How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Tax.appeal.168 Your Own Question

Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 2533
Experience:  Nearly 30 years of varied tax industry exp. Tax Biz owner
58285678
Type Your Tax Question Here...
Tax.appeal.168 is online now
A new question is answered every 9 seconds

What are the compensatory tax rules around consulting at a

Resolved Question:

What are the compensatory tax rules around consulting at a location out of your home state for more than a year?
Submitted: 2 years ago.
Category: Tax
Expert:  Tax.appeal.168 replied 2 years ago.
Hello, THANK YOU for choosing Just Answer. My goal is to help make your life...a little...LESS taxing.


In brief, travel expenses in connection with consulting at a location outside of your home state for more than a year are not tax deductible. SEE BELOW:

--------------------------------------------------------

IRS Tax Topic 511 states the following:

Travel expenses paid or incurred in connection with a temporary work assignment away from home are deductible. However, travel expenses paid in connection with an indefinite work assignment are not deductible. Any work assignment in excess of one year is considered indefinite. Also, you may not deduct travel expenses at a work location if it is realistically expected that you will work there for more than one year, whether or not you actually work there that long. If you realistically expect to work at a temporary location for less than one year, and the expectation changes so that at some point you realistically expect to work there for more than one year, travel expenses become nondeductible when your expectation changes.

LINK TO REFERENCE SOURCE:

http://www.irs.gov/taxtopics/tc511.html

Please let me know if I can be of further assistance to you regarding this matter.

Thank you.
Expert:  Tax.appeal.168 replied 2 years ago.
Hello again,

My apologies, I addressed a different issue other than what you were requesting in my previous answer. Hopefully the information provided will be helpful to you. Now to address the question that you asked;

--------------------------------------------------

Companies sending an employee on domestic (in the United States) assignment outside of his or her home location must determine whether the assignment is temporary, long term, or indefinite in order to properly report compensation. In conjunction with an assignment, the company reimburses the employee for many items such as lodging, transportation, and meals (i.e., reimbursed expenses). These reimbursed expenses are not considered taxable income to the employee provided that the business trip that correlates to the assignment is temporary in nature.

Defining a business trip is a 'facts and circumstances' determination that is dependent upon the overall nature of the stay and the length of the assignment away from the taxpayer's principal place of business. Assignments of less than one year are considered temporary business trips and the associated reimbursed expenses are not taxable. Alternatively, if the assignment is indefinite, expected to last more than one year, or actually exceeds one year, the assignment is considered long term. As a result, the taxpayer's tax home is considered shifted to the new location and reimbursed expenses are compensatory.

LINK TO REFERENCE SOURCE:

http://www.us.kpmg.com/microsite/tax/ies/tea/summer2004/stories/article03.htm
Customer: replied 2 years ago.
I am trying to understand if I'm at all liable for any tax implications related to expenses incurred/reimbursed for being on a project lasting more than a year.
Expert:  Tax.appeal.168 replied 2 years ago.
Hello again,

Yes, for assignments lasting more than a year, any reimbursed expenses are deemed as compensatory, and are taxable to you.



Customer: replied 2 years ago.
Thank you. Just one last bit of clarification.

I live in MN and that is where my company's office is. I have been in CA for the past 11 mo.

If I stay for over the one year mark I am going to have to treat all the incurred expenses as income, since it will be a and pay taxes on those for my personal tax return.

Whether or not I stay for over the 1 year mark I need to pay both non-resident taxes to the state of california as well as minnesota state taxes based on the time I was earning income in each state.
Expert:  Tax.appeal.168 replied 2 years ago.
You are welcome. If you stay over a year, The REIMBURSED expenses will be considered as income, and you will be required to pay taxes on that amount.

Regarding the state taxation, yes, irregardless to whether you stay in CA for a year or not, you will need to file two state tax returns, one for MN and the other for CA. On the CA return, you will list yourself as a non-resident, and on the MN return, you will be listed as a resident. As a non-resident, the state of CA will tax you on your CA source income only. You should be able to receive a credit from the state of MN for taxes paid to CA. The California state return that you will file is the 540-NR. The state taxing agency for California is the California Franchise Tax Board. See below for a link to their website.

https://www.ftb.ca.gov/index.shtml?disabled=true
Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 2533
Experience: Nearly 30 years of varied tax industry exp. Tax Biz owner
Tax.appeal.168 and other Tax Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.