Career Path > Tax Q&A
Need help with new per diem rules
BetaAnt:
@Rennhack An apartment will not count as a tax residence provided that you maintain a primary residence. ;)
Case in point Engineer A is working on a l-o-n-g term project in Oak Ridge, TN, but maintains a permanent residence in Orlando, FL. Once a quarter he will commute to his FL house for upkeep and clothing change out (summer to winter cloths). His Oak Ridge expenses are tax deductible and have withstood an audit (keeping copious receipts). 8)
BA 8) 8) 8)
Already Gone:
You are absolutely WRONG about that.
The term "tax residence" does not appear in the hundreds of thousands of pages of tax code.
You TAX HOME is the place where you make your money -regardless of where you live, whether it is a house, and apartment or a trailer. It does not matter how many residences or "domiciles" you have.
Your living expenses at your tax home are never deductible.
If your friend passed an audit, he probably used the "bigger shoebox" method, whereby the taxpayer simply wears down the auditor with so many receipts that the auditor just gives up. It happens, but not always. Many people have survived audits even when they violated the tax code. Auditors are mostly temporary, low-level employees who make about $18,000 a year.
However, and audit of last year's return only buys him temporary relief. The statutory period for collection is 10 years. That means that they can audit that year over and over again, as well as this year, next year ... etc. If he gets audited again within 10 years, and the next auditor actually knows the tax code, and isn't lazy, your friend will most likely be re-audited for the whole ten years.
What I'm saying is that your pal broke the rules and got lucky.
OR
He didn't tell you the whole story
OR
He lied
Still, the IRS regulations do not agree with what you have posted. You can gamble that your friend was right or that the IRS was right. Since the IRS is the ultimate judge of that particular contest, you should bet with the house on that one.
In almost 30 years in this industry, I have heard so much tax lore from the techs I could write a Sci-Fi novel about it. The bottom line is that the regulations are printed, published, and have the force of law. On the other hand, there's this guy who knows this guy who passed an audit by doing it this way or that way. Naturally, everybody takes the shaggy dog story over the actual law.
You're wrong.
GLW:
--- Quote from: Already Gone on Dec 18, 2013, 07:00 ---You are absolutely WRONG about that.
The term "tax residence" does not appear in the hundreds of thousands of pages of tax code.
You TAX HOME is the place where you make your money -regardless of where you live, whether it is a house, and apartment or a trailer. It does not matter how many residences or "domiciles" you have...........
--- End quote ---
You know you've been illuminating the facts on these related topics for twelve years and they just keep being smarter than the law,...
They rarely search the forums before starting a new thread of meandering tax lore, nor does anyone else simply refer them to Thread A in Forum B, msg000001.html#msg0000001,....
me?!?!?!?!?!
I just like to read 'em, imagine the financial train wreck in my "thinking in pictures" braincase,....and smile to myself,....
Somethings, somefolks, jus' gotta learn the hard way,... :P ;) :) 8)
Rennhack:
--- Quote from: GLW on Dec 18, 2013, 08:41 ---You know you've been illuminating the facts on these related topics for twelve years and they just keep being smarter than the law,...
--- End quote ---
And that's why I didn't even bother responding to Beta Ant. I mention the facts once. They can take it or leave it.
BetaAnt:
@already gone,
If you are on a non-per diem project away from your primary residence, none of your expenses are deductible???
Either away from your tax "home" or "residence", away expenses are always deductible if you are not not receiving PD.
Quote from: djdroc on Sep 13, 2010, 09:31
I'm a nukeworker who regularly travels away from home on temp assignments running anywhere from 2 wks to 3 mos and often a min of 75 miles away. I drive to each location, paying out of pocket for meals/lodging and receiving no per diem for either. I haven't been the best with keeping up with all my receipts. For simplicity, can I take a tax deduction for lodging and meals using the fed per diem rates? If not both, is it true that I can deduct actual lodging exps and take a standard meal deduction using the fed per diem meal rates instead?
Actual lodging expenses and the Federal per diem for meals.
This assumes that you have a tax home vs a permanent residence as those two things are different
Joseph Smith EA/MS Tax
Enrolled Agent, Admitted to Practice Before the IRS
TravelTax LLC
The Mobile Professional Tax Specialists
www.traveltax.com
jsmith@traveltax.com
866.272.7871
Joe Smith should add clarification.
Permanent Tax Residence Declaration
The IRS requires that you pay taxes on housing benefits and travel expense reimbursements, unless you maintain a permanent residence while on a temporary assignment. If you qualify for permanent tax home exemption, we are required to keep your Permanent Tax Home Address on file.
Consult your tax advisor regarding tax liability of housing and travel benefits and permanent tax residence.
IRS criteria used to determine your tax home residence is as follows:
• You must meet at least one of the following criteria:
a) You lived at your permanent tax residence immediately prior to your current assignment, or
b) You have a family member utilizing the residence, or you utilized this residence frequently for purpose of your own lodging.
• There must be a realistic expectation that you will return to & live at your home; and
a) Your tax home must be separate and distinct from your temporary address; and
b) You pay to maintain your permanent tax residence while you are on assignment (i.e. mortgage, rent, room and board).
• The Permanent Tax Residence must be:
a) Habitable living quarters at least 50 miles away from your temporary residence; and
b) Payments to maintain your permanent tax residence must be real and substantial.
Please be advised, the IRS considers employment away from your home in a single location that exceeds or may exceed one year, to be indefinite, not temporary and
therefore housing and travel benefits would be subject to withholding.
Aren't TN and FL state income tax exempt?
BA 8) 8) 8)
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