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I have a question about my taxes. I am a resident of

Hi I have a...

Hi I have a question about my taxes.

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I am a resident of California and I started a job which required me to move to New York. It is a 3 year contract and I work seasonally. So I spent have of last year in NYC. Can i deduct my rental apartment?

Accountant's Assistant: Is there anything else important you think the Accountant should know?

I was paid a relocation fee, but that only covered a fraction of my expenses. And taxes were deducted through the payroll service.

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Answered in 4 minutes by:
3/27/2018
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,319
Experience: Taxes, Immigration, Labor Relations
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Unfortunately - based on your information these are considered personal expenses and not deductible.

.

If your assignment or job away from your main place of work is temporary, your tax home doesn’t 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 be-comes your new tax home and you can’t 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.

Sorry if you expected differently.

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Customer reply replied 4 months ago
Is it considered indefinite because the contract is for three years? Meaning for the next three years I will move back and forth. I would June through October of each year.

Is it considered indefinite because the contract is for three years?

Yes - that is correct - because that is assigned for more than a year.

Meaning for the next three years I will move back and forth. I would June through October of each year.

That makes no difference - unless you will be working in California between these assignments.

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Customer reply replied 4 months ago
Thank you for your help. Last question: Does it matter if it's not a guaranteed contract. They have the option of bringing e back to NYC. Here's the language:
"2018/2019: Studio’s option for Artist’s services as Story Editors for the 2018/2019 production year (exercisable by written notice on or before 6/15/2018) upon the same terms applicable to the 2017/2018 production year"So I don't know if I will have that job this year...

If you are looking to deduct travel expenses - including dwelling - we need to consider

- if that is a temporary assignment - basically less than a year - after which you return to your tax home and continue to work in your tax home, or

- that is an indefinite assignment - more than a year - and your tax home changed

That will be a key in determination. The answer on that question will tell us if deductions are allowed.

So - if that assignment is for 5 months only - and you are moving back to California to work there - it may be considered as temporary, but if you are taking vacation and coming back to your work after vacation is over - that will be indefinite assignment.

I understand - there might be details and circumstanced which affect determination and sometimes we may have a gray area...

But that determination must be made when you start your work and that will affect deductibility of your travel expenses.

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Customer reply replied 4 months ago
Ok that makes sense....I'm sorry to sound like a broken record. Just trying to relay the info accurately.... I lived in CA from January 2017-May 2017. In June of 2017, I moved to NYC to work for 5 months in NYC. Then I moved back to my normal tax home in November 2017. I was able to file for unemployment. When I came back I no longer did work duties for them. The company I work for has an option to bring me back this year--June 2018. I won't know whether or not I'm re-hired until around then. So at this point I technically don't have a job until then. But if I get re-hired I will go back to NYC. They have no obligation to bring me back, but I am exclusive to them until they release me from the contract.

That may be related to some specific in your profession regarding these contractual obligations.

It woudl be hard to me to make determination specifically for your case.

It sound as it may interpreted either way - as temporary or as a permanent.

You might want to verify with other persons in your type of trade - how do they handle such situation.

But again - the key question is

- if that is a temporary assignment - deduction for travel expenses are allowed

- if that is a permanent assignment - no deductions are allowed.

I am afraid if audited - that three year clause might be interpreted by the IRS agent as indefinite assignment.

By the way - will you be compensated as an employee (W2) or as a contractor (1099misc) - that may affect determination as well.

Lev
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Category: Tax
Satisfied Customers: 33,319
Experience: Taxes, Immigration, Labor Relations
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