Also remember, W-2 employees can no longer deduct any unreimbursed travel expenses. That deduction was eliminated in the tax reform act of 2018. A W-2 employee can list the expenses and they might flow through to the state return for a state deduction, depending on your situation, but they don't qualify for a federal deduction.
@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?
To your broader question, what happens if an assignment lasts more than one year? If the worker is self-employed, they can no longer deduct their expenses. And if the worker is a W-2 employee, the company must add their reimbursement to their taxable income, it's not tax-free any more. In both situations, the new work location becomes your new "tax home" if the assignment is not considered temporary.
Temporary meaning, expected to last and actually does last less than 1 year. If an assignment starts out with the intention of being temporary, and is then extended, it becomes "not temporary" as of the date that fact is known, even if less than a year has passed.
Generally, your tax home is the entire city or general area where your main place of business or work is located, regardless of where you maintain your family home. For example, you live with your family in Chicago but work in Milwaukee where you stay in a hotel and eat in restaurants. You return to Chicago every weekend. You may not deduct any of your travel, meals or lodging in Milwaukee because that's your tax home. Your travel on weekends to your family home in Chicago isn't for your work, so these expenses are also not deductible. If you regularly work in more than one place, your tax home is the general area where your main place of business or work is located.
https://www.irs.gov/taxtopics/tc511
You don't have to like it, but that's the way it is. You never get a deduction for food or lodging or commuting in your home city. If your employer pays for those things, it must be included in your wages. Because travel "away from home" often increases your cost of living, those expenses are deductible (or excludable from income) as long as it is a temporary assignment. If the assignment is not temporary, you can't deduct or exclude the expenses because it's your new main home, and there has to be some set rule of what that is.
