Tax question: can I write off “travel expenses” from work to home - state and city

[catchup]

I have a full time job in another city in the state of PA where I spend 50% of my time and receive all of my income. The other 50% I spend at home in a separate county where my children go to school, a separate permanent residence.

My understanding of federal rules is that the tax home is where I work and I can not write off travel going to another residence and back.

However I have been paying the higher city taxes where my permanent residence is and do not write off the considerable travel expenses, food on the road, apartment expense where I work. Worst of both worlds. Pay the city tax as if it’s my residence, can’t write off expenses because it is not my tax home. I felt I was being cheated on one end or the other.

My accountant told me I could write off apt, food and travel on city and state taxes this year, but not federal. Is this kosher? I know bogleheads don’t give tax advice, but how do I evaluate the quality and legitimacy and legality of his advice?

Thanks.

[johnubc]

I really do not want to comment - other than to say, get a second opinion from another accountant.

[tashnewbie]

My accountant told me I could write off apt, food and travel on city and state taxes this year, but not federal. Is this kosher? I know bogleheads don’t give tax advice, but how do I evaluate the quality and legitimacy and legality of his advice?

I have no clue. But if you don't trust your accountant, perhaps it's time to get another accountant? I would ask the accountant to give you state tax code references/other official materials so that you can review and confirm his communications. If you want further assurance, look for another accountant.

[TomatoTomahto]

Different states, but our accountant has not suggested such a thing. I am not an accountant, but you should have an accountant whose opinion you trust.

[fabdog]

I'd ask your accountant where exactly they will deduct these expenses for your PA return? there are only 4 deductions, and a number of specific credits, but I don't see anything that jumps out as a place to take a deduction for commuting, food on road, etc.

It's your choice to live in a different locality

PA income tax guide below... you can also get the docs that talk about deductions and credits

https://www.revenue.pa.gov/FormsandPubl ... fault.aspx

Mike

[jebmke]

I'd ask your accountant where exactly they will deduct these expenses for your PA return? there are only 4 deductions, and a number of specific credits, but I don't see anything that jumps out as a place to take a deduction for commuting, food on road, etc.

It's your choice to live in a different locality

PA income tax guide below... you can also get the docs that talk about deductions and credits

https://www.revenue.pa.gov/FormsandPubl ... fault.aspx

Mike

That's a good first step. I'm not familiar with PA but MD starts with Federal AGI so Schedule C income from the FED rolls forward as-is. Other subtractions are specifically enumerated to arrive at MD AGI and there is no "what the hell, I'll deduct it anyways" line.

[catchup]

Thanks for your replies.
The argument for writing off expenses is that it is a work expense necessary for my job. Whereas the federal govt considers the locality of my employment my tax home, the de facto city/ state tax home is my residence away from my job. I feel I should not be paying the taxes for my home locality if I can’t write off work expenses. But whereas it is spelled out in the federal code, it is not spelled out in pa code. They do allow deduction for work expenses.

I agree, it does resemble a what the hell I’ll write it off anyway scenario.

Not thrilled about searching for a new accountant but it is probably time.

Thanks.

[catchup]

This will probably be deleted, but maybe I should ask Mehmet Oz what he did. Is he on this forum?

[SmileyFace]

I am not an expert but the logic doesn't pass the sniff test to me.
I also don't understand how you feel cheated - no one from the gov't is forcing you to keep two residences. That's the price you are paying for having a job at a location where you don't want to permanently reside. I don't understand why you feel you are entitled to addtional tax breaks for doing this.

[galawdawg]

I have a full time job in another city in the state of PA where I spend 50% of my time and receive all of my income. The other 50% I spend at home in a separate county where my children go to school, a separate permanent residence.

My understanding of federal rules is that the tax home is where I work and I can not write off travel going to another residence and back.

