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jgordosea
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3005
Experience:  I've prepared all types of taxes since 1987.
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I am An IBEW union electrician. I am a member of a major local

Customer Question

I am An IBEW union electrician. I am a member of a major local union
whose territory is in central Jersey, but I reside in PA. I have worked in New Jersey
for many years. Through these years there has been much debate about deducting travel miles pertaining to individuals who do not work in their local metropolitan area, and whose jobs last less than 1 year. Some accountants say that regardless of whether the job lasts
less than 12 months or not, it is your "regular" job and you cannot deduct traveling
expenses(miles). Other so called experts argue that chapter 26 of the tax guide clearly
defines "temporary" work as realistically expected to last one year or less, and that travel
expenses are OK outside of your metropolitan area. My jobs never last a year or more, and I
never work close to my home "metropolitan area". Can I deduct miles?
Submitted: 5 years ago.
Category: Tax
Expert:  Ed Johnson replied 5 years ago.

DearCustomer

 

Are these jobs while working for the same employer?

 

Are you required to remain overnight on the jobs or do you return home each day?

Customer: replied 5 years ago.
#1 Yes they are working for the same employer.

#2 I return home every day.
Expert:  Ed Johnson replied 5 years ago.

DearCustomer

 

So then I need to make sure I udnerstand exactly how this job transpires.

 

Your employer sends you on different contracted jobs or different job sites with various customes through out NJ and PA?

 

It is not the same job site each time nor is it the same customer each time?

 

Customer: replied 5 years ago.
My employer sends me on different contracted jobs. If these jobs are new construction, they will last at least several months. A renovation may last several weeks. Sometimes I will be sent to a job site to perform a specialized task that may only last a day or two. Two years ago I worked on the same job site for more than 12 months, and I deducted travel miles(2500 miles) associated with Saturday and Sunday work at job sites that were not at my "regular" job location. In 2008 I jumped around all over the state of NJ. It looks like 2009 will be the same. Can I log all work miles. They are not the same job site each time nor are they the same customer each time. Thank you.
Expert:  Ed Johnson replied 5 years ago.

Dear PA,

 

Based on the information you have provided you would be entitled to claim mileage for those daily commutes.

 

No regular place of work. If you have no regular place of work but ordinarily work in the metropolitan area where you live, you can deduct daily transportation costs between home and a temporary work site outside that metropolitan area.

Generally, a metropolitan area includes the area within the city limits and the suburbs that are considered part of that metropolitan area.

 

the confusion some people are focusing on is where you regularly work. The langague specifically states you can only take the deduction for working outside the metropolitian area, if you normally work within the Metropolitan area, but also have no regular place of work.

 

since these are temporary work assignments and not expected to last a year or more, AND because they are outside the metropolitan work area, then you may deduct them.

 

BUT, you need to have a mileage log that is sufficient for allocating business miles, commuting miles, and personal use.

 

 

Customer: replied 5 years ago.
"If you have no regular place of work but ordinarily work in the metropolitan area where you live".
My concern has always been with the word "but". If the word "or" was substituted for the word "but", I would have all the confidence in the world. I don't ordinarily work in my metropolitan area.
Expert:  Ed Johnson replied 5 years ago.

My answer was based on the assumption that your tax home was in the same metropolitan area as your employer.

 

for example: living in ft. Washington and the empoyer is in Philadelphia. Philadelphia and ft. washington are both in the same metropolitan area.

 

 

Customer: replied 5 years ago.
My employer is not located in my metropolitan area/tax home(Bethlehem, PA). My employer is located in Piscataway, NJ. I stated this in my original question. Do you now recommend that I not claim mileage, or is this a gray enough area that I would have a good argument in the event I get audited. Sorry to keep hounding you. What would you do if you were me. I don't have a problem paying you more for your time. As you know, this is a substantial deduction.
Expert:  jgordosea replied 5 years ago.

Greetings,

 

Since Ed Johnson is not available I will give an answer.

 

References are to Publication 463 (2007), Travel, Entertainment, Gift, and Car Expenses

 

When Tax Home is discussed in that publication it says, in part:

 

Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home. It includes the entire city or general area in which your business or work is located.

...

If you do not have a regular or a main place of business because of the nature of your work, then your tax home may be the place where you regularly live.

 

This is the area that has resulted in varied advice. That is, where is your main place of business or do you not have a main place of business ?

 

Since you work for the same employer in New Jersey that would certainly be your main place of business if you always worked in one location in New Jersey. In that case you would not deduct any expenses for travel from PA to NJ or NJ to PA.

 

Your case is not so clear as you work in various places in NJ for that one employer.

 

Case 1: IF most of those places you work in NJ are in the same metropolitan area it would still be your main place of business. In that case, you would deduct travel to and from any job locations that are not part of the main metropolitan area that you worked in. Still you would not deduct any expenses for travel from PA to NJ or NJ to PA.

 

Case 2: IF most of those places you work in NJ are NOT in the same metropolitan area it would not be your main place of business. The rules for no main place of business would apply. In that case, you would deduct travel to and from any job locations that are away form your tax home. There are three factors to consider where your tax home is when you do not have a main place of business.

 

Factors used to determine tax home. If you do not have a regular or main place of business or work, use the following three factors to determine where your tax home is.

  1. You perform part of your business in the area of your main home and use that home for lodging while doing business in the area.

  2. You have living expenses at your main home that you duplicate because your business requires you to be away from that home.

  3. You have not abandoned the area in which both your historical place of lodging and your claimed main home are located; you have a member or members of your family living at your main home; or you often use that home for lodging.

