MAIN ISSUE- Did Recent College Grad establish a Tax Home before travelling out-of-state for temporary contract work?
Previous Years
Home State Michigan, where she also went to University.
Taxpayer Katy Graduated Spring 2014 Education Major. Worked Part Time throughout School, both substitute teaching and non-related jobs (never adding up to over $5000/year; she lived largely on student loans and credit cards).
Continued with additional year of University starting Fall of 2014: Master’s courses, unpaid student teaching—This additional year was required to get her teaching Credential.
(Note: Teaching Credential was not required for the Substitute teaching she did).
Tax Year 2015
Continued working part-time while finishing University Spring 2015--But the full time unpaid student teaching left less time for her normal part-time employment.
Got engaged also in 2015, further establishing her Michigan Domicile and intent to stay in Michigan. 25 years old.
Finished with school, she looked for better work than Substitute teaching locally, simply couldn’t find. Would have continued Substitute teaching in September, but found great glorified tutoring job in New York for 9 months—Definitely a Temporary job, contracted that way—she needed to get back to Michigan to get married! $3000/month 1099 work. She needed this money desparately.
Total paid earnings 2014 about $5000 in Michigan.
Total paid earnings 2015 only $2000 in Michigan thru August.
$12000 made at her temp job New York September-December.
No Question Temp job; No question Domicile Michigan.
But had she really established a “Tax Home” in Michigan? (In order to justify deducting her travel expenses?)
She’d been renting a home until got this NY temp job. Lease ended July so she moved in with parents for the 3 weeks before she started her drive to NY. Knew she’d be moving in with Fiancee upon her return & wedding (June 2016) so no reason to have duplicate living expenses and continue renting anything. This is the biggest “strike against her” I suppose in the strength of her Michigan Tax Home argument. Note: She's using her fiancee's address for mail but doesn't believe in living together before marriage so hasn't actually moved in.
She will return to her substitute teaching there when she returns—Although she will also be looking for a better job. The Sub teaching would likely be more like full time now that she's finished with school--but is subject to availability.
Another concern, is it’s a live in tutoring job in New York. If we take perdiems for food only—it will be about $8000 x 50% allowed = $4000 food deduction on Sch C (against $12,000 income). I’m worried this high % of travel food (plus $700 travel expense) (and first year box checked on Sch C) could spark an audit. And I’m uncertain even about how the IRS would look at the lodging! She’s a live in tutor. If she were an employee—NO doubt this is for the convenience of the “employer”—Her living with family to tutor. But if the IRS were to assert Michigan is not her tax home, might they even force her to add the FMV of her lodging into her income?? On top of losing food deduction! So this is an crucial question for this new career girl.
Thanks so much!!
Previous Years
Home State Michigan, where she also went to University.
Taxpayer Katy Graduated Spring 2014 Education Major. Worked Part Time throughout School, both substitute teaching and non-related jobs (never adding up to over $5000/year; she lived largely on student loans and credit cards).
Continued with additional year of University starting Fall of 2014: Master’s courses, unpaid student teaching—This additional year was required to get her teaching Credential.
(Note: Teaching Credential was not required for the Substitute teaching she did).
Tax Year 2015
Continued working part-time while finishing University Spring 2015--But the full time unpaid student teaching left less time for her normal part-time employment.
Got engaged also in 2015, further establishing her Michigan Domicile and intent to stay in Michigan. 25 years old.
Finished with school, she looked for better work than Substitute teaching locally, simply couldn’t find. Would have continued Substitute teaching in September, but found great glorified tutoring job in New York for 9 months—Definitely a Temporary job, contracted that way—she needed to get back to Michigan to get married! $3000/month 1099 work. She needed this money desparately.
Total paid earnings 2014 about $5000 in Michigan.
Total paid earnings 2015 only $2000 in Michigan thru August.
$12000 made at her temp job New York September-December.
No Question Temp job; No question Domicile Michigan.
But had she really established a “Tax Home” in Michigan? (In order to justify deducting her travel expenses?)
She’d been renting a home until got this NY temp job. Lease ended July so she moved in with parents for the 3 weeks before she started her drive to NY. Knew she’d be moving in with Fiancee upon her return & wedding (June 2016) so no reason to have duplicate living expenses and continue renting anything. This is the biggest “strike against her” I suppose in the strength of her Michigan Tax Home argument. Note: She's using her fiancee's address for mail but doesn't believe in living together before marriage so hasn't actually moved in.
She will return to her substitute teaching there when she returns—Although she will also be looking for a better job. The Sub teaching would likely be more like full time now that she's finished with school--but is subject to availability.
Another concern, is it’s a live in tutoring job in New York. If we take perdiems for food only—it will be about $8000 x 50% allowed = $4000 food deduction on Sch C (against $12,000 income). I’m worried this high % of travel food (plus $700 travel expense) (and first year box checked on Sch C) could spark an audit. And I’m uncertain even about how the IRS would look at the lodging! She’s a live in tutor. If she were an employee—NO doubt this is for the convenience of the “employer”—Her living with family to tutor. But if the IRS were to assert Michigan is not her tax home, might they even force her to add the FMV of her lodging into her income?? On top of losing food deduction! So this is an crucial question for this new career girl.
Thanks so much!!
Comment