Employee Business Expense

[Bettie Cheek]

1. I have a client who is being examined for employee business expense, charitable contributions, and medical deductions. Never had this before.
2. T/P was temporarily working out of state(6 months). He bought a travel trailer. What exactly can he deduct? I thought the only thing would be interest payments(at100% for the 6 months) and lot payment, utilities, etc. What about round trips to go home ( 3 times) during this time. Thanks for input.

[ChEAr$]

He may deduct

1. I have a client who is being examined for employee business expense, charitable contributions, and medical deductions. Never had this before.
2. T/P was temporarily working out of state(6 months). He bought a travel trailer. What exactly can he deduct? I thought the only thing would be interest payments(at100% for the 6 months) and lot payment, utilities, etc. What about round trips to go home ( 3 times) during this time. Thanks for input.

depreciation on the trailer.
Even at 27.5 years, it's something, and better than nothing.

But all these expenses depend on the permanency of the job you know; one year or more?

I had a client like this but for one year only. He returned to previous preparer because
she took standard mileage rate for the truck PLUS depreciation.

[JohnH]

Lots of them out there

--> I had a client like this but for one year only. He returned to previous preparer because
she took standard mileage rate for the truck PLUS depreciation. <---

Several years back I picked up a real estate agent as a client who had been taking lease payments AND the standard mileage allowance for her car on her self-prepared returns. She said her car was her office and the lease payments would be comparable to the rent paid on a store-front office while the mileage allowance was the equivalent of utlities & overhead expenses on a store-front office. She also claimed a home office deduction as well, but thought it wasn't unusual to have two offices since lots of the big real estate brokers have multiple offices. With reasoning powers like that, it's no surprise that she was a top performer.

We eventually got the facts right, but I'm sure glad more than 3 years have passed since her last slef-prepared return was filed.

[dsi]

JohnH, that's a beautiful story. It made me laugh till I fell to the floor (the fact that I've had a couple of Mooseheads had nothing to do with it).

[Gretel]

1. I have a client who is being examined for employee business expense, charitable contributions, and medical deductions. Never had this before.
2. T/P was temporarily working out of state(6 months). He bought a travel trailer. What exactly can he deduct? I thought the only thing would be interest payments(at100% for the 6 months) and lot payment, utilities, etc. What about round trips to go home ( 3 times) during this time. Thanks for input.

It depends if you stayed in one place for 6 months or if he worked in several places. If he stayed in one place then only the first and last trip are deductible. Plus trailer expenses (depreciation, interest, upkeep, utilities, lot lease) and per diem.

[abby]

trips home

see TB 8-11 - trips home can be deductible - if returning to the tax home (if temporary location is not the tax home)

"These expenses are deductible up to the amount it would have cost to remain at the temporary place of work"

[New York Enrolled Agent]

Bettie Cheek

I'm not sure if ANY interest is deductible. I infer from your post that the taxpayer is an EMPLOYEE. If that's the case, then unless I'm missing something, I think §163(h) will not allow you to take any deduction for interest as an employee business expense.

This is part of §163(h) - caps added

1) In general.
In the case of a taxpayer other than a corporation, no deduction shall be allowed under this chapter for personal interest paid or accrued during the taxable year.

(2) Personal interest.
For purposes of this subsection, the term “personal interest” means ANY interest allowable as a deduction under this chapter other than—

(A) interest paid or accrued on indebtedness properly allocable to a trade or business (OTHER than the trade or business of performing services as an employee),

[joanmcq]

If the trailer is only the second home, interest on the trailer (and any property taxes) is better off being deducted as mortgage interest (as long as there is a kitchen & bath) rather than as an employee business expense. He would have per diem for meals as a deduction for employee business expenses.