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Tax "home" determines which job expenses are deductible


Dear Tax Talk,
I have lived for 15 years in Bakersfield, Calif., in my own home. I started working at Edwards Air Force base over a year ago. I maintain an apartment in that area and stay three nights a week, working four-to-10-hour days, coming home to Bakersfield on days off. I can't sell my house in Bakersfield and move closer to work because I share custody of my daughter with my ex-husband and she goes to school in Bakersfield. Is the apartment a deductible expense? -- Diana

Dear Tax Talk,
Because of my employment, I am required to maintain a second residence (rental) and commute to my primary residence, about 450 miles away, on weekends. Are any portions of the expenses incurred in this deductible? My spouse did not relocate because of her job. -- Hodges

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Dear Diana and Hodges,
In life you make personal choices. The tax law doesn't subsidize these choices.

To determine if you can claim travel expenses while away from home, you have to determine where your tax home is. Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home. It includes the entire city or general area in which your business or work is located.

If you (and your family) do not live at your tax home, you cannot deduct the cost of traveling between your tax home and your family home. You also cannot deduct the cost of meals and lodging while at your tax home.

Internal Revenue Service Publication 463, Travel, Entertainment, Gift, and Car Expenses, provides the following two examples:

Example 1. You are a truck driver and you and your family live in Tucson. You are employed by a trucking firm that has its terminal in Phoenix. At the end of your long runs, you return to your home terminal in Phoenix and spend one night there before returning home. You cannot deduct any expenses you have for meals and lodging in Phoenix or the cost of traveling from Phoenix to Tucson. This is because Phoenix is your tax home.

Example 2. Your family home is in Pittsburgh, where you work 12 weeks a year. The rest of the year you work for the same employer in Baltimore. In Baltimore, you eat in restaurants and sleep in a rooming house. Your salary is the same whether you are in Pittsburgh or Baltimore.

Because you spend most of your working time and earn most of your salary in Baltimore, that city is your tax home. You cannot deduct any expenses you have for meals and lodging there. However, when you return to work in Pittsburgh, you are away from your tax home even though you stay at your family home. You can deduct the cost of your round trip between Baltimore and Pittsburgh. You can also deduct your part of your family's living expenses for meals and lodging while you are living and working in Pittsburgh.

In the second example, allowable expenses would be claimed on Form 2016, Employee Business Expenses. These deductions, however, must come to more than 2 percent of your adjusted gross income before they will do you any tax good.

In both of your situations, your tax home is not where your family home is. The costs associated with either home are not business-related expenses.

-- Posted: Feb. 27, 2004




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