Travel Expense

Forum|Forum|3 years ago
March 14, 2023
5 replies
22 views

I work one week per month in Illinois as a general partner of an LLC, and work/live the rest of the time from my home in Virginia. 90% of my income comes from a client in Illinois. Are my travel & living expenses for 12 trips to Illinois (one week each) deductible?

GeorgeM777

Level 11

Perhaps. The Tax Book provides the following with regard to unreimbursed expenses incurred by a partner in connection with partnership business:

Under the general rule, a partner is not allowed to deduct partnership expenses on his or her individual tax return. However, an exception applies when there is a provision in the partnership agreement requiring the partner to pay the expenses, or if payment of the expenses is a routine partnership practice tantamount to an agreement...Allowable expenses are deducted on Part II, Schedule E (Form 1040). Report allowable unreimbursed partnership expenses as a separate item from partnership income on line 28, Schedule E. Enter “UPE” as the name of the line item, then list the amount on (i) of line 28. The expense will be deducted from partnership income and will also reduce net income subject to self-employment tax.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

LLC_PartnerAuthor

Level 2

Thank you GeorgeM777.

My question was more oriented towards determining my "tax home". If most of my income comes from another state but I'm only there one week per month, is my "tax home" that state? If so, then IRS topic 511 is very clear stating that travel expenses between "tax home" state and state of residence are NOT tax deductible. So if I only spend 84 total days in another state, but 90% of my income comes from that gig, if that my "tax home"?

Thanks

GeorgeM777

Level 11

That additional information is helpful. Yes, Illinois appears to be your "tax home" as that term is defined by the IRS in Topic 511. Tax home is not dependent on the number of days spent in a particular jurisdiction, but rather, the location where work activity is performed. Thus, IL would be your tax home and your travel back to your domicile in Virginia would not be a deductible expense.

While you may already know this, whether you are an IL resident is entirely predicated on the fact of whether you maintain your domicile in IL. Given that your domicile is the place where you reside and the place where you intend to return after temporary absences, your domicile would be VA and not IL.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"