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Ed Johnson
Ed Johnson, Tax Preparer
Category: Tax
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Experience:  GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
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Business Travel Expense Questions Background Im a single

Resolved Question:

Business Travel Expense Questions:

Background
I’m a single person LLC based in Maryland that provides management consulting and project management services. My business recently won a project in California. The project will last from 1/5/09 to 12/31/09 (a little under 12 months). I will be renting an apartment in California while I’m there, while my house in Maryland is empty, and I will fly home to Maryland once or twice a month to check on my house. I will also still be trying to win work in the Washington, DC/Maryland area while I’m in California.

Questions:
1.     While in California, I will be renting an apartment and claiming the monthly rent as a business expense. Will I also be able to deduct the cost of the apartment utilities: e.g., electric, water, internet connection?
2.     Can I take the standard daily meal allowance while I’m in California (and the 50% expense deduction)? Also, do I claim the meal allowance only on workdays, or can I claim it on weekends as well?
3.     If I rent a car (or take out a short-term lease) while in California, can I deduct the cost of the rental? If so, do I claim the expense only on workdays and not weekends (e.g., expense only 5/7 of the cost)?
4.     If I drive my own car to California, I can claim the expense of the drive to California, but can I also claim use of the car while in California as an expense? If yes, what exactly could I claim – the miles from my apartment to work and back, or all miles driven in California (e.g., workday miles)?
5.     While in California, can I claim the cost of my dry cleaning?
6.     Are there any other expenses I can claim while in California (besides my monthly travel back and forth to Maryland)?
7.     Can I claim the cost of expenses in Maryland that I incur only because I’m in California? For example, house sitting fees, lawn services, etc.?
Submitted: 6 years ago.
Category: Tax
Expert:  Ed Johnson replied 6 years ago.

DearCustomer

 

I will take your questions one at a time. I will do them in sections so that we make sure we are able to take care of any misunderstanding along the way.

 

1. According to the IRS you can claim lodging and expenses if you are required to travel away from home for business purposes, of a temporary nature. You would include this on your schedule C expenses. Temporary is an assignment less than one year. Do not take this on your schedule A...It is a schedule C expense:

 

http://www.irs.gov/pub/irs-drop/n-07-47.pdf

 

The IRS defiines temporary assignments as 1 year or less. More than one year and these are no longer deductable business expenses on your schedule C.

 

2. You can not take a daily meal expenses on schedule c because you are temporarily away from home.

 

Determining temporary or indefinite. You must determine whether your assignment is temporary or indefinite when you start work. If you expect an assignment or job to last for one year or less, it is temporary unless there are facts and circumstances that indicate otherwise. An assignment or job that is initially temporary may become indefinite due to changed circumstances. A series of assignments to the same location, all for short periods but that together cover a long period, may be considered an indefinite assignment.

 

3.Even though this trip is for business purposes and you can deduct your general lodging and meals, in and around transportation. So you have to apportion personal use and business use for not only the auto lease, but things like recreation, and personal visits, etc.

 

4. You can claim the mileage for your personal use vehilce, including tolls, and parking to and from your temporary assignment. You can not claim the commuting miles from the hotel to the work site, nor can you claim the mileage for personal use. You can claim the mileage of the vehicle for travel to clients and work sites, after first commuting to your first locaiton of your business day. You do not count commuting to the first job site or home from the last job site. You have to have a mileage log.

 

5. You can deduct dry cleaning.

This chart summarizes expenses you can deduct when you travel away from home for business purposes.
IF you have expenses for...THEN you can deduct the cost of...
transportation travel by airplane, train, bus, or car between your home and your business destination. If you were provided with a ticket or you are riding free as a result of a frequent traveler or similar program, your cost is zero. If you travel by ship, see Luxury Water Travel and Cruise Ships (under Conventions) for additional rules and limits.
taxi, commuter bus, and airport limousine fares for these and other types of transportation that take you between:
  • The airport or station and your hotel, and

  • The hotel and the work location of your customers or clients, your business meeting place, or your temporary work location.

baggage and shipping sending baggage and sample or display material between your regular and temporary work locations.
car operating and maintaining your car when traveling away from home on business. You can deduct actual expenses or the standard mileage rate, as well as business-related tolls and parking. If you rent a car while away from home on business, you can deduct only the business-use portion of the expenses.
lodging and meals your lodging and meals if your business trip is overnight or long enough that you need to stop for sleep or rest to properly perform your duties. Meals include amounts spent for food, beverages, taxes, and related tips. See Meals for additional rules and limits.
cleaning dry cleaning and laundry.
telephone business calls while on your business trip. This includes business communication by fax machine or other communication devices.
tips tips you pay for any expenses in this chart.
other other similar ordinary and necessary expenses related to your business travel. These expenses might include transportation to or from a business meal, public stenographer's fees, computer rental fees, and operating and maintaining a house trailer

 

NOTE: I recommended deductingn lodging and meals and transportation on schedule C, but for the rest taken them on schedule A.

 

 

Customer: replied 6 years ago.

Ed,

 

Thank you for your reply. I was not clear on your response to question number 2 (the standard meal deduction). Since the contract is for less than a year, it is temporary, so I assume I can take the deduction. Also, did you have any input on questions 6 and 7?

Also, am I able to deduct the expenses related to the apartment, e.g., utilities?

Expert:  Ed Johnson replied 6 years ago.

DearCustomer

 

For item six, I provided you a tabel taken from regulation.

 

For item 7, you can not take these expenses unless it is associated with temporary travel overseas. For temporary assignments overseas, the deduction is home maintenance and property management expenses, because you are required to maintain a home in the United States while assigned overseas.

 

If you sublet you can take these expenses against he rental income. Else you can not deduct them.

 

 

Customer: replied 6 years ago.
Okay - but I'm still not clear on your answer to question #2 - you wrote that I can not claim the meal expense, however, since my contract is temporary, it appears that I should be able to take the meal deduction.
Customer: replied 6 years ago.
Also, you didn't address the matter of if I can deduct the expenses related to the apartment I would be renting.
Expert:  Ed Johnson replied 6 years ago.

You can deduct the cost of the rental including utilities, water and sewage, but not cable.

 

You can not deduct maid servcie in the apartment in MD.

 

You can not deduct the basic cost of the phone, but you can apportion the actual individual phone calls from the personal and business phone calls, including the taxes for such calls.

 

 

Customer: replied 6 years ago.
Okay, we're almost done with answering my original questions - please let me know if, in your response to question #2, you meant "can not", or just "can" related to being able to deduct the meal allowance. You wrote "can not" but I assume you meant "can."
Expert:  Ed Johnson replied 6 years ago.

Dear call,

 

That was a typo. for temporary assignments you can take the meal expenses. But they must be reasonable meal expenses. The normal test is the government perdiem rates for that area. If you are close to those figures you would be ok. What the IRS is trying to say is that it is not reasonable to have fourstar meals three times a day.

 

per deim website: http://www.gsa.gov/Portal/gsa/ep/contentView.do?contentId=17943&contentType=GSA_BASIC

 

The actual lodging and meals are not a problem as long as they are reasonable, the irs uses the tables above as a guide to what is reasonable. AS long as you are close you do not have to worrry.

Ed Johnson, Tax Preparer
Category: Tax
Satisfied Customers: 10760
Experience: GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
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