 

If you satisfy all three factors, your tax home is the home where you regularly live. If you satisfy only two factors, you may have a tax home depending on all the facts and circumstances. If you satisfy only one factor, you are an itinerant; your tax home is wherever you work and you cannot deduct travel expenses.

 

Using those factors it would appear that your tax home is PA. In that case you would deduct expenses for travel from PA to and from NJ or in NJ from job to job.

 

The key fact to decide is if you work enough in one metropolitan area of NJ for that to be your main place of business (See Case 1) OR if your locations in NJ during the year are not mainly in one metropolitan area of NJ (See Case 2).

 

It does seem possible that the key fact may be decided differently from year to year. For example, one year you may have several assignments all in one metropolitan area so that area wold be your main place of business for that year and only deduct as in Case 1; but in the next year when you have many shorter and more distant assignments you do not have a main metropolitan area in which you work and you deduct as in Case 2.

 

Of course, your work and life do not fit so neatly around the calendar year and a year by year decision may not be best truly reflect the facts in your case. That is, when viewed in the longer term it is clear that over the many years you have worked in NJ it has been in one area (Case 1) or it has not been mainly in one metroplitan area (Case 2) so that case is how you will report it every year (even when there is a year that does not fit the overall long term pattern).

 

What you need to do is keep very good records of the amounts and locations of your travel expenses and apply the rules for deciding the key factor in the manner that best fits your situation.

 

I hope this answer, though a bit long, helps you to see the rules to apply and gives you a basis to make that decision.

 

Please ask if you need clarification.

Best regards.

Customer: replied 5 years ago.
"Using those factors it would appear that your tax home is PA. In that case you would deduct expenses for travel from PA to and from NJ or in NJ from job to job".

1. Unless I could figure a way to satisfy factor 2, my tax home would "depend on all the facts and circumstances" per your description. The only duplicate expenses I could even think of would be lodging, which I do not satisfy. Can you site some examples of duplicate living expenses?

2. If I don't satisfy factor 2, then "my tax home would depend on all the facts and circumstances" per your description. There seem to be conflicts that I don't understand:

*Is my place of business determined by; if a job's location is expected to last , or does in fact last 1 year or longer (in which case I would not have a main/regular place of business)?
OR
*Per case 1, if most (more than 50%?) of those places I work in NJ are in the same metropolitan area, then that would be my main place of business.
*Per case 2, if most (more than 50%?) of those places I work in NJ are not in the same metropolitan area, then I would not have a main place of business.

3. Are you telling me to disregard the general guideline of a job lasting 1 year or more, and that the Case 1/Case 2 scenario supersedes it?

4. If that's the case, is my assumption that the word "most" means more than 50%?

5. If case 1 applies to me, you first say in your explanation that the area I work in "most" of the time is my main place of business and I could only deduct miles pertaining to work outside that area. Then you say, "still you would not deduct any expenses for travel from PA to NJ or NJ to PA". Can I or can't I deduct miles outside that metropolitan area? My job locations encompass a huge territory not confined to one city and it's suburbs.

6. If Case 2 applies to me, then would the rules for no main place of business apply, because I did not work in one general area for a cumulative total of 6 months or greater (most of the time)? If this is the case, you indicate that I should deduct travel to and from any job away from my tax home. Now I must determine my tax home yes?

7. See question #1. I'm like a dog chasing my own tail.

My Summary:
-If I can satisfy all 3 factors in determining my tax home, I'm OK to deduct all mileage provided I don't work in the same location 1 year or longer.
-If I can only satisfy 2 factors, I should apply the Case 1/Case 2 scenario, and I would need the apparent Case 1 contradictions cleaned up, OR Case 2 sends me chasing my tail.




Expert:  jgordosea replied 5 years ago.

Hello again,

 

1. Can you site some examples of duplicate living expenses? Food and lodging would be the common duplicate expenses. Laundry, grooming and other personal expenses would be others.

 

2. We are not dealing with (so yes ignoring) the temporary job rules for length of time on or expected on the job. You did not have many temporary jobs; as you said you had one employer. We are just dealing with that the travel must be away from your tax home.

 

3. Yes. If the job is not away from your tax home it does not matter how long it lasts. Even for the temporary job less than one year, the travel must be away from your home. That you have many short term jobs in one area does not, of itself, make it deductible travel.

 

4. Yes, 50% or more as most is a reasonable interpretation (note:"most" is not defined in the regulations) but earnings may be a better standard than time to determine where "most" of your work occurred. That is, someone could work one or a few months in one place; but make all (or 80%, or more than 50%) of their income for the year in that place. Obviously, "most" of the work was in that one place even though it was not most of the time during the year.

 

5. I mean that you would not deduct travel expenses to or from home in PA to the area you mainly work in NJ since your tax home is NJ in that case. You will deduct travel expenses away from that main area (your tax home).

 

6. In case 2 your tax home is your place of residence.

 

7. The key (and only) fact to decide is if you work enough for the employer in one metropolitan area of NJ for that to be your main place of business (See Case 1) OR if your locations in NJ during the year are not mainly in one metropolitan area of NJ (See Case 2).

 

There are the two cases distilled from the facts you presented. You need to decide either (1) year to year which of the two cases to use; or,

(2) you can decide based on the many years which case is most proper for you overall; and use that case every year.

 

One key fact to decide that leads to one of two cases to use is as concise as I can make it given the many rules.

You may want to have face to face discussions with an experienced tax practitioner so you can have back and forth questions ( as that is not feasible on a site such as this) to confirm our general discussion and your understanding. .

 

I hope this helps to clarify for you.

jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3005
Experience: I've prepared all types of taxes since 1987.
jgordosea and 6 other Tax Specialists are ready to help you

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