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Old 12-11-2012, 04:46 PM
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Deductable or not?

My professional job is located in city A. I own a business in city B. Every other week to once a month I travel to city B. I bring inventory, discuss business with my business partner, do book keeping, and other misc. tasks. Are my hotel and mileage charges deductible?



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Old 12-12-2012, 01:28 AM
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“Are my hotel and mileage charges deductible?”------------> Travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job. Business travel is a specific term determined by the IRS to describe travel away from your tax home that is "substantially longer than an ordinary day's work" and that requires you to sleep or rest while away from home. You must also sleep away from home to be able to deduct these costs. The travel must also be "temporary" (lasting less than a year). You can deduct expenses for lodging and meals while away from home on a business assignment. As a self employer, you must submit actual expenses for lodging(NOT per diem rate evn if per diem rate is higher then actual lodging costs ). If yiu are a sole proprietor /SMLLC,disregarded entity , I mean, you need to show these expenses in the "Expenses" section of Sch C; if yu are a partnership and MMLLC, you need to show these expenses in the "Deductions" section of Form 1065;if you are an S- or reg C corporationyou need to, show these expenses in the "Deductions" section of Form 1120/1120S. HOWEVER,if you use frequent flyer miles for air travel for a business trip, you can't deduct the cost as a business travel expense. The IRS lets you deduct automobile expenses when your vehicle is used for business reasons. Expenses can either be deducted on either an "actual expense" basis, or you can use the Standard Mileage Rate on a mileage basis where you can deduct a certain amount of money per mile. You can not use the Standard Mileage Rate if you claimed a section 179 deduction on the car (current expense instead of taking depreciation over years).; claimed the Special Depreciation Allowance on the car; claimed actual car expenses after 1997 for a car you leased. F not then you can use the std mileage rate.If you use the Standard Mileage Rate, you can deduct a certain amount of money per mile traveled. To use the Standard Mileage Rate, you must use it in the first year you use the vehicle for business use. To use the Standard Mileage Rate on a leased vehicle, you must use it for the entire lease period. You cannot deduct expenses that are lavish or extravagant or that are for personal purposes.



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Old 12-12-2012, 10:33 AM
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Thank you for your quick response.

We are indeed an S-corp. And I do spend the night in city B as I do not arrive until 8 pm - at best - to the necessary work.

The only thing I would ask for clarification on (and perhaps the main reason I posted this question) is the term "tax home". I see this mentioned in the IRS code and to me the way it is stated, leads me to believe that my "tax home" is city B not A - where I currently live and work. Am I reading this correct? Are there other options that I am not considering?



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Old 12-12-2012, 11:09 AM
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“The only thing I would ask for clarification on (and perhaps the main reason I posted this question) is the term "tax home". I see this mentioned in the IRS code and to me the way it is stated, leads me to believe that my "tax home" is city B not A - where I currently live and work. Am I reading this correct?”-------->I guess it depends on the situation; your tax home is the general area in which your biz/work is located, regardless of where you maintain yourfamily home.As long as youhave more than one place of work, you need to use some factors to determine your tax home;the total time spent at each place of biz;the degree of biz activity in each area;the relative income earned at each place of biz. As you do business in more than one location, you need to declare one of them to be your “tax home” in order to deduct travel between A and B. When you travel away from your tax home and stay overnight, you can take the deduction for all your expenses. If you don’t stay overnight, only your travel costs can be deducted, but not your meals.If you combine business and pleasure in the same trip, you can only deduct the portion of your travel expenses attributable to business. ALSO, once you determine your tax home, then,if you are on a temporary assignment to an area away from your tax home, you can deduct the living expenses that you have during the temporary assignment. In general, temporary assignment is one that is expected to last NO MORE THAN one year, so, you must determine whether your assignment is temporary or indefinite when you start work.If it is realistically expected to exceeds one year, it is considered indefinite and you can’t deduct your living expenses while there. If yu expect it to last more than one year, and it is in fact doesn’t last more than on e year, you can’t deduct the living expenses.



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