However I have been paying the higher city taxes where my permanent residence is and do not write off the considerable travel expenses, food on the road, apartment expense where I work. Worst of both worlds. Pay the city tax as if it’s my residence, can’t write off expenses because it is not my tax home. I felt I was being cheated on one end or the other.

My accountant told me I could write off apt, food and travel on city and state taxes this year, but not federal. Is this kosher? I know bogleheads don’t give tax advice, but how do I evaluate the quality and legitimacy and legality of his advice?

Thanks.

You can always look to see what the Pennsylvania Department of Revenue has to say about it:

Commuting expenses are not deductible in PA. Commuting expenses, including mileage to and from
work and parking expenses, are not allowable.

https://www.revenue.pa.gov/FormsandPubl ... ev-489.pdf

Time to get a new accountant.

[catchup]

I guess the bottom line is that if bogleheads find it questionable, an auditor would also.
The money for living, transportation, and quarterly taxes is already spent anyway. No new major hits to absorb…

I do think that these grey areas are where savvy people without integrity probably get away with paying less than the rest of us in taxes.

[simas]

I have a full time job in another city in the state of PA where I spend 50% of my time and receive all of my income. The other 50% I spend at home in a separate county where my children go to school, a separate permanent residence.


Thanks.

- are you an independent contractor working from a fixed location that has to frequently travel to client site (whether you contract with them for full time hours, etc). then, may be for travel expenses
- if you are employee than I believe this is commuting and as other said, unlikely to be deductible.

[Nyc10036]

I guess the bottom line is that if bogleheads find it questionable, an auditor would also.
The money for living, transportation, and quarterly taxes is already spent anyway. No new major hits to absorb…

I do think that these grey areas are where savvy people without integrity probably get away with paying less than the rest of us in taxes.

In your instance it has nothing to do with integrity.
It is no different than my former co-worker who lived in Maryland but commuted to Pennsylvania every week.
He had a deal with the motel owner for a discount rate.

He told our employer that he planned on relocating his family.
His wife was a dentist . They had no plans on relocating.
They simply pocketed the lump sum relocation allowance $10K(?).
He quit the job after the 1 year was over.

[catchup]

Smiley Face,

Thank you for your reply. I do not feel cheated or entitled. I am simply seeking to understand how travel to a different work location affects my taxes— what is considered a work related tax deduction.

If there were not nuances, the tax codes would not use clarifying examples.

There are other questions I could ask as well. Would changing my primary residence to my place of work obviate the need to pay city taxes? Would establishing a part time residence change things? I am not an independent contractor, but would an apt or hotel be a work related expense in that case? And how does the W2 really change the facts of the situation.

I’m not being cheated if I’m following the rules.
That is why I brought the question to the forum. To make sure I’m following the rules.

[Nyc10036]

Smiley Face,

Thank you for your reply. I do not feel cheated or entitled. I am simply seeking to understand how travel to a different work location affects my taxes— what is considered a work related tax deduction.

If there were not nuances, the tax codes would not use clarifying examples.

There are other questions I could ask as well. Would changing my primary residence to my place of work obviate the need to pay city taxes? Would establishing a part time residence change things? I am not an independent contractor, but would an apt or hotel be a work related expense in that case? And how does the W2 really change the facts of the situation.

I’m not being cheated if I’m following the rules.
That is why I brought the question to the forum. To make sure I’m following the rules.

Ask another accountant.

You don't seem to like the answers here because they are not what you wanted to hear. LOL.

[UpperNwGuy]

Get a new accountant and ask him or her. You're not making much progress asking the question here.

[Katietsu]

What federal rule says your “tax home” is where you work? And your primary residence is not necessarily the home you own as opposed to one you rent.

And there is a difference between federal and PA in that the federal no longer allows a deduction for employee expenses but PA does. So for instance, if you must buy steel toe boots, pay for a professional license for your job, or drive from your office to visit a client, you can deduct these expenses on PA. You used to be able to deduct them on federal but not since the last major tax law changes.

