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Taxable Long Term Assigments - Partial workweeks

pfdtxpfdtx ✭✭
edited February 2011 in General Payroll Topics
We have someone who has been on a remote assignment and will near a year shortly. The original plan was always to have his assignment end prior to a year.

• If the individual continues in this assignment but only works remotely (and stays overnight in a hotel, etc.) 1-2 days a week, will that change anything (expenses become taxable income)?
• If the person didn’t work remotely 5 days a week in the past 10 months, does that change anything (meaning can we count days instead of pure calendar time)?

Thanks in advance for the guidance. Our goal is to do this correctly and in accordance with all applicable laws.

Comments

  • Tax home is the key - not enough info in the Original Post (OP) to tell what is really going on so as to have an opinion one way or the other. The "year" test is to establish a reasonable period (although arbitrary) to distinguish between a "Permanent" or "Indefinite" (same thing for tax home purposes) to distinguish between a change in tax home and a temporary assignment that has the employee spending most of the working time at the remote location.

    Tax home is primary work location - even if the employee is away from there for weeks at a time.
  • pfdtxpfdtx ✭✭

    This has come up again. An employee works on a remote job 1-2 days a week and it is expected to last for 13 months. Are the remote assignment expenses taxable to the employee, even though the majority of their time worked was at their home office tax home?

  • Hello pfdtx,
    Ah - a tad more definite information. The remote work location would not create a new tax home unless it became the employee's primary work location. Since the employee continues to perform most of the employee's services at the "home office tax home" - 3-4 days per week vs. 1-2 days per week at the remote location - the home office remains the employee's primary work location and, therefore, tax home. The living expenses at the remote location are travel expenses even if the assignment is indefinite or expected to last more than one year.

    If the situation were reversed, - that is, the employee is expected to spend 3-4 days per week at the remote location and 1-2 days a week at the home office AND the assignment is indefinite or intended to last more than a year, the remote location becomes the employee's tax home for travel expense purposes, and the home office may qualify as "travel away from home" for travel and living expense purposes if the expenses otherwise qualify as business travel expense.

    That is to say, that some portion of the employee's expenses for staying at the employee's personal residence might qualify. Of course the ordinary and necessary rules would apply and time spent at home for personal reasons would not qualify. For example, if the employee works Monday through Wednesday at the remote location and Thursday and Friday at the home office, meals and lodging at the remote location would not qualify as travel away from home.

    Meals and lodging costs, presumably at the employee's personal residence, could be qualified business travel away from home. Saturday and Sunday are likely to be considered personal days rather than travel away from home absent a business reason for staying the weekend.

    Transportation costs between the remote location and the home office are business travel, if otherwise qualified. Travel at either location between living quarters and the work location is commuting and is personal rather than business transportation. .

  • Thank you for the reply Pat! You're incredibly helpful on this forum!!

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