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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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I am married but my wife will be commuting to another state

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I am married but my wife will be commuting to another state to work. I am trying to figure out if she should become a resident of the other state or stay a resident of our home state. The out-of-state work arrangement is temporary , a necessary-evil to build experience in her profession - we expect the out-of state work arrangement to be two years.

We currently live in Denver, CO.
My wife's job is in Omaha, NB

I make $200K/yr, My wife will make $80K/yr

We plan on renting an apartment and buying a used vehicle for my wife's use in Omaha.

Can we claim airfare, apartment, and auto mileage as part of job expense?
Should she become a NB resident to avoid any CO income tax (don't know how that works)?
Submitted: 5 years ago.
Category: Tax
Expert:  Lev replied 5 years ago.

LEV :

Hi and welcome to Just Answer!
Can we claim airfare, apartment, and auto mileage as part of job expense?
Yes - if that is a temporary assignment. See for reference IRS publication 463 - www.
irs.gov/pub/irs-pdf/p463.pdf


Temporary assignment vs. indefinite assignment. If your assignment or job away from your main place of work is temporary, your tax home does not change. You are considered to be away from home for the whole period you are away from your main place of work. You can deduct your travel expenses if they otherwise qualify for deduction. Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for 1 year or less.


However, if your assignment or job is indefinite, the location of the assignment or job becomes your new tax home and you cannot deduct your travel expenses while there. An assignment or job in a single location is considered indefinite if it is realistically expected to last for more than 1 year, whether or not it actually lasts for more than 1 year.
Should she become a NB resident to avoid any CO income tax (don't know how that works)?
If your wife will change residency - that will not be a temporary job assignment - in this case she may not deduct travel expenses but may deduct one time moving expenses if otherwise she qualifies.
Concerning state income tax liability... If your wife will work in Nebraska - she will be liable for Nebraska state income tax regardless of her residency because that will be an income from NE sources.. NE tax rates range from 2.56% to 6.84%.
If she will be a resident of CO - she will be taxed on all her income regardless in which state it was earned. However she will claim a credit for taxes paid to other states - thus effectively will avoid double taxation.


The Colorado income tax rate is a flat 4.63% - so most likely there will not be any additional tax liability.


Let me know if you need any help.

Customer:

That is very helpful thanks

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