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I'm an independent contractor and travel away to my Tax Home location. My employer reimburses my airfare costs but its subject to tax. Is my travel cost now a deduction?

Forum|Forum|2 years ago
January 10, 2024
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My reimbursement of my travel costs become subject to tax because the reimbursements are included in the total compensation amount on my 1099-NEC.

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Best answer by DaveF1006

IRS Topic 511, covers this in detail. For an example, it mentions your tax home is the entire city or general area where your main place of business or work is located, regardless of where you maintain your family home.

As far travel expenses to be claimed, Topic 511 states that you can deduct travel expenses paid or incurred in connection with a temporary work assignment away from home. However, you can't deduct travel expenses paid in connection with an indefinite work assignment. Any work assignment in excess of one year is considered indefinite. This doesn't mean that travel expenses can be claimed in temporary work assignments if you are traveling between your permanent home and your tax home or vice-versa unless that travel has a business purpose. just going home to visit the family is not allowed as a travel expense.

Here are deductible travel expenses you may claim on temporary work assignments.

Travel by airplane, train, bus or car between your tax home and your business destination.
Fares for taxis or other types of transportation between an airport or train station and a hotel, or from a hotel to a work location.
Shipping of baggage and sample or display material between regular and temporary work locations.
Using a personally owned car for business.
Lodging and meals.
Dry cleaning and laundry.
Business calls and communication.
Tips paid for services related to any of these expenses.
Other similar ordinary and necessary expenses related to the business travel.

Hopefully this clarifies many of the questions that have already appeared.

DoninGA

Employee

Deleted - Answered for an employee which was not correct.

X

xmasbaby0

Employee

Please clarify. In the same post you say that you are an "independent contractor" but then say you have an "employer." It cannot be both. If you are an independent contractor, you do not have an employer---you have a client. Did you receive a W-2 or did you receive a 1099NEC?

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

C

crewman59Author

Apoogies. Incorrect term on my part. It's an ongoing client and I receive a 1099-NEC.

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Opus 17

Employee

Please explain a bit more. Where do you live? Why do you travel "to" your tax home (and not away from your tax home.). Where do you actually work for this client?

Note, that in general, all monies paid by your client or customer must be included in your schedule C gross income, even if not reported on a 1099-NEC. Then, you either can deduct expenses or not, depending on the rules. The client should probably not be reimbursing you tax-free (omitting the payment from your 1099) because the client can't take responsibility for how you file your tax returns or what deductions you qualify for.

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crewman59Author

I live in Washington state and work in California - so I travel between my home and my tax home. (Not sure of the nuances of travelling from or to one or the other.)
My reading of the IRS tax code on the issue is that travel expenses can only be claimed if you travel To/From your Tax Home to conduct work somewhere else. Whereas the travel expenses To/From where you live and your Tax Home cannot be claimed.
Happy (and hoping) to stand corrected!

DaveF1006Answer

IRS Topic 511, covers this in detail. For an example, it mentions your tax home is the entire city or general area where your main place of business or work is located, regardless of where you maintain your family home.

As far travel expenses to be claimed, Topic 511 states that you can deduct travel expenses paid or incurred in connection with a temporary work assignment away from home. However, you can't deduct travel expenses paid in connection with an indefinite work assignment. Any work assignment in excess of one year is considered indefinite. This doesn't mean that travel expenses can be claimed in temporary work assignments if you are traveling between your permanent home and your tax home or vice-versa unless that travel has a business purpose. just going home to visit the family is not allowed as a travel expense.

Here are deductible travel expenses you may claim on temporary work assignments.

Travel by airplane, train, bus or car between your tax home and your business destination.
Fares for taxis or other types of transportation between an airport or train station and a hotel, or from a hotel to a work location.
Shipping of baggage and sample or display material between regular and temporary work locations.
Using a personally owned car for business.
Lodging and meals.
Dry cleaning and laundry.
Business calls and communication.
Tips paid for services related to any of these expenses.
Other similar ordinary and necessary expenses related to the business travel.