"Oil Riggers"

[rick in cal]

WhiteO, maybe I'm missing something. This guy picked up a job while he was on "vacation" from his tax home and would have to stay gone for a year to lose temporary status. The fact that he continues to return to Wi. indicates he considers that his home. He would only lose his deductions if he stays employed outside his Wi. tax home past the one year mark.Can you refer us to any IRS section that could be interpreted differently? Gary asks the right question; what did he do in 2008.

[WhiteOleander]

Check out Pub 463, beginning on page 3. It discusses tax home versus family home. There's enough there to make your head spin.

Travel expenses are some of the vaguest rules in the tax code. (in my opinion)

[JG EA]

Some observations

1. TTB explains that your first questions to the taxpayer start with the tax home.TTB 8-11: "To determine if a taxpayer travels away from home, the taxpayer must first determine the location of his or her tax home."

All these questions are hard because it truly is a facts and circumstances tax issue. A simple explanation doesn't work with a taxpayer. We have to go through their situation carefully.

2.

The Travel Rules presuppose that the worker is traveling away from the general area of his main tax home. When one stops working in the general area of one's residence for a year or most of a year than that area stops being one's tax home. ...

Just a point I think is right: This would be true for a year. If less than a year - it would be a temporary assignment and wouldn't negate his tax home. (Supposing of course that he took the job as temporary and so forth.)

3. I lost a client or two over the issue. They had a tax home, worked on a temporary assignment in another state, came home and worked at tax home, and the next year worked in another state temporarily. Then the year after that they were working different temporary assignments in different places in two states. At this point (examining their facts) they no longer had temporary assignments in my view and I told them their tax home either changed or no longer existed because of the F&C.

[newbie]

I don't see how Wisconsin could be his tax home. In my opinion, when he decided to take the job in Wyoming that became his tax home. He could've purchased or rented a home in Wyoming, it was his choice not to make it a home and instead travel back and forth to Wisconsin.

If I travel from Wisconsin to Florida to do tax prep for 4 months out of the year can I deduct my travel to and from along with lodging because it's only temporary? I would say no, once I decided to take the job in Florida, that became my tax home.

[erchess]

Tax Home

I am assuming that the guy was working so much in WY that he earned over half of his total income for 2007 far enough from his residence that he did not normally return to the residence to sleep between shifts. When he went home it was on some but not all of his fourteen day periods off and I am guessing he worked little to not at all on those trips home. I realize that tax home is a kind of a flexible and therefore hard to understand concept. But it boils down to the general area where you earn most of your money if indeed you have such an area. If you earn most of your money while working so far from your residence that you do not usually return to the residence to sleep between shifts then the area around your residence is not your tax home. I was asked for a cite but others have mentioned the only two I know of - TTB and Pub 463

[Gretel]

What an interesting discussion. I always dread these workers and delving into this grey area.

I think if you take on a temporary job away from your home (WI), which until then also was your tax home, with the intend to return to your home and look for work there, then this being a temporary work location does not make this (WY) your tax home. All travel expenses are deductible.

I even think that if one works all over the state (WY) and each location is in a different area, far enough apart, you have several temporary work locations, each lasting less than a year. This can go on for years. As long as you also work at your home/tax home (WI) and fulfill the other requirements you keep having temporary work assignments.

This could be even true if you do not work at your tax home, but here it goes into the dangerous zone, and the arguments and facts and circumstances better be darn good.

Same is true for doing tax prep in Florida, unless you already plan to do it the next year.

[rick in cal]

Thank you White Oleander for refering us to pub 463 pg 3 and proving my point. Based on what we know our oil rigger satisfies 2 of the 3 factors to determine his Wisconsin tax home, much like the "Boston example". Our rigger did have duplicate expenses and did not abandon his dwelling in Wisconsin. that would qualify Wisconsin as his tax home provided he meets the temporary time limit of one year (not most of a year).
Erchess, no hard feelings. I've seen you submit many knowledgeable posts but I have to disagree with you again. If our oil rigger makes $10,000 a year in Wisconsin and returns to that job within the one year time limit, what he earns in Wyoming has no bearing on his tax home. Even if he earns a million dollars digging holes as you put it.

[Zee]

Erchess, We can draw different senarios on whether the client will return to Wi. and when, because all the facts weren't given. This would determine his tax home. The fact that he's staying in motels leads me to believe he doesn't mean to make Wy his new home and plans to return to Wi. The IRS is quite clear on the one year rule for determining permanent residency and while I find your attempt to pay down the national debt, you can't rewrite tax code. Where did you find tax law that says being away from your tax home for "most of a the year" would negate ones tax home. I take this to mean if you had a client who was on a temporary assignment somewhere between 6 1/2 months to 11 1/2 months you would tell him he shouldn't take his expenses. I don't think that is correct and can't find anything in writing to change my mind.

Pub 17 indicates the following:

Factors used to determine tax home. If you do not have a regular or main place of business or work, use the following three factors to determine where your tax home is.

1. You perform part of your business in the area of your main home and use that home for lodging while doing business in the area.

2. You have living expenses at your main home that you duplicate because your business requires you to be away from that home.

3. You have not abandoned the area in which both your historical place of lodging and your claimed main home are located; you have a member or members of your family living at your main home; or you often use that home for lodging.

If you satisfy all three factors, your tax home is the home where you regularly live. If you satisfy only two factors, you may have a tax home depending on all the facts and circumstances. If you satisfy only one factor, you are an itinerant; your tax home is wherever you work and you cannot deduct travel expenses.

[ChEAr$]

Pub 17 indicates the following:

Factors used to determine tax home. If you do not have a regular or main place of business or work, use the following three factors to determine where your tax home is.

