deducting mileage, travel, etc.

[mblatour]

I keep running into this same question over and over and would love if someone could give me any information to help back things up.

My husband works in the construction trade. We live about 15 miles away from the company he works for. He works on different jobs all the time. The job he is currently on is about 10 miles from our house; in our same city; and is lasting about 3 months. When this job is done, he'll probably go to another job in the area for a few months.

Sometimes he gets sent to another city, neighboring state, or across the country on jobs. Most of the time he is in the general vicinity of our home. When he travels outside the range his company sets, he receives what is called "subsistance pay" and "travel pay" on his checks which is non-taxable. Usually the amount he receives covers his expenses in full. Sometimes he will drive in a company truck which he pays nothing for.

We have never used any deductions in the past and don't believe anything would apply in his situation being as he is being reimbursed by his employer.

The reason I am still questioning this situation is because I am a new preparer and am trying to build up my client base. Several of his co-workers who have had their taxes prepared in the past by CPA's are taking deductions that I don't believe they should.

Example 1: A guy lives an hour and a half away, and drives to work in our city. He is in the same situation as my husband when it comes to job site changes. He was told by his preparer that as long as he hauls his safety harness, or bucket of tools in the back of his truck, he can deduct his daily mileage to home and back. Another guy doesn't even use this excuse, he just says it's legit because of the distance.

Example 2: A guy drives a company truck and travels out of town to different job sites. His CPA told him that he can claim $80 per day as a deduction for doing this. (Remember I mentioned they are paid subsistance and travel pay). He told his preparer this and they said it doesn't matter, he can still claim it.

I have researched and researched this and cannot find anything to support these situations. I believe their tax home would be the location of their employer in our city (Duluth, Minnesota) and that when they travel outside of our area, they have deductible employee expenses; less the amount they are reimbursed by the employer.

I am up to about a half dozen guys that all say they do it and they are told it is legit. I know one of the guys isn't being honest with his preparer about being reimbursed; but I am pretty sure that several other guys are being honest to their preparers.

I am trying to find case rulings, or something that would back these situations up. I just can't go based on what they say other people do. I don't have anyone in my area that I can talk to about this because I don't have a network yet. I just wonder if these preparers know something that they are able to apply it to that I don't. Even if it's bending the rules, or a gray area, I'd still like to know so that I can understand why they are doing it. I personally wouldn't want to take the chance on this sort of thing. I'd have to be confident that it's legit, and I am not.

Can anyone give me any information?

[taxmandan]

Travel pay`

Example 1: He was told by his preparer that as long as he hauls his safety harness, or bucket of tools in the back of his truck, he can deduct his daily mileage to home and back.

The preparer is almost correct, he can deduct any excess cost of transporting his equipment over and above his personal communting costs. So, if he has to use a trailer to haul the equipment he can take that cost, if he had to buy a truck instead of using his family car for commuting he can claim expense for the extra cost. Good luck trying to figure out what the extra expense is going to be in that case.

The other example is an example of a really bad preparer. If the worker is getting travel pay and subsistence he can only claim costs above those if they are reasonable and necessary. You didn't mention if he remains overnight at these work areas or not, but again it would still have to be costs only above what his employer pays.

You are in a frustrating position, but one you'll learn is common in the tax business. Clients want to do like everyone else and deduct stuff that is not allowed. They believe the guys at the Home Depot contractor's desk rather than you the tax professional. The excuse that "everyone else is doing it" is sound tax advice to them. I just had a client tell me he's not coming back next year because I won't deduct his uniforms and laundry "above the line" like all his co-workers who go to a national tax office. Sometimes you can talk sense into them, sometimes not.

[mblatour]

glad I am not alone!

Thanks for your input. It always helps to know there are others out there dealing with this sort of thing. Maybe some day I'll get to meet these preparers and find out where they are getting this infomation from; somehow I doubt it!