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Arthur Rubin
Arthur Rubin, Tax Preparer
Category: Tax
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Experience:  22 years of tax preparation experience, including individual, trust, and estate returns.
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I am trying to prepare my sons income tax return for 2009

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I am trying to prepare my son's income tax return for 2009 (an extension was filed). He is a union electrician out of Houston, TX and has been out of work since 2008. In 2009 he received unemployment compensation in the full amount of $16,798, but later received notice that he was overpaid by $10,192. This came about because he filed in his home state of Texas and rules were changed and he should have filed in a state where he worked. He worked in Oklahoma and Illinois in 2008. My problem is I can't determine his residency. He lives in a trailer which he moves with him from state to state looking for work. He has a Texas driver's license and is registered to vote in Houston, TX. He uses my address as a mailing address in Houston but doesn't live with me when he is here. He parks his trailer in a travel trailer park.

I am trying to figure out what expenses he can take. He is now in West Virginia waiting for a nuclear power plant which is being constructed to start hiring electicians. He has been there all of 2009 and 2010 without employment and his only income has been the unemployment compensation most of which they now say he must repay.

He has been calling unions all over the country to see if work is available but since he doesn't have any income coming in he can't just pack up his trailer and go to another area and wait until his name comes up. It looks like the power plant in West Virginia will start hiring soon but with winter coming it might not need electricians until 2011.

Your help will be much appreciated.

Also, is it necessary to file a West Virginia tax return? Is unemployment compensation taxed in that state?
Chat Conversation Started
Arthur Rubin :

I'm afraid the residency problem is more complicated than you might think.

Arthur Rubin :

But let me get back to the simpler problem of his 2009 Federal return first....

Arthur Rubin :

He must report the full $16,798 as income. $2400 is excluded under the Recovery Act.

Arthur Rubin :

When he files his 2010 return, he has the option of declaring the $10,192 as an itemized deduction, or recalculating his 2009 return with the $10,192, and taking the difference in 2009 taxes as a refundable credit on his 2010 return. See "Repayment" in IRS Publication 525 for more details.

Arthur Rubin :

This last section applies only to the extent that he repaid the excess in 2010. To the extent that any repayments were made in 2009, they directly reduce the unemployment income reported. If not repaid until 2011, the adjustments would be made on the 2011 return due in 2012.

Arthur Rubin :

Expenses are another difficult matter. Publication 529 gives an indication of what expenses the IRS will concede without a fight, but there are almost certainly others allowable expenses. Examples given include:

Arthur Rubin :

Union dues and any fees paid to the union for placement assistance are deductible.

Arthur Rubin :

Transportation expenses may be deductible "if the trip is primarily to look for a new job." I'd have to research further to determine if he would have the option of claiming only 55 cents/mile, or would have to calculate the total 2009 expenses of maintaining the trailer, and multiplying by the ratio of total miles to "business" (e.g., job search) miles. Publication 463 has more information on that deduction. I would have to say that, at least for IRS purposes, he has no "tax home", so cannot claim personal expenses while "away from home" as a deduction. If had a tax home, and relocated for a job expected to last less than a year, some of the meal and lodging (well, never mind that) expenses would be deductible.

Arthur Rubin :

As for state residency, each state with a state income tax has its own residency laws.

Arthur Rubin :

Even if he was in Oklahoma in 2009, he doesn't appear to have an Oklahoma resident filing requirement, because Oklahoma bases "residency" considerations solely on the "domicile", "the place established as a person’s true, fixed, and permanent home". (definition from the OK NR511 packet).

Arthur Rubin :

West Virginia will declare him a resident if he spends more than 30 days in the state, "with the intent of West Virginia becoming his/her permanent residence", or if he is present in the state for more than 183 days.

Arthur Rubin :

Unemployment insurance is taxable in both OK and WV, including the $2400 Federal exclusion.

Arthur Rubin :

Have I covered everything?