I am not sure what you mean with respect to local taxes unless you are just saying that the town where your kids are has a higher local income tax rate than the city you work in.

I suspect that the best decision both on how to file for 2022 and what decision should be made for the future depends on details that might get lost on this forum. Is this a long term situation? Can you give any details about how and why you came to work at a great enough distance that you are not daily commuting?

[JBTX]

You can’t deduct most employee expenses for federal tax purposes anymore.

https://www.hrblock.com/tax-center/fili ... -expenses/

It appears you may be able to for PA state income tax purposes.


https://www.revenue.pa.gov/TaxTypes/PIT ... fault.aspx

[mcraepat9]

This will probably be deleted, but maybe I should ask Mehmet Oz what he did. Is he on this forum?

One important difference between you and Oz: Oz didn’t get the gig.

[MishkaWorries]

I have a full time job in another city in the state of PA where I spend 50% of my time and receive all of my income. The other 50% I spend at home in a separate county where my children go to school, a separate permanent residence.

My understanding of federal rules is that the tax home is where I work and I can not write off travel going to another residence and back.

However I have been paying the higher city taxes where my permanent residence is and do not write off the considerable travel expenses, food on the road, apartment expense where I work. Worst of both worlds. Pay the city tax as if it’s my residence, can’t write off expenses because it is not my tax home. I felt I was being cheated on one end or the other.

My accountant told me I could write off apt, food and travel on city and state taxes this year, but not federal. Is this kosher? I know bogleheads don’t give tax advice, but how do I evaluate the quality and legitimacy and legality of his advice?

Thanks.

Kosher?

[catchup]

This will probably be deleted, but maybe I should ask Mehmet Oz what he did. Is he on this forum?

One important difference between you and Oz: Oz didn’t get the gig.

True, but he worked away from his “home” address in Montgomery County Pennsylvania.

[catchup]

I have a full time job in another city in the state of PA where I spend 50% of my time and receive all of my income. The other 50% I spend at home in a separate county where my children go to school, a separate permanent residence.

My understanding of federal rules is that the tax home is where I work and I can not write off travel going to another residence and back.

However I have been paying the higher city taxes where my permanent residence is and do not write off the considerable travel expenses, food on the road, apartment expense where I work. Worst of both worlds. Pay the city tax as if it’s my residence, can’t write off expenses because it is not my tax home. I felt I was being cheated on one end or the other.

My accountant told me I could write off apt, food and travel on city and state taxes this year, but not federal. Is this kosher? I know bogleheads don’t give tax advice, but how do I evaluate the quality and legitimacy and legality of his advice?

Thanks.
[/quote]

Kosher?
[/quote]meaning legitimate, genuine (following the rules)

[fyre4ce]

I don't think the tax code is favorable to you here.

Whether you are an independent contractor or a W-2 employee, commuting is never deductible. Only trips between worksites are deductible. You're correct that your work location is your "tax home" as defined by the IRS, but this does not mean it counts as your family home. "Tax home" means your main work location, from which trips to alternate work locations may be deductible. Because you only have one work location, I don't see any of your driving or other expenses as being deductible. See IRS pub 463: https://www.irs.gov/pub/irs-pdf/p463.pdf

For federal income tax, it wouldn't matter anyway what would be deductible by a business, because the current tax code does not allow any deductions for work expenses for a W-2 employee. I'm not familiar with the PA rules on this; they may allow deductions but probably conform to the federal rules on what is deductible.

For the purposes of city tax, you'll have to read the rules but I bet city tax applies to your primary (family) residence, not your work location/"tax home". I don't think it would be reasonable to claim your small apartment where you stay during the week is your primary residence, when your family resides at a bigger residence within the city, that's where you get your mail, keep most of your things, etc.

All of these are questions you should ask your accountant about. It's okay to get a second opinion online, but if you don't trust your accountant you should get a new one.

