What year should Business Travel Deposit be taken

[startedwithasmile]

In 2021 I am going to have Business Travel to an annual convention however in 2020 I had to pay the deposit which was $500 (November 2020) and the final payment and trip is in 2021. Should I submit the $500 deposit in my 2020 taxes or wait until the actual trip and final payment occurs in 2021?

[Kat]

You should list the business expense in the year in which the money was paid.  So go ahead and use the $500 deposit for 2020, and the remainder of the expense will be listed on your 2021 return.

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[startedwithasmile]

Appreciated and I wasn’t sure given it’s a deposit plus is for some reason the trip gets cancelled (and deposit refunded) , I’d have to reverse it in 2021.

[Mike9241]

is the deposit refundable? if so I would say you don't incur an expense until it becomes non-refundable.    the flip side is the amount involved seems small and it would not surprise me to find that a majority of taxpayers would deduct in the year paid.  can't say what the IRS would do if audited. 

[Kat · Accepted solution]

Yes, the charge would have to be reversed in 2021 if by chance the conference was cancelled.  But you could easily do that by decreasing business expenses by that amount.

Personally, I'd go ahead and deduct the conference fee.