My job in IL terminated 35 people after losing a big client. They offered me the same role in CA. If I accept and stay in CA less than a year, can I deduct the CA rent?

[todali]

I was given a termination letter and offered severance that will be disregarded if I accept the new position. If I don't accept I will be terminated. Currently I am not paying rent in IL as I live with family. I will not be given a pay raise after transferring.

[Carl]

No. however, if the move is a condition of employment or continued employment, then your moving expenses are deductible. But before you accept the job, understand that you will be paying state taxes in CA also. So if the offer isn't significantly more than you get now, it might not be worth it to you.

[Hal_Al]

No. For the job to be considered "temporary", for the purposes of the  Calif. rent being deductible, your old job in IL must be available to return to. That is, you must be on a temporary job, out of town, from your regular job

[todali]

Assuming I can negotiate this - I would ask HR to send me to CA for 11 months and then welcome me back to work again in IL upon return. Is there a duration I have to stay working for after returning from CA? 2 weeks? 1 month? I will have them specifically put the temporary relocation and return in my offer letter as long as I can deduct the rent. Thanks a lot

[SweetieJean]

I hope you are not asking your employer to write a fictitious letter. Are you in a union?

[Carl]

Unless the offer in CA is clearly identified and intended as a temporary assignment of less than one year, there is no way you can deduct rent. Period. If they do make it a temporary assignment and then later change it to permanent, all that rent you may have deducted immediately becomes taxable. Additionally since you wouldn't have paid taxes on it to begin with, that would mean you underpaid your taxes and you would be subject to late fees, penalties, fines and interest. On top of that, the state of CA will assess the same fines, penalties, taxes, and late fees.
Basically, if you think you're going to outsmart the IRS, you need to rethink that. You will lose.
But the bottom line here is, you're going to do what you want regardless of what folks tell you in this forum. You've been informed of what's legal and what's not.

[macuser_22]

Business expenses are also an itemized deduction first reduced by 2% of AGI and must exceed the standard deduction before there would be any tax benefit.