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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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I worked the first 6 months of 2008 in Algeria for an American

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I worked the first 6 months of 2008 in Algeria for an American company out of Washington State. I was hired Temporary-Full-Time. The project was set-up on an 8-2 schedule, 8 weeks there, then home for 2 weeks. When I received my W-2 and compared it to my last check-stub there was a substantial difference in gross income, fed. icome tax, and S.S. I called their payroll department and was told the cost of my plane tickets had been added as income and the taxes paid. I just don't see that as being income but seeing that I did not purchase the tickets I have no way of writing it off. Is this correct?
Submitted: 8 years ago.
Category: Tax
Expert:  Merlo replied 8 years ago.
Hello jmurphy,

If you were already an employee of this company prior to going to Algeria, and they required you to go there as part of your job, then they would be responsible for paying your airfare for the trip.

However, if you started with this company as a new employee, and knew up front that going to Algeria was required to take this position, then you are the one who is responsible for the cost of the travel, unless you were actually making a permanent move to the new location. This would be no different if you agreed to take a job in California or Texas or New York. If it were required that you make the travel as a condition of keeping your current employment, then the travel is at the employer's expense.

But if you take a new job, regardless of where that job is, you can only deduct the cost of the travel if you are making a permanent move to a new location. Part of the IRS requirements on this are that you must have taken a new job and stayed in that job for a minimum of 39 weeks after making the move. Even if you had satisifed that particular requirement, if you made trips back and forth to the US during the time periods when you were not working, that would also be considered a personal expense, as it was not required for you to come back to the US during the time you were not working.

The only bright side of this whole issue is the fact that at least you are only having to pay tax on the amount of this airfare, and did not actually have to pay for the airfare itself. I know it may not be much consolation, but unfortunately this just does not qualify for a deduction.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank you.

Customer: replied 8 years ago.
That is not how overseas construction projects work. The flights are paid for by the employer. I have worked for 3 different contractors in 3 different countries and none of them has ever did this. Part of my contract was a business class flight home every 8 weeks, for 2 weeks. When I was in Iraq it was 10 and 2. I just don't see how it can be labeled "income".
Expert:  Merlo replied 8 years ago.
Hello again jmurphy,

Your other overseas projects may have provided these benefits for you without reporting it as income, but legally according to IRS regulations that is not how it should work.

The flights paid for by your employer for you to come home every 8 weeks is a taxable fringe benefit in the eyes of the IRS. Although it is certainly understandable why you would want to come home during your 2 weeks off, it is still deemed by the IRS to be personal travel rather than related to your work, as you are not required to travel back home.

Your other employers were either not aware of the requirement to report this as taxable income, or they simply chose not to do so, which companies will often do. But legally this is the rules they should follow if they want to be in compliance with the IRS.

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