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August 20, 2024
Question

Relocation

  • August 20, 2024
  • 1 reply
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I was transferred from California to Missouri. The company paid my relocation expenses and temporary housing for 30 days. After that, I had to rent a home to fulfill the one-year obligation. I am paying all my overhead for the home through my LLC. Funding it with my W-2. Can I deduct that from my LLC as an expense?

1 reply

Employee
August 20, 2024

If you have a W-2 job as an employee, and you also have work (side gig, independent contractor) that is organized as a single member LLC, you can only deduct expenses on the LLC that are ordinary and necessary expenses for that particular work

 

If you travel on a temporary assignment for your LLC work, you can deduct lodging and 50% of meals according to the rules in publication 463.  The rule about 1 year or less for temporary relocation will be important.  https://www.irs.gov/forms-pubs/about-publication-463

 

However, based on the way you phrased your question, you relocated temporarily because of the W-2 job.  That would seem to indicate that the relocation expenses are not an ordinary and necessary expense  for your LLC self-employment work.   You can't use the LLC to get special tax treatment for your ordinary living expenses, the expenses must be ordinary and necessary for the LLC.

 

Only you know the facts.  But if you did not relocate for the LLC work, then I would not try and deduct the expenses without getting professional backup from your own tax professional.

 

Also note, you may already know, any assistance provided by the W-2 employer is taxable, is subject to income tax and social security and medicare tax withholding, and should be reported on your W-2.