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I am a resident of California, But I am currently working

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I am a resident of...
I am a resident of California, But I am currently working on a show in North Carolina working. The production give me a certain amount of allowance for living expense and per diem. But the total amount is subject to 1099 at the end of the year. So basically it adds to my income. Can I use my rent in North Carolina where I am working as a deduction?
Submitted: 8 years ago.Category: Tax
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2/1/2009
Tax Professional: Lev, Tax Advisor replied 8 years ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,162
Experience: Taxes, Immigration, Labor Relations
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HiCustomer Thank you for asking your question on JustAnswer.

 

- how long does your job assignment in NC last?

- are you an employee receiving W-2 or self-employed with income reported on 1099-misc?

- were any of your travel expenses reimbursed by your employer?


Thank you again for trusting us with your problem.

 

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Customer reply replied 8 years ago
I have been working on a Tv show call One tree hill Since Last March and will be on the show til the first week of April. I do get paid by W2 but i also recive 1099 for such things as kit rentals. The housing and per diem check is cut every month but on the check stub. It states that the total amount is subject to 1099. My travel expenses are covered by the studio. If you have any other questions. do not hesitate to contact me at XXX-XXX-XXXX Tym
Tax Professional: Lev, Tax Advisor replied 8 years ago

Hi Tym,

 

Please refer to the IRS publication 463 - http://www.irs.gov/pub/irs-pdf/p463.pdf

 

To determine whether you are traveling away from home, you must first determine the location of your tax home and if your tax home is changed.

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.

 

If your assignment or job away from your main place of work is temporary, your tax home does not change. 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 one year, whether or not it actually lasts for more than one year.

 

As your assignment is more than a year - the reimbursement for travel expenses should be included into your taxable income.

However your employer incorrectly reported it on the 1099 form because it should be included into your wages and reported on the W-2 form.

as that income is taxable and reported on the 1099-misc form - the IRS would generally expect it to be reported on the Schedule C as self-employment income.

 

Please let me know if you need any clarification.

 

Lev
Lev, Tax Advisor
Category: Tax
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Customer reply replied 8 years ago
One thing i for got to say is that i was employed since march but when the show was on hiatus for 2 months. So i was not employed by the show during may and june. I came back to work in NC late june til early april. I am also paying income tax to both in NC and CA. Does that makes any different????
Tax Professional: Lev, Tax Advisor replied 8 years ago

Yes - that might make a difference...

First of all - you need to determine if that were two assignments or one assignment...

 

As you are working in NC - your income is considered from NC sources and therefore is taxable for NC regardless on your residency.

If in Mar 2008 your residency changed from CA to NC - you should file as part year resident for both states - with your income from NC to be taxable only for NC.

If your residence was not changes - you should file NC tax return as a non-resident, and CA tax return as a resident - so all income will be taxable for CA and on CA tax return you will claim a credit for taxes paid to NC.

 

According to the IRS - please refer to the IRS publication 463 - http://www.irs.gov/pub/irs-pdf/p463.pdf

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.

Once you have determined that you are traveling away from your tax home, you can determine what travel expenses are deductible.

You can deduct ordinary and necessary expenses you have when you travel away from home on business. The type of expense you can deduct depends on the facts and your circumstances.

 

If you have several consecutive assignments in the same area/location for more than a year - your assignment will not be considered as temporary and you tax home will be changed.

However the IRS doesn't define the save harbor period between two assignment.

 

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Customer reply replied 8 years ago
during the period of may and june I was unemployed and the show flew me back home to LA. I was rehired at the end of june for the current season of the show. When I came back I redid my deals and had to sign a new deal memo with the production company. I never changed my residency from CA to NC
Tax Professional: Lev, Tax Advisor replied 8 years ago

If you determine that these were two different assignment and each was for less than a year - you may deduct travel expenses.

As your income was reported on the form 1099-misc - that is considered your self-employment income and the IRS would expect you to report it on the Schedule C.

On the same schedule C - you will deduct all actual expenses - please refer to the IRS publication 463 - http://www.irs.gov/pub/irs-pdf/p463.pdf for details on which travel expenses are deductible.

 

<table border="0" width="546" summary=" Table 1-1. Travel Expenses You Can Deduct" style="width: 546px;">This chart summarizes expenses you can deduct when you travel away from home for business purposes.
IF you have expenses for...THEN you can deduct the cost of...
transportation travel by airplane, train, bus, or car between your home and your business destination. If you were provided with a ticket or you are riding free as a result of a frequent traveler or similar program, your cost is zero. If you travel by ship, see Luxury Water Travel and Cruise Ships (under Conventions) for additional rules and limits.
taxi, commuter bus, and airport limousine fares for these and other types of transportation that take you between:
  • The airport or station and your hotel, and

  • The hotel and the work location of your customers or clients, your business meeting place, or your temporary work location.

baggage and shipping sending baggage and sample or display material between your regular and temporary work locations.
car operating and maintaining your car when traveling away from home on business. You can deduct actual expenses or the standard mileage rate, as well as business-related tolls and parking. If you rent a car while away from home on business, you can deduct only the business-use portion of the expenses.
lodging and meals your lodging and meals if your business trip is overnight or long enough that you need to stop for sleep or rest to properly perform your duties. Meals include amounts spent for food, beverages, taxes, and related tips. See Meals for additional rules and limits.
cleaning dry cleaning and laundry.
telephone business calls while on your business trip. This includes business communication by fax machine or other communication devices.
tips tips you pay for any expenses in this chart.
other other similar ordinary and necessary expenses related to your business travel. These expenses might include transportation to or from a business meal, public stenographer's fees, computer rental fees, and operating and maintaining a house trailer.

 

 

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