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Travel expenses for co-op students

Client is a 3d year college student at the University of Cincinnati. She does co-op work 2-4 months per year in conjunction with her architecture studies. So far, she has worked in Louisville, KY, Columbus, OH and Chicago. She has a home with her parents in Cincinnati and an apartment at the University but on each of these jobs, she has to pay her own room, board and expenses in the distant city.

On the Chicago job, she was paid as an independent contractor and it occurred to me that she could lessen the impact of the SE tax if she deducted her travel and housing expenses. If I took a 2 month temporary assignment in Chicago, I would see no reason why I could not deduct such expenses.

Likewise, she should be able to take the same expenses for her other jobs as employee business expenses subject to the 2% limit.

Does anyone see anything wrong with this? It is a temporary absence from her tax home, more than 50 miles, for the purpose of employment. It seems like all her travel, housing, meals, and local transportation should be deductible.

Uncompensated advice guaranteed correct or double your money back

Frank S. Duke, Jr. CPA Cincinnati, OH USA

Reply to
Frank S. Duke, Jr.
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She might be a transient worker and her travel expenses might not be deductible. This was being discussed in the recent thread "Employee expenses". The IRS publication is 463 and they say

If you do not have a regular or main place of business or post of duty and there is no place where you regularly live, you are considered an itinerant (a transient) and your tax home is wherever you work. As an itinerant, you cannot claim a travel expense deduction because you are never considered to be traveling away from home.

So I think the key is whether she has a home office. But see "Factors used to determine tax home" in the same link above.

She was paid as a W2 employee in the other jobs?

Seems to be she might be a transient worker. However, I wonder if she could describe herself as moving from place to place, and so claiming a moving expense deduction (food is not allowed). However, she returns to her primary residential home, so this probably would not work.

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removeps-groups

With the usual caveat that without seeing all the documentation you can't really rely on this - this is likely what I would do.

I saw another response that suggested that she may be a transient worker and I disagree with that assessment. IMNHO, her tax home, especially if her parents are claiming her, is her tax home. And should they not be claiming her then I'd say her tax home is at the University where she intends to return after these temporary assignments.

Don't forget all the state returns too!

Gene E. Utterback, EA, RFC, ABA

Reply to
Gene E. Utterback, EA, RFC, AB

messagenews:C5DF9B70.125CA% snipped-for-privacy@one.net...

I am in the same situation as the client discussed in this post. I just want to ask some questions to further my understanding of this topic. I am an engineering student. And it says that we don't rationalize things the right way when it comes to legal/financial issues.

Let's assume that her tax home is her parents house. Is it sufficient that her parents claim her to make her parents' home her tax home? Under the conventional definition of tax home in publication 463, the tax home is where she conducts her regular business. If she has no place of business she has to satisfy at least 2 of the 3 conditions listed.

1) perform part of her regular business in her tax home 2) duplicate living expenses 3) have not abandoned the area of her main home

As a student, I don't think she performs a regular business around her parents home. She also wouldn't have duplicate living expenses (similar to the itinerant worker that lives with his sister used in example 2 in pub 463).

Now, what would happen if her main tax home is considered to be the university? Unless being a student constitutes a regular business. She might not qualify for the standard definition. For the second definition of tax home, the only way I envision her qualifying is if she kept paying rent and utilities while she was gone for the internship to qualify for duplicate living expenses.

Like I said, I am in the same situation as above, the only difference is that nobody can claim me. I also put