Is out of town living expense tax deductible? If so for how long?

Forum|Forum|7 years ago
May 31, 2019
3 replies
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I have a job offer for a salary significantly lower than I make now. However the "Out of Town Living Expense" (OTL) they pay me will make my income much higher. They said they do this because it helps me and them. Not sure how, but from what they said the OTL is 100% tax deductible for a couple years meaning I would see 100% of this payment. But after a set time it will undergo a certain percent tax, and I will be reimbursed the difference at that time. Sounds confusing and kind of shady. I'd like to uderstand this prior to signing on board. Is it true the OTL payment will not show up on my W2 and I will see 100% of this payment?

ItsDeductible Online

DJS

Employee

Living expenses are not in general tax deductible. However, there are exceptions. According to the Internal Revenue Service, temporary housing is housing that you live in when working on a temporary assignment for your employer that takes you outside of an acceptable commuting distance from your home. The IRS further defines "temporary" as one year or less. Temporary housing may include a hotel or motel, an apartment or a rented house. Any reimbursements that you receive from your employer for travel and living expenses you incur while on a temporary assignment are not taxable. Your employer will not include these reimbursements in your gross income on your W-2, nor should you include this income on your tax return. If you incur all or a portion of these expenses without reimbursement from your employer, you may deduct these expenses from your taxable income as unreimbursed business expenses. The IRS does consider any reimbursements for temporary housing associated with a permanent move taxable. For example, if your employer transfers you to a new office and pays for your relocation, the IRS treats those expenses as nontaxable moving expenses. However, if your employer also pays for you to stay in temporary housing while you finalize the move out of your former home, then 100 percent of those payments are fully taxable.Be careful. If you live in temporary housing while on an eight-month assignment, the reimbursement for that housing remains fully deductible for the duration of your stay. However, if your employer and you subsequently decide that you will stay in your “temporary” location for another six months, bringing your total stint to well over a year, the IRS then considers your temporary assignment to be permanent. The date the decision was made to keep you there for longer than a year is the date that your temporary housing reimbursement becomes taxable. This applies whether your employer physically reimbursed you or paid for the housing directly.

Answers are correct to the best of my ability but do not constitute legal or tax advice.**If this post is helpful please click on "thumbs up"**

S

schmiechenkid

Employee

Djay43, I found this thread while researching my own situation. Could you comment on this: After being on maternity leave, I returned to my job as a firefighter. Normally, I work a 48 hour shift, ie, 48 hours in a row. However, when I returned, I was required to work a 40 hour week (9-5) for a month. My home is about 125 miles away from my workplace. The change in schedule put my job outside of a daily commuting distance: it would be a 5 hour round trip. For that month, our family living in temporary housing close to my new assignment location. None of these expenses were reimbursed, and the schedule and location change were mandatory and non-negotiable. Is the temporary housing deductible?

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CaptdennismRN

Is "Per diem" Deductible?

C

CaptdennismRN

Is Per Diem for 13 weeks deductible?

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xmasbaby0

Employee

@CaptdennismRN What kind of "per diem" work are you asking about?

What about "per diem" do you think is deductible? Are you a W-2 employee? If so, no job related expenses can be deducted on a federal tax return. Your state laws might be different. Per the federal tax laws that changed for 2018 and beyond, W-2 employees cannot deduct job-related expenses.

https://ttlc.intuit.com/questions/4482873-which-federal-tax-deductions-have-been-suspended-by-tax-reform

Or are you working as an independent contractor?

**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.**

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xmasbaby0

Employee

@CaptdennismRN And.....not sure if you read this whole thread but it is very old and it began before the tax laws changed. Even if you are seeing posts dated "2019" they are really older. When the user forum changed from Answer Xchange to Real Money Talk in mid-2019, a lot of old threads migrated over with 2019 dates. The information is old and outdated. Tax laws changed for 2018 and beyond with the Tax Cuts and Jobs Act. There are a lot of job-related expenses that can no longer be deducted on federal returns if you are a W-2 employee.

**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.**