Example of Temporary Work Location

Example:

  • You're an employee.
  • You live and work in Phoenix, AZ.
  • You have a temporary job in Sedona, Arizona (about 120 miles away) which is expected to last, and actually does last, three months.
  • You drive round trip to Sedona and Phoenix five days per and have the weekends off.
  • You don't require any sleep before returning home each day.

Result:

  • Your tax home is Phoenix because it is your regular place of business.
  • Since you expect to work, and actually do work, less than one year at your temporary work place in Sedona, Arizona, your round trip transportation costs each day are 100% deductible.
  • Meals:
    • Since your trips to Sedona and back to Phoenix each day are just day trips (you neither stay overnight nor require time off for necessary rest before returning home), your meals are nondeductible personal expenses.

What if you expect to work more than one year?

If you expect to work at a temporary work place for more than one year, commuting costs between your hotel and place of employment are not deductible.

What if Your Expectations for the Length of Time to Work Changes?

You expected to work more than one year, but work less than one year:

Suppose you initially thought you were going to work more than one year on a temporary assignment, then, your expectation changes, and you work less than one year?

The IRS says, if the period of employment is expected to last more than one year it is not a temporary work place even if the period of employment ends up lasting less than one year.

Consequently, your transportation costs between your hotel and place of employment would be considered nondeductible commuting expenses.

You expected to work less than one but determine you will work more than one year:

Now suppose you expect to work less than one year on a temporary assignment but your expectation changes, and you determine you will be working more than one year?

The IRS will treat the period prior to the date you determined it would last more than one year as a temporary work place. Commuting expenses up to that point are deductible.

Example:

  • You live and work in Phoenix, AZ and have a regular place of business there.
  • You expect to be working in San Diego from February 1, 2012 through September 30, 2012 (eight months).
  • On August 1, 2012 you determine you will be working in San Diego until March 31, 2013 (a total of fourteen months).

Result:

  • Deduct commuting expenses for six months (February 1, 2012 through July 31, 2012), the period prior to August 1, 2012, when your expectation changed.

Professionals Traveling to Clients' Sites

If you have to travel to your client's job sites and work is temporary and you can show you have a regular work office, then, you can deduct commuting expenses from your home to each of the work sites.

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