Deductible Travel Expenses?

[ddoshan]

To me employee travel expenses have been a really tough thing to deal with and sort out with clients. Clients always want to deduct all sorts of things such as their meals, lodging, mileage etc. Especially the construction type of workers.
For example, I had a client the other day that is from MN. He has a home and family here where he historically worked. Last year he took a job with an employer from New Town ND working in the oil industry. This was a permanent hire not a temporary job. He had a list of his expenses such as 7200 dollars for renting a place, a whole lot of mileage, and of course amounts for meals.
He rented a place in New Town ND. His job for the company did also take him to other areas of western ND generally 40 to 110 miles or so from New Town.
My take to the client was that his tax home was ND in and around the area of New Town. That I thought he probably would be entitled to deductions for mileage from New Town to the outside areas he worked. Also for lodging and meal expenses when it was necessary to stay overnite when working away from his general area of New Town.

This gets very expensive for employees in these situations and most including the client felt like he should be entitled to much more in deductions such as his rent in New Town, additional mileage, and meal allowance. In other words pretty much all of his expenses in connection with his work out there. Not just the expenses based on my take that New Town ND and the immediate surrounding area was his tax home.

I know other preparers may disagree and allow pretty much all of his expenses. What is your take? Do you agree that his tax home has changed and with my take on his situation. The client did decide to go elsewhere for his tax prep. As the client really does not have a regular work station could you possibly still consider his tax home his home. Even though he did take the job from a New Town employer and rents living quarters there, he does work in and around the western ND area for this employer, not at one fixed location.

[Bees Knees]

Do you agree that his tax home has changed and with my take on his situation.

The key information you left out is how long did the job last. The job is temporary if a single location is expected to last, and does last, for one year or less.

See TTB, page 8-10 under temporary travel.

[ddoshan]

This was a permanent hire not a temporary job. As mentioned in the original post. The employer is based out of and the client works out of New Town ND. The job does entail him going to various locations throughout NW North Dakota, so these various job locations are temporary. I advised the client that I thought his tax home was The general area in and around New Town. Therefore any expenses such as his rent, trips home and back, meals etc. for days he was not away from the New Town, ND general area would not be deductible. But that expenses incurred in going to areas / sites out of the New Town general area (metropolitan area argument) would probably be OK. Client felt different.

[Burke]

Client may have felt different, but any qualified preparer will tell him the same thing you did. You are correct. His tax home is the ND location and none of his living expenses there are deductible as job-related. Maybe the travel out of the metro area to other locations as you said. I have had the same situation several times. One was a laid-off worker who got a job for 2 years in another state, (family stayed here) and the other was a long-term employee with a company who closed their office locally, and he commuted for 2 years to corp headquarters in another state until he retired (family also stayed here.) Neither one could deduct their living expenses in the job location. (The 1st worker bought a small house, however, so he could deduct the mtge int and taxes since it qualified as a second home. It was cheaper than renting hotel rooms.)

[joanmcq]

Well of course the client felt different. He wants the deductions. But you are right and he is wrong. His tax home moved when he took the new, permanent, job.