@mital1982 wrote:
so locum agencies which have long term contract , pay for lodging and plane travel and get deduction on their bussiness.
but if my spouse owns that locum agency then i cannot do it?
I can't speak to any specific type of agency, they might use people as subcontractors rather than employees. And there may be special concerns where the employee is related to the employer. You may want professional guidance.
In general, this is what happens with a W-2 employee and an unrelated employer:
The tax code assumes that everything of value provided to an employee as compensation for services is taxable wages, unless it falls under one of the fringe benefit rules or other exceptions (like business travel). For travel away from home that is expected to last less than a year and actually does last less than a year, the employer can reimburse the employee under an accountable plan. The reimbursement is not taxable income to the employee, and is a deductible business expense to the business.
If the travel lasts more than one year, and the business reimburses the employee, the business may still deduct the reimbursement as a business expense, but it must include the reimbursement as taxable wages on the employee's W-2, and withhold the appropriate federal, state and employment taxes.
To put it another way, if the employer pays for the employee's apartment, food or car in their home city, that must be included in the employee's taxable wages. For a temporary assignment away from their tax home, those expenses may be reimbursed tax-free. But when the assignment is not temporary, that new location is considered the employee's tax home, and if the employer pays for food, lodging and travel, that reverts to being part of their taxable wages.
