business Credit or Debit Card for Your Trip
Keeping all your business-related expenses on a business or separate card streamlines recordkeeping and makes it easier to prove documentation when filing taxes.
Keep a Detailed Record of the Trip
One of the biggest mistakes physicians make when trying to deduct their CME travel expenses is not keeping detailed records. From daily schedules to receipts of airfare and meals, these documents serve as proof that your trip is primarily for business and show how much you’ve spent on business activities.
Plan Out Your CME Trips with Custom Accounting CPA
Going on a trip to maintain your professional skills and recharge from your busy schedule while reducing your tax liability is enticing to many medical professionals. If you’d like to do the same, you’ll need to carefully plan out your trip and document any necessary proof. Better yet, partnering with a CPA can streamline the process and ensure you have a solid plan even before you head out on your trip.
At Custom Accounting CPA, we work exclusively with medical practices and use a proactive approach to help our clients with their tax and financial needs. If you have an upcoming conference, we can help you build an itinerary that allows you to write off certain expenses and enjoy a getaway. When you work with our team, you don’t have to figure it all out on your own and wait until tax time to know if you can deduct expenses from your trip. You can confidently know which expenses are deductible and how to provide adequate documentation ahead of time.
Schedule your free consultation with us today and see how our team can help you minimize tax liability with CME travel deductions and other proactive tax planning strategies. We want you to pay as little as legally required so you can keep more of your earnings and further expand your business.