1. You perform part of your business in the area of your main home and use that home for lodging while doing business in the area.

2. You have living expenses at your main home that you duplicate because your business requires you to be away from that home.

3. You have not abandoned the area in which both your historical place of lodging and your claimed main home are located; you have a member or members of your family living at your main home; or you often use that home for lodging.

If you satisfy all three factors, your tax home is the home where you regularly live. If you satisfy only two factors, you may have a tax home depending on all the facts and circumstances. If you satisfy only one factor, you are an itinerant; your tax home is wherever you work and you cannot deduct travel expenses.

Thank you Zee. Point # 1 quashes any away from home deduction. His main
focus of activity , aka tax home, is in WY.

[FEDUKE404]

Still curious

Did we ever find out what this guy did in 2008 and 2009 ???

[JG EA]

Yes you can

If I travel from Wisconsin to Florida to do tax prep for 4 months out of the year can I deduct my travel to and from along with lodging because it's only temporary? I would say no, once I decided to take the job in Florida, that became my tax home.

Ok, the F&C in this case are different from what we have been discussing. So, if you are saying that you work in Wisconsin most of the year and work in Florida for 4 months of the year....
Pub 17

Main place of business or work. If you have more than one place of business or work, consider the following when determining which one is your main place of business or work.
The total time you ordinarily spend in each place.

The level of your business activity in each place.

Whether your income from each place is significant or insignificant.


Example.

You live in Cincinnati where you have a seasonal job for 8 months each year and earn $40,000. You work the other 4 months in Miami, also at a seasonal job, and earn $15,000. Cincinnati is your main place of work because you spend most of your time there and earn most of your income there.

Example 2.

Your family home is in Pittsburgh, where you work 12 weeks a year. The rest of the year you work for the same employer in Baltimore. In Baltimore, you eat in restaurants and sleep in a rooming house. Your salary is the same whether you are in Pittsburgh or Baltimore.

Because you spend most of your working time and earn most of your salary in Baltimore, that city is your tax home. You cannot deduct any expenses you have for meals and lodging there. However, when you return to work in Pittsburgh, you are away from your tax home even though you stay at your family home. You can deduct the cost of your round trip between Baltimore and Pittsburgh. You can also deduct your part of your family's living expenses for meals and lodging while you are living and working in Pittsburgh.

[Jesse]

And there is much to be said why tax year 2007 is only now rearing its ugly head for this guy! Perhaps a little IRS heat is looming?? (I would strongly consider a retainer fee.)

There is no simple answer. Depending on the facts not stated, a good case could be made for still having to file a WI return especially if family (spouse) is there and the usual things (voting/car tags/etc) still lean to WI. Everything from the oil rig work that is taxed by another state (WY as non-resident) can then be used for a WI state tax credit,with some possibility of deductible travel expenses.

It is highly likely a WY return is necessary, whether resident or non-resident. Although the clock is a matter on that decision. A case could be even made that he is now a WY resident, with a two-week on/off job, and then he would totally be up the creek for any "job" expenses to include meals. And whether he stayed in "a" hotel or "various" hotels in WY could even become a factor.

And if all else fails, he may well (eventually) fall into the "transient" category after all.

I am familiar with a return (someone else) that was similar with an extra twist. Person "lived' somewhere in mid-west, got a job with a TX company (where he "lived" during the non-work periods) and then he worked in the Gulf of Mexico. Apparently the "state lines" go outward into the Gulf, and his W2 showed at least two states dependent upon where the rig was physically located. No word on whether that preparer opted for flipping burgers....

BTW: You did not mention what state(s) showed up on the W2? Please tell me he did not get a Form 1099-MISC !!

FE

I think there is a good case to be made for having to file a WI return and as pointed out, WY has no income tax, therefore no credit for WI. He was just “too busy” to file a tax return, as he has a $3,000+ refund, and that’s without any travel/lodging expenses. He did receive a W-2 with the state of WY listed in box 15.

[Jesse]

WhiteO, maybe I'm missing something. This guy picked up a job while he was on "vacation" from his tax home and would have to stay gone for a year to lose temporary status. The fact that he continues to return to Wi. indicates he considers that his home. He would only lose his deductions if he stays employed outside his Wi. tax home past the one year mark.Can you refer us to any IRS section that could be interpreted differently? Gary asks the right question; what did he do in 2008.

Thank you White Oleander for refering us to pub 463 pg 3 and proving my point. Based on what we know our oil rigger satisfies 2 of the 3 factors to determine his Wisconsin tax home, much like the "Boston example". Our rigger did have duplicate expenses and did not abandon his dwelling in Wisconsin. that would qualify Wisconsin as his tax home provided he meets the temporary time limit of one year (not most of a year).
Erchess, no hard feelings. I've seen you submit many knowledgeable posts but I have to disagree with you again. If our oil rigger makes $10,000 a year in Wisconsin and returns to that job within the one year time limit, what he earns in Wyoming has no bearing on his tax home. Even if he earns a million dollars digging holes as you put it.

Wisconsin is where his personal residence is, but in my opinion it is not his tax home. The tax home is the regular place of business or post of duty, regardless of where the taxpayer maintains his or her family home. He picked up the job in WY and worked there for just under 1 year, so it was temporary, but it was a different employer , different vicinity, and no connection to WI. He does not perform any part of his business activities in the area of his main home in WI so the duplication of expenses is by choice.

The only travel deduction I can see is moving expenses to WY. He worked in WY part of 2007 and part of 2008 and then collected WY unemployment for part of 2008 and part of 2009. No other wage for 2008 or 2009.