Traveling Nurse

[Earl]

Have client who is a nurse. Signed a contract with company that finds jobs. When clients sign up they indicate they are eligible for travel expenses and any reimbursments they receive for housing and meals is not included on W2.

My client signed up for reimbursements but I am determining the client is not eligible for tax free handling of reimbursements. Does not have permanent residence.

Reimbursements were not included on W2. How would you include the reimbursements on the return as taxable.

[JohnH]

If the employer has accepted responsibility for that decision, isn't it sometimes a good idea to just let sleeping dogs lie? (Or maybe I'm just in a lazy mood today)

[gkaiseril]

Does the employer have an accountable expense plan or not?

Is the travilng nurse an intinerent, no permenante legal address, or does the nurse have a permenant residence she owns or rents?

A taxpayer who does not have a regular place of business or post of duty and has no place where he or she regularly lives is considered a transient (an itinerant) and the taxpayer's tax home is wherever he or she works. A transient worker cannot claim a travel expense deduction because he or she is never considered to be traveling away from home.

Max W. Tugel (TC Memo 1961-137)

[Earl]

Traveling Nurse

Client is itinerant. Uses parents home as mailing address. Has not lived there in last few years. Has worked in 3 different states over last 2 years.

I did not feel client was eligible for the reimbursements but was wondering whether to include them on 1040. If included on 1040 would SS and Medicare taxes have to be included. How to put on 1040? If put on 1040 I thought about using 2106 and listing no expenses and just showing amount of reimbursements.

[gkaiseril]

Since an intinerint or transient worker has no tax home, there are no travel expenses.

[Earl]

Traveling Nurse

I realize there should be no deductible expenses. However, the company already has paid for housing, meals and transportation. Amounts paid not included on W2.

I'm just wondering if the amounts the company paid as non-taxable should be included on the 1040 or just let the company worry about it.

[Gretel]

I am very much interested in the out come of this question myself.

There are different rules for employers that reimburse through an accountable plan than the rules applying for a deduction on the tax return.

Can we ignore employers reimbursement in this case?

What about if a taxpayer qualifies for travel expenses but employer has reimbursed too much? (Not because of higher per diem rates, just because of other circumstances)

[RitaB]

I agree

I thought about using 2106 and listing no expenses and just showing amount of reimbursements.

This is excess reimbursement. You would use 2106, and the excess amount (all) will wind up on 1040, line 7.

[Earl]

Traveling Nurse

Does this mean the reimbursement amounts escape social security taxes. If employer had included in wages (correct if not eligible for reimbursements) social security taxes would be paid.

[gkaiseril]

What is considered the 'tax home' for computing traveling expenses. The taxpayer has no established a tax home.

And this issue goes beyond the 2106 deduction. The taxpayer maybe considered a non-resident in all states that the taxpayer works.

[Gretel]

Does this mean the reimbursement amounts escape social security taxes. If employer had included in wages (correct if not eligible for reimbursements) social security taxes would be paid.

Reimbursements are added to box 1 of the W-2 only. No issue with SS taxes.

[Gretel]

If the employer has accepted responsibility for that decision, isn't it sometimes a good idea to just let sleeping dogs lie? (Or maybe I'm just in a lazy mood today)

I agree with John H on this one. If employee would want to claim additional expenses not reimbursed and form 2106 is used it would be different.

But I am still unsure if facts like in this case would require us to undo the employer's treatment. I have a case where employee got too much mileage reimbursement because unqualified home trips where counted fully for mileage reimbursements. I don't really know where to find the rules that apply just to employers and not necessarily to deductions.

They can reimburse medical expenses through a Cafeteria plan that would not be allowed otherwise. Am I mixing apples and oranges?

[DaveO]

This make me think about a client who gets a huge travel allowance. A good chunk ends up unused on the 2106 and added back to income. I wonder if this isn't a way for the employer to avoid employment taxes.