Help with Employee Business Expenses

[David1980]

You may have a tax home even if you do not have a regular or main place of work. Your tax home may be the home where you regularly live.

I agree, so a retired taxpayer with no job who takes on temporary assignments outside their metropolitan area could have travel expense.

But that would require they have no regular or main place of work. If they have a job they do 2-3 weekends a month and that's their only job, I would call the location of that job their tax home.

[Gary2]

...that your tax home has to be someplace where you receive W=2 income? Are you saying that a self-employed person does not have a tax home?

It must have been getting late, since the section you quoted from me explicitly includes self-employment income. But what I was saying is that if a person's only income is investment, pension, and social security, then that person doesn't have a tax home for the purposes of this discussion.

In any event, I just came across Bogue v. Commissioner, issued just a few weeks ago, which provides a thorough discussion, at least with regard to the commuting issues. It dismisses any sort of rigid limit, referring to "facts and circumstances to decide ... incurred in traveling to a worksite unusually distant from the area where petitioner lives and normally works." Unfortunately, this is only for the temporary assignment rule, so it's not obvious if the same standard would apply to traveling away from the tax home in this case (which, as far as we know, is not a temporary assignment).

[taxea]

I try not to make assumptions when reading the original post...there is nothing that says this is a second job or not the same employer. I think this needs more clarification rather than us adding to it.

[appelman]

Where does it say...

This assumes that there was other work taking place in San Francisco. If "retired" means no other job or self-employment income, then Chicago becomes the tax home. Pub 463 is quite clear that the tax home and family home can be different, and that travel between the two is not deductible.

...that your tax home has to be someplace where you receive W=2 income? Are you saying that a self-employed person does not have a tax home?

But in the particular case, I don't think you can assume that the lady is twiddling her thumbs during all the time she isn't at the prison (or in transit thereto).

This may help, from Pub. 463:

"No Main Place of Business or Work

You may have a tax home even if you do not have a regular or main place of work. Your tax home may be the home where you regularly live.

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.

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.

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

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 a transient; your tax home is wherever you work and you cannot deduct travel expenses."

[David1980]

I don't see where you're getting that it's for the convenience of the employer.

I'm not see why it matters.

[dsi]

*** A letter from her employer states that she is not eligible for reimbursement; she pays for gas going there, some of the meals, and the lodging.

rfk[/QUOTE]

I think this statement says it all...she is not able to take any of her expenses as a deduction.

[Gary2]

lodging for the 2nd day is probably deductible because this is for the convenience of the employer and employer does not reimburse.

I don't see where you're getting that it's for the convenience of the employer.

[Gary2]

1. Evan, your traveling from San Francisco to Chicago would clearly qualify as away from the general area of your tax home. You had retired to SF and you took long work related trips so your lodging and meals would have been tax deductible if unreimbursed.

This assumes that there was other work taking place in San Francisco. If "retired" means no other job or self-employment income, then Chicago becomes the tax home. Pub 463 is quite clear that the tax home and family home can be different, and that travel between the two is not deductible.

2. Eighty miles strikes me as on the borderline between away from and not away from.

Agreed, but as I research this further, it seems that the key term is "metropolitan area". This tax court case has an interesting discussion of the metropolitan area. Keep in mind, reading this, that while the court quoted decisions finding that a round trip of 162 miles could still be within the metropolitan area, they didn't imply that it always is.

Indeed, in a second case, the court explicitly allowed a standard of 35 miles for one particular metropolitan area. However, the main reason is that the IRS never actually challenged that distance, but instead first claimed that 80 was a better standard (without substantiation) and second, tried to substitute the Commerce Department "economic area".

Come to think of it, even though this case can't be cited as precedent, the fact that the IRS proposed 80 miles in this case makes me think that it's not, on the surface, unreasonable to claim that the 80 miles in this thread can't be enough to constitute travel away from the tax home.

[erchess]

Reflections

1. Evan, your traveling from San Francisco to Chicago would clearly qualify as away from the general area of your tax home. You had retired to SF and you took long work related trips so your lodging and meals would have been tax deductible if unreimbursed. There is nothing in the post here to suggest that the clergywoman's tax home is not the prison.

2. Eighty miles strikes me as on the borderline between away from and not away from. Some people do pull a daily commute of that much or more but others of us including yours truly have been ordered by doctors not to drive over an hour without a fifteen minute break and not over two hours total in any day in which we are otherwise active nor more than four hours total in any day in which the remainder of the day is devoted to rest. Naturally the rate of speed at which the miles may safely be driven comes into play. My rule of thumb is that anything under 50 miles is clearly in the area, 50-100 is a grey area and over 100 is clearly outside the tax home subject to the provision that the trip is also a lot longer than the taxpayer's normal commute.

[rfk]

Employee Business Expense Followup

Thanks for the comments folks; great conversation as always.

I am going to presume that anything expended prior to the work day is not deductible. Meals should be eaten at the facility; lodging for the 2nd day is probably deductible because this is for the convenience of the employer and employer does not reimburse.

So only lodging the 2nd night will be taken into consideration; all else is tough luck via IRS tax law. For any difference of opinions from you folks, I will wait before talking to my client.

Thanks again, people; great stuff. You are all the best (sincerely stated).

rfk

[appelman]

Still not convinced.

A further reductio ad absurdum: In my former life I was a research chemist at Argonne National Laboratory, near Chicago. I retired to the San Francisco area. For some while, my former employer would ask me to return for short-term work assignments. I was reimbursed for travel under an accountable plan. But had my employer chosen not to reimburse me, as is the case for this lady, are you saying that my travel to these assignments would be a non-deductible commuting expense? I doubt it!

Taking another tack, some of the responses seem to be saying that the lady chooses to live where she does rather than move to the location of her two-or-three-weekends-a-month employment. Assuming the lady is doing something productive with the rest of her time, does that approach really make sense?

[JohnH]

I assume you drove extra-careful in that city after giving him the bad news...

[taxxcpa]

If the employee worked for the same employer at two locations, then the main location would he the tax home. However if there are two employers, then the only way there could be a deduction would be if the employee drover to the first job, then, on the same day drove to the second job.

Having one job during the week and another job on the week-end makes all travel commuting and it would not qualify as being away from the main job site overnight (for the week-end job).

I had a police officer client that wanted to deduct his apartment rent because his home was in one city but as a condition of being promoted to Captain he had to be available 24 hours a day in the city in which he worked. I could find no justification for such a deduction.

[Burke]

A state employee should be reimbursed for the out of pocket stuff while on duty -
by completing a voucher.

*** A letter from her employer states that she is not eligible for reimbursement; she pays for gas going there, some of the meals, and the lodging.rfk

This is the biggest clue. Reading between the lines, this must be her only employment with the state agency. If she worked for them during the week, and this were part of her responsibilities, she should qualify for reimbursement. Since she does not, its on her own volition, and I would consider it all commuting expense, therefore non-deductible under these facts and circumstances. The lodging and meals come under the same rules as the mileage.

[JohnH]

This client needs to come up with some different facts if they expect to get a tax deduction.