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Dave CPA
Dave CPA, Accountant
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independent contractor expense deductions

Resolved Question:

My son has been working this year as an independent contractor. His permanent home is in one state but he is working in other states. He worked for one company in another state for 3 months and now is starting with another company in a different part of that state for a few months. What are the specific expenses he can deduct as far as hotel, meals and mileage? Can he deduct mileage from the hotel to the job every day or just what he drives on the job during the day? He usually has to stay up to 25 miles from the job as they are usually in remote locations. The rules we have read are very confusing and not very helpful in his case.


 


4:59AM -I am going to bed now will check for answer later in AM.

Submitted: 2 years ago.
Category: Tax
Expert:  Dave CPA replied 2 years ago.
Hello,

Welcome to Just Answer,

The deductions depend on if the out of state assignments are temporary in regards XXXXX XXXXX he produces all of his income or if his sole job is moving around to produce income.

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.

If he doesn't do any work where is primary residence is then that is not his Tax Home. 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.

There is a good chart on page 14 of the link below that outlines what travel between jobs is allowed an what is not. You should reference "Temporary work location"


http://www.irs.gov/pub/irs-pdf/p463.pdf

So to summarize, if he works temporarily away bust mostly in his normal location the hotel, meals and mileage can be deductible, but if his main job is on temporary assignment than he can't make the deduction as his tax home is where he works and therefore you can't deduct such expenses where you live and work.

This is all outlined in the link above.

Please let me know if you have any follow up question before you rate my answer. A positive rating is what I strive for.
Customer: replied 2 years ago.

I don't believe he can deduct any of his lodging, meals or his travel from SC to Georgia and back when he comes home. However, since he is self-employed shouldn't he be able to deduct the mileage for his workdays? He does fiberoptic cable mapping. The job in each location will be less than 6 months. He leaves his extended-stay hotel each day and drives to different sites where he has to do mapping using a GPS and other such tools. Then back to the hotel for the night.


 


He has never worked in the city where he lives. I guess the best thing for him to do is to get a CPA next spring to do his taxes for this year. In the meantime, he is trying to figure out his estimated taxes due this year to make a payment.


 


Does his status sound like he would be considered a temporary self-employed person, and as such could he just take the work-related mileage off his taxes?

Expert:  Dave CPA replied 2 years ago.

Hello,

 

Let me answer your questions individually and let me know if you need further clarification.

 

However, since he is self-employed shouldn't he be able to deduct the mileage for his workdays? The job in each location will be less than 6 months. He leaves his extended-stay hotel each day and drives to different sites where he has to do mapping using a GPS and other such tools.

 

Yes this would be deductible as laid out in the scenario. Getting from one workplace to another during the course of your business is deductible. This is referenced on page 14 of the link I sent.

 

He has never worked in the city where he lives. I guess the best thing for him to do is to get a CPA next spring to do his taxes for this year. In the meantime, he is trying to figure out his estimated taxes due this year to make a payment.

 

A CPA can help but to make the estimated taxes for this year he can use last years tax liability as a proxy if his income and filing status is about the same. So if he paid $5,000 in taxes last year he should make estimated payments of $1,250 every quarter. That would be a good start.

 

Does his status sound like he would be considered a temporary self-employed person, and as such could he just take the work-related mileage off his taxes?

 

If he is truly a self-employed person whom files a schedule C for his business then he include the work-related mileage on his taxes as outlined above.

 

Below is a link that can help with determining the estimated taxes that he should make in 2012. It has good info and includes the voucher forms that he would send in along with his payment.

 

I think with this link and the info on travel in the first publication I sent he should be in good shape in regards XXXXX XXXXX the info he would need.

 

http://www.irs.gov/pub/irs-pdf/f1040es.pdf

 

Please let me know if you need further clarification.

Dave CPA, Accountant
Category: Tax
Satisfied Customers: 840
Experience: Vast knowledge within the accounting/tax industry
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