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Dave CPA
Dave CPA, Accountant
Category: Tax
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I am going to have to live remotely for 2.5 years for work

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I am going to have to live remotely for 2.5 years for work (3 states away). Can I take a deduction for the rent of the remote housing since it is due to work. I will maintain my residence in home state and family will reside there.

Hello,

 

Thanks for requesting me. The expenses would not be deductible as this situation is longer than one year.

 

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.

 

If your assignment is indefinite, you must include in your income any amounts you receive from your employer for living expenses, even if they are called travel allowances and you account to your employer for them. You may be able to deduct the cost of relocating to your new tax home as a moving expense.

 

Please let me know if you have any other questions before you rate my answer. A positive rating is what I strive for. Regards Dave

Customer: replied 3 years ago.


So if my assignment is for the duration of a project but my permenant location for the company does not change and I am expected to return to permenant location, it does not qualify?

In the eyes of the irs you have moved and the assignment is your new tax home and you can't deduct the expense of maintaining a residence in your new tax home. Please let me know if you need more clarification. Regards Dave
Customer: replied 3 years ago.

If the company issues me a temproary assignment document for 9 months at a time and I return to the main location, would this work. If so how long would I have to remain at main location in order to qualify for another temporary assingment?

Yes that should work as it falls under the one year threshold. You leave for 9 months and then come back home for 3 three months. Let me know if you need anything else. Regards Dave
Customer: replied 3 years ago.

Final Question (I think)uide on how >


Using the scenerio above, what is the IRS rule/guidance for how long the return to main location needs to be to prevent any issues. (Example I used 9/3 months, what if it were 11/1 months etc).

There is no specific guidance on that. The only guidance is from what I referenced in the first portion of my answer which is the one year mark. There is some gray area here. My advise would be that these costs aren't deductible, but you are trying to make the case that they are. So as long as you can make the case to the IRS that the expenses were deductible based on temporary location then you should be good.

 

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 1 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.

 

The following examples illustrate whether an assignment or job is temporary or indefinite.

 

 

Example 1.

You are a construction worker. You live and regularly work in Los Angeles. You are a member of a trade union in Los Angeles that helps you get work in the Los Angeles area. Your tax home is Los Angeles. Because of a shortage of work, you took a job on a construction project in Fresno. Your job was scheduled to end in 8 months. The job actually lasted 10 months.

You realistically expected the job in Fresno to last 8 months. The job actually did last less than 1 year. The job is temporary and your tax home is still in Los Angeles.

 

Example 2.

The facts are the same as in Example 1, except that you realistically expected the work in Fresno to last 18 months. The job actually was completed in 10 months.

Your job in Fresno is indefinite because you realistically expected the work to last longer than 1 year, even though it actually lasted less than 1 year. You cannot deduct any travel expenses you had in Fresno because Fresno became your tax home.

 

Example 3.

The facts are the same as in Example 1, except that you realistically expected the work in Fresno to last 9 months. After 8 months, however, you were asked to remain for 7 more months (for a total actual stay of 15 months).

Initially, you realistically expected the job in Fresno to last for only 9 months. However, due to changed circumstances occurring after 8 months, it was no longer realistic for you to expect that the job in Fresno would last for 1 year or less. You can only deduct your travel expenses for the first 8 months. You cannot deduct any travel expenses you had after that time because Fresno became your tax home when the job became indefinite.

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