I’m working out of state. Living in a motel paid for by the company. How does taxes work for that

[xmasbaby0]

Are you a W-2 employee?

[pattax177]

Yes

[pattax177]

What does not deductible mean

[xmasbaby0]

It means entering it on your tax return will have no effect.  You do not get money back on your taxes for meals, lodging, mileage, etc. while you are traveling for the employer if you are a W-2 employee.

[pattax177]

Okay sweet! Now let’s say I’m out there for 1 or 2 years. Do I pay the state I’m working in taxes or the state I reside in?

[xmasbaby0]

What states?

[Hal_Al]

If you are “out there” more than a year, you have a bigger problem than which state you pay tax to.
For tax purposes, an out-of-town job assignment must be expected to last less than one year, for the expenses to be deductible, by the company.

Anything longer is a permanent change of “tax Home”. 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. (Reference: <a rel="nofollow" target="_blank" href="http://www.irs.gov/taxtopics/tc511.html">http://www.irs.gov/taxtopics/tc511.html</a>)

Any expenses, the company pays on your behalf is taxable income to you.

You are also considered to be  a resident of the new state, for sate income tax purposes. If you maintain a residence in the old state, you could well be considered tax resident of both states. Although one state will probably give you a credit for tax paid to the other state.

[xmasbaby0]

You are fortunate that the employer is paying for your motel.  As of the new tax laws that went into effect for 2018 returns, job-related expenses for W-2 employees are not deductible on a federal return.  So any un-reimbursed expenses you have are NOT deductible on your federal tax return.

https://ttlc.intuit.com/questions/4482873-which-federal-tax-deductions-have-been-suspended-by-tax-re...

[Hal_Al]

"How does taxes work for that?"
It depends on the details.
1. How long is the assignment expected to last.
2. Does the company pay your bills or give you the money as reimbursement.
3. Will the company add the money to your W-2.

But, the simple answer is: as long as the company doesn’t add it to your W-2, as income; there is nothing you need to do. Your company has an “accountable” expenses plan, per IRS rules, and you taxes aren’t affected.