Can 1099-misc independent business consultant continue to deduct travel expenses if out of state project lasts for longer thn one year?

Forum|Forum|2 years ago
October 30, 2023
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According to IRS topic 511- Business Travel Expenses: "Any work assignment in excess of one year is considered indefinite. Also, you may not deduct travel expenses at a work location if you realistically expect that you'll work there for more than one year, whether or not you actually work there that long."
Does this only pertain to employees or independent contractors as well? I have single client that per contract agreed to to reimburse travel expenses from my home 5hrs from project site ( hotel/meals) for life of project. Phase 1 was planned to last less than 1 year. Project has expanded to multi-year status and will require me to spend 90% of my time on-site. Will I have to pay tax on my travel reimbursement if project lasts longer than 1 year?

TurboTax Self Employed Online

Anonymous_

Employee

@Mike9241

Mike9241

IRS TAX TOPIC 511

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. Also, you may not deduct travel expenses at a work location if you realistically expect that you'll work there for more than one year, whether or not you actually work there that long. If you realistically expect to work at a temporary location for one year or less, and the expectation changes so that at some point you realistically expect to work there for more than one year, travel expenses become nondeductible when your expectation changes.

ddwilkins671Author

Just to clarify I am a independent contractor with a contract with client that reimburses for expenses ( turn in an expense report every month with invoice for services) but has counted the expenses as taxable income because they were included on 2022 1099-NEC. Project was set up in 2 phases : Analysis of viability and Build the Plant. The first phase was supposed to be far less than a year and would not have continued to next step if not financially feasiable. Client just made the decision to continue 16months ( Oct 2023) into project. 2022 taxes ( 6 months) into project I deducted 100% of my reimbursed travel expenses. So are you saying that I can fully deduct my travel expenses up until June 2023 ( 1 year from start of project) or Oct 2023 when the project officially turned into a long term project? If so either point after that I would lose deductibility of all travel expenses ( miles, meals and lodging) against the reimbursed dollars?