Is out of town living expense tax deductible? If so for how long?

[Daniel83]

I have a job offer for a salary significantly lower than I make now.  However the "Out of Town Living Expense" (OTL) they pay me will make my income much higher.  They said they do this because it helps me and them.  Not sure how, but from what they said the OTL is 100% tax deductible for a couple years meaning I would see 100% of this payment.  But after a set time it will undergo a certain percent tax, and I will be reimbursed the difference at that time.  Sounds confusing and kind of shady.  I'd like to uderstand this prior to signing on board.  Is it true the OTL payment will not show up on my W2 and I will see 100% of this payment?  

[DJS]

Living expenses are not in general tax deductible. However, there are exceptions. According to the Internal Revenue Service, temporary housing is housing that you live in when working on a temporary assignment for your employer that takes you outside of an acceptable commuting distance from your home. The IRS further defines "temporary" as one year or less. Temporary housing may include a hotel or motel, an apartment or a rented house. Any reimbursements that you receive from your employer for travel and living expenses you incur while on a temporary assignment are not taxable. Your employer will not include these reimbursements in your gross income on your W-2, nor should you include this income on your tax return. If you incur all or a portion of these expenses without reimbursement from your employer, you may deduct these expenses from your taxable income as unreimbursed business expenses. The IRS does consider any reimbursements for temporary housing associated with a permanent move taxable. For example, if your employer transfers you to a new office and pays for your relocation, the IRS treats those expenses as nontaxable moving expenses. However, if your employer also pays for you to stay in temporary housing while you finalize the move out of your former home, then 100 percent of those payments are fully taxable.Be careful. If you live in temporary housing while on an eight-month assignment, the reimbursement for that housing remains fully deductible for the duration of your stay. However, if your employer and you subsequently decide that you will stay in your “temporary” location for another six months, bringing your total stint to well over a year, the IRS then considers your temporary assignment to be permanent. The date the decision was made to keep you there for longer than a year is the date that your temporary housing reimbursement becomes taxable. This applies whether your employer physically reimbursed you or paid for the housing directly.

[schmiechenkid]

Djay43, I found this thread while researching my own situation. Could you comment on this: After being on maternity leave, I returned to my job as a firefighter. Normally,  I work a 48 hour shift, ie, 48 hours in a row. However, when I returned, I was required to work a 40 hour week (9-5) for a month. My home is about 125 miles away from my workplace.  The change in schedule put my job outside of a daily commuting distance: it would be a 5 hour round trip. For that month, our family living in temporary housing close to my new assignment location. None of these expenses were reimbursed, and the schedule and location change were mandatory and non-negotiable.  Is the temporary housing deductible?

[PL1]

I encountered similar situation and was audited by IRS. Since it was only a month and commuting distance more than 50 miles, it should be tax deductible. However, IRS does require you to show evidence of employer not willing to reimburse your temporary living. In another word, you were NOT "entitled" to reimbursement.

[Anonymous]

My new employer pays for the temporary housing, the relocation team is telling me that I have to cover the taxes on the expense. Exactly what is the percentage of tax burden I am looking at? The new employer is in Washington State.

[Anita01]

wjimenez-883.-are you talking about taking  a new job?  Is the job temporary, expected to last less than a year?  Temporary living quarters for  a new job expected to last more then a year are not deductible.

[Anonymous]

@TurboTaxAnita, The job is new, temporary living will only last 30 days. Not expected to last any longer than that.

[Anita01]

The temporary living will only last that long, or the job will only last that long?  If the job is a permanent job expected to lat last a year or longer, the temporary living expenses are not deductible so you will pay full tax on the income.  

There is no fixed tax rate for such income.  It will just be taxed as ordinary income along with your wages, at whatever tax rate you pay on your return next year.

[Anonymous]

@TurboTaxAnita The job is expected to be a permanent job. The housing is temporary until I find a permanent home. Why do I have to pay for the taxes? Since it is a fully furnished apartment, can I deduct the cost of maintaining such a home?

[Anita01]

No, you cannot deduct any expense for living costs while you are waiting to find a permanent home, it is simply not a moving cost, or temporary living cost that is eligible for deduction.  It's just a personal expense as far as tax laws go.

[tigerx]

FYI A lot of the information here is no longer valid. See the IRS 2019 Publication form 463, the key part is in bold. I have no idea how much misinformation cost me this year. 😠

"Temporary
Assignment or Job
You may regularly work at your tax home and
also work at another location. It may not be
practical to return to your tax home from this
other location at the end of each workday.
Temporary assignment vs. indefinite assignment. If your assignment or job away from
your main place of work is temporary, your tax
home doesn’t change. You are considered to
be away from home for the whole period you
are away from your main place of work. You
can deduct your travel expenses if they otherwise qualify for deduction. Generally, a temporary assignment in a single location is one that
is realistically expected to last (and does in fact
last) for 1 year or less.
However, if your assignment or job is indefinite, the location of the assignment or job becomes your new tax home and you can’t deduct
your travel expenses while there. An assignment or job in a single location is considered indefinite if it is realistically expected to last for
more than 1 year, whether or not it actually lasts
for more than 1 year.
If your assignment is indefinite, you must include in your income any amounts you receive
from your employer for living expenses, even if
they are called travel allowances and you account to your employer for them. You may be
able to deduct the cost of relocating to your new
tax home as a moving expense. See Pub. 521
for more information.
For tax years beginning after December 2017 and before January 2026, the
deduction of certain moving expenses
is suspended for nonmilitary taxpayers. In order
to deduct certain moving expenses, you must
be an active member of the military and moving
due to a permanent change of duty station. "

[Hockeyman]

acceptable commuting distance from your home what is that.  Also, my situation is this.  I took a 12 month contract which began March 10, 2020.  I live just outside Raleigh, NC and the job is in Charlotte NC over a 2.5 hour drive from my house.  In my case I travel back to my home every weekend.  What type of living expenses can I deduct?  housing? food? gas? Light Rail travel to and from the office?  Please expand if I missed anything else.  Thanks 

[CaptdennismRN]

Is "Per diem" Deductible?

[CaptdennismRN]

Is Per Diem for 13 weeks deductible?

[xmasbaby0]

@CaptdennismRN What kind of "per diem" work are you asking about?

What about "per diem" do you think is deductible?   Are you a W-2 employee?   If so, no job related expenses can be deducted on a federal tax return.   Your state laws might be different.  Per the federal tax laws that changed for 2018 and beyond, W-2 employees cannot deduct job-related expenses.

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

Or are you working as an independent contractor?