@mital1982 wrote:
Thanks for reply but still there is lot of confusion.
so an oil company out of texas rents motel or hotel in new mexico (some rooms or all rooms) for a year for employee housing. They deduct all these cost. they fly their contractors, employee and even high ranked official. tickets are booked using corporate card, rental car on card, they to do regular work in shifts for two weeksand are off two weeks. This cost is borne by the company and tax deductible. It is not shown on the empoyee's w2 or 1099 of contractor. so is it because it is c-corp?
also if you have w2 job for 2 weeks in one city and you commute for bussiness to another city like assignement on 1099 , the irs doesnt tell what is your tax home. it just consider either/or situation. i would assume in such a case even though your assisgnment last more than a year your tax home (as you cant have two )would be still where you do your w2 job and so travel and travel related expenses would be bussiness cost
1. If the assignment is temporary--meaning that it is expected to last and actually does last 1 year or less--the company can deduct the expense as business-related travel and does not have to include the expenses as income on the employee's W-2s. If the assignment is indefinite (has no planned end date) or if the assignment starts out with a planned end date of 1 year or less but actually lasts longer, then the value of the hotels, food, cars and everything else must be included in the employee's W-2 wages for the year and is subject to federal, state, social security and Medicare tax withholding, beginning as of the date the assignment became indefinite or exceeded 1 year. The expense is NOT deductible by the business as "travel", but it is deductible as wages paid to the employees. (Same $$ deduction, different space in the tax return.)
The rules are the same no matter if the "company" that the employees work for is an S-corp, C-corp, LLC, or sole proprietorship.
(The rules for officers and "highly compensated employees" may be different. Please see a CPA if this applies to you.)
2. "also if you have w2 job for 2 weeks in one city and you commute for bussiness to another city like assignement on 1099 , the irs doesnt tell what is your tax home."
Your question doesn't really make sense. If you are a W-2 employer for company A, then everything you do for company A is as an employee. Company A can't treat you as an employee in one city and an independent contractor in another city. If company A assigns you to a new city for more than 1 year, your travel is not a business expense because even if you did not change your domicile (personal residence, where you vote, your kids go to school, etc.) you changed your tax home according to the regulations for business travel. The value of lodging etc. provided by the company is considered taxable wages to you, and the company deducts it as wages and not as business travel.
If you live in city A and you commute to city B which is your regular workplace, then your tax home is city B and commuting is never deductible, even if city B is a long distance from city A.
If you are a W-2 employee for company A, and you take a leave of absence to do some independent contractor work for company B, then the usual rules still apply. If your assignment with company B in a different city lasts more than 1 year, then it is not temporary and your travel expenses are not deductible on schedule C, because even if you did not change your domicile, you changed your tax home.