Arthur Rubin :

Oh, yes, I almost forgot. If he was in WV for more than 183 days in 2009, one could make a good case for his filing a part-year-resident return, with his residency start date being when he first entered the state.

Arthur Rubin :

I think I'll be going to sleep shortly, so I'll switch this to Q&A, in case you have more questions.

I see you read my answer this morning. Have you any other questions on your son's 2009 tax return?
Customer: replied 7 years ago.

I quickly read your answer this morning before I left home. I am just now returning home but have an appointment at 2:00 p.m. so won't be able to get back to this until after 9:00 p.m. this evening.


I do need to decide what expenses to take (mileage looking for work, etc.) Since he is living in W. Va and has been since the beginning of 2009 it seems he will be considered a resident even though he doesn't intend to stay there after the job is finished (or if it doesn't get started and he has to go elsewhere). If he gets the job it will probably last more than 1 year but that is not a certainty.


What is the rate of sales tax in W. Va.? He is living in Weston but I don't know the county. It looks like he will owe quite a bit to W. Va. Doesn't seem fair that he is trying to make ends meet (unemployed since 2008) and things just keep piling up.


It seems unbelievable that a person making no more than he did (only unemployment) would owe so much in state and federal taxes.


I will get back with you later this evening if you are still available. So far you have helped a lot.



WV sales tax rate is 6%; 3% on food. The state board doesn't know anything about local sales taxes, but I couldn't swear they do not exist.

WV income tax for your son appears to be $490 for 2009; I can't find any allowable deductions or a "claim of right" credit, but I'm still researching it.

The Federal standard deduction for a single person in 2009 is 5700, and the personal exemption is 3650, leaving taxable income of 16,798-2400-5700-3650, or $5,048, and a tax due of $503, even without calculating deductions. Once the "excess" unemployment is repaid, he will have a refundable credit of $503 on his 2010 return, so it may not be worth calculating deductions for 2009.
Customer: replied 7 years ago.

Can I take mileage for him while he is looking for work. He traveled from Oklahoma to W. Va. stopping at various cities in various states that had jobs posted and signed the books. His travel mileage was 8,125 miles. Can he take any deduction for food or lodging (travel trailer lot rental) while driving across the country looking for work?


He probably won't pay the umemployment compensation back in one year. I think they have agreed to take it out of future unemployment checks.


I see that electricians may be targeted for audit next year to examine their expense deductions. I don't want him to fall in that category.

The problem with taking food and lodging deductions is that he doesn't have a "tax home", so he's not "away from home" while traveling, making meals and lodging "personal", non-deductible, expenses. Mileage, tolls, and parking fees at prospective employers are allowable, but not meals and lodging, unless you want to take a very aggressive stance. In any case, WV doesn't recognize itemized deductions, so the WV tax is left untouched. Mileage at 55 cents/mile x 8,125 miles would be $4,468.75, so you would still need to find $1,231.25 in additional deductions before any Federal itemized deductions would start to be allowed. Actual vehicle expenses would probably be higher, but better records would have had to have been kept; not only the locations of the jobs applied for, separating business and non-business mileage, but the actual gas prices, prices and location of any vehicle repairs or maintenance, auto insurance, vehicle registration payments, the original basis (probably cost, unless there was a trade-in of vehicles partially used for business reasons), and probably some other factors I haven't considered.

I don't know what "employee" business expenses would be appropriate for an unemployed electrician; perhaps there's some indication in the IRS audit manual. All I can think of, off-hand, are: If he owns his own tools, then tool depreciation would probably still be allowable. Union dues and training (as long as it's helpful in his current occupation and doesn't qualify him for a new occupation) should be deductible.

As for the year it's paid back, once he pays back $5048 (provided he pays back at least $3000 per year), his modified tax due for 2009 is $0, and he would get a full credit for whatever Federal tax he paid for 2009, probably not including interest and penalties. I suppose the interest (from April 15, 2010 to whenever his 2009 income tax is actually paid) and penalty (there shouldn't be any Federal penalty, but there may be a WV penalty) would not be refundable.
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