Home Away From Home Deductible?

So your boss has you on a temporary work assignment far away from your real “home.”  And the tightwad isn’t even going to reimburse you for your travel, meals and lodging expenses while fulfilling the duty.  Can you ask Uncle Sam to subsidize the trek, and the ancillary costs?

Maybe.

Indeed, the Tax Court said “OK” in its recent decision in the case of taxpayer Snellman.

Seems Mr. and Mrs. maintained their personal residence in a place called Indialantic, Florida.  In May, 2009, Mr. took a job as a project manager for U.S. Fidelis, Inc. with the understanding from the start that this project, based in Missouri, was to be completed no later than December 31, 2009, and that his employment would end at that time.

So, off he went (by car), staying in a hotel in Missouri for a while, and later leasing an apartment there.  Along came the time to prepare his 2009 income tax returns, when our boy deducted a whole bunch of unreimbursed employee business expenses associated with the job:  auto expenses, meals, lodging and incidentals.

Of course, along came the Revenooers who challenged the deductions on two grounds:  insufficient documentation/substantiation and further, on the basis that the expenses were not “ordinary and necessary” business expenses.

Digging in his heels, Snellman took the bureaucrats to Tax Court, and basically won.  The Court did give his deductions a bit of a haircut (because his documentation was, in fact, determined to be a little deficient), while agreeing, however, that the deductions were indeed ordinary and necessary within the confines of the law.

The Internal Revenue Code allows a taxpayer to deduct travel expenses, including expenditures for meals and lodging, if the expenses are reasonable and necessary, incurred “while away from home,” and incurred in pursuit of a trade or business.

And although the term “home” (or “tax home”) normally means a taxpayer’s principal place of employment (and not necessarily the location of the taxpayer’s personal residence), an exception to the rule arises when a taxpayer accepts employment away from his personal residence and the employment is temporary, though not indefinite.

The reason for this exception, which does make sense for once, is to relieve the taxpayer of the burden of duplicate living expenses while at a temporary employment location, since it would be unreasonable to expect him to move his residence under such circumstances.

The IRS in this case asserted, however, that Missouri was his “tax home,” though Snellman claimed Florida remained his real home and “tax home,” gaining agreement from the Court.

So, remember that concept the next time your boss tells you to get to work in some far off location!

CONSULT YOUR TAX ADVISOR – This article contains general information about various tax matters.  You should consult your CPA regarding the implications to your own particular situation.

Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno.  He can be reached at 831-7288, welcomes comments at jquinn@ashleyquinncpas.com, and invites readers to consider his other commentary at http://blog.nolo.com/taxes.

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