About celebrity tax strategies - there are well-publicized examples of celebrities and politicians doing questionable or blatantly illegal things with their taxes. Sometimes they seem to get away with it, other times not. Sometimes they get away with it because they have political power, sometimes because they have teams of top lawyers, other times because they just don't get audited or the auditor lets them go. You should not model your tax strategy on what other people do. You probably don't have the resources they do, and many of them do get busted, and the ones who don't probably live in fear of getting busted. Follow the law as best you can, and live your life without perpetual fear of a tax audit. If people cheating on their taxes bothers you, lobby your elected representatives for (a) fairer, simpler, and clearer tax laws, and (b) more enforcement.

[catchup]

Fyre

Good analysis. I was a little tongue in cheek about celebrities, but you are right.

I think there is enough ambiguity with respect to work expenses and travel to work that one could interpret the terms liberally and consider writing off the apt expense, or travel, etc. but the intent is probably more in line with the federal guidelines. It is not a usual situation and probably a red flag for an audit in the best case scenario. At the risk of leaving money on the table, I will probably raise the question with my accountant and choose not to write off those expenses unless he can provide further validation, such as through direct communication with dept of revenue or tax lawyer.

[galawdawg]

I do think that these grey areas are where savvy people without integrity probably get away with paying less than the rest of us in taxes.

I think there is enough ambiguity with respect to work expenses and travel to work that one could interpret the terms liberally and consider writing off the apt expense, or travel, etc...

I'm not so sure about that. The tax laws are clear regarding commuting expenses for wage or W-2 employees. You commute from your home to your workplace. Those expenses are not deductible. Merely because you choose to maintain two residences doesn't change the analysis.

If you were a business owner and not a W-2 employee, the analysis might be different.

I agree that you should not attempt to "write off" these expenses absent guidance from a well-qualified tax attorney or a formal opinion from the Pennsylvania Department of Revenue, the advice of your accountant notwithstanding.

[catchup]

Galawdag

I agree that the federal code is not ambiguous. I think it could be argued that maintaining the apt for example is a work expense. Since work expenses are deductible per pa code, one could conceive of trying to write it off on state and city taxes. I see the PA code as ambiguous, or open to interpretation, not the federal code.

I agree with your bottom line with respect to how I should proceed.

[galawdawg]

Galawdag

I agree that the federal code is not ambiguous. I think it could be argued that maintaining the apt for example is a work expense. Since work expenses are deductible per pa code, one could conceive of trying to write it off on state and city taxes. I see the PA code as ambiguous, or open to interpretation, not the federal code.

I agree with your bottom line with respect to how I should proceed.

While I am not admitted in Pennsylvania, I don't read the same ambiguity into PA code as you do. Here is what PA says about allowable Pennsylvania employee business expenses (emphasis added):

Pennsylvania Does Not Allow The Following Business Expenses, Even If Allowed for Federal Purposes:
• Personal, living, or family expenses
• Dues to fraternal organizations, professional societies, Chambers of Commerce, or recreational club memberships
• Dues and subscriptions to publications, including trade and professional publications
• Political candidate or campaign contributions
• Charitable contributions
• Commuting expenses – driving to and from work
• Cost of meals while working late, unless while traveling away from home overnight on business
• Childcare or elderly care expenses
• Life, disability income and health insurance premiums
• Contributions to deferred compensation plans or other pension plans
• Legal fees (except to recover back wages), fines, penalties and bad debts
• Bribes, kickbacks, or other illegal payments
• Job hunting or other pursuit of employment expenses
• Malpractice insurance premiums, except when allowed in Section I
• Moving expenses, except when allowed in Section V
• Educational expenses, except as allowed in Section VI
• Capital expenditures
• Expenses calculated at federal per-diem rates

www.revenue.pa.gov

But even reasonable minds can disagree about the interpretation and application of various statutes...hence the appellate courts!

[catchup]

Fair enough.
Thanks.