As a W-2 consultant, can travel reimbursement be t...
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Returning Member

As a W-2 consultant, can travel reimbursement be taxed if I'm on an assignment for over 1 yr if my firm doesn't track my time working at home? Work in VA, but home in NC.

 
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Level 15

As a W-2 consultant, can travel reimbursement be taxed if I'm on an assignment for over 1 yr if my firm doesn't track my time working at home? Work in VA, but home in NC.

from rev ruling 93-86

If employment away from home in a
single location is realistically expected to last for more than 1 year or there is no realistic
expectation that the employment will last for 1 year or less, the employment will be treated as
indefinite, regardless of whether it actually exceeds 1 year.  

 

so the employer would include travel reimbursements on your w-2 and you would not be entitled to a deduction 

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Returning Member

As a W-2 consultant, can travel reimbursement be taxed if I'm on an assignment for over 1 yr if my firm doesn't track my time working at home? Work in VA, but home in NC.

@HACKITOFF  Thank you for your reply, but I am afraid it's off-base as to what I am asking. The initial question field didn't give me enough room to ask the complete question, so that's probably why you went that route.

 

To clarify, I am a W-2 employee (not self-employed), and my company reimburses me for all travel expenses: therefore I would NOT be worried / concerned about filing any of those expenses as deductions. My concern is whether or not I am taxed on the reimbursement as income at the end of the year, based on my employer refusing to track the location in which I am working. In other words, if I stay on this assignment all of next year in Virginia, my 'tax home' would be shown as Virginia - however, I fly to Virginia every week, and I also work from home in NC at least one day at week (and typically one week from home per month).  Currently, they are not taking out NC state taxes for the days I'm physically working from home in NC - so it makes it look like I'm always working in Virginia. Let me know if that doesn't make sense. Thank you!

Highlighted
Level 15

As a W-2 consultant, can travel reimbursement be taxed if I'm on an assignment for over 1 yr if my firm doesn't track my time working at home? Work in VA, but home in NC.

ask your company if the reimbursement will be on the W-2.  under current tax law even if the reimbursements are included on your w-2, your expenses are not deductible.  

Highlighted
Level 15

As a W-2 consultant, can travel reimbursement be taxed if I'm on an assignment for over 1 yr if my firm doesn't track my time working at home? Work in VA, but home in NC.

If the assignment lasts more than 1 year, your employer is not allowed to provide you tax free reimbursement of expenses.  So, yes the reimbursement is taxable income to you.  The fact that your work in VA is intermittent may negate the one year rule.  So, it really depends on how your employer treats the reimbursement.  If they report it as taxable income, on your W-2, you're probably stuck with that.  If they don't, you can probably get away with not reporting it. 

 

As for state taxes; you are an NC resident and will file an NC return and pay (calculate) NC tax on all your income.  You will file a non-resident VA return and pay only tax on your VA income.   You will have to keep track of the days worked in each state.  NC will give you a credit, or partial credit,  for any tax you pay to VA. So there will be little or no double taxation.   Due to the fact that your W-2 will report all your salary  as VA source income, you may may get some kick back from VA, if you report less. 

 

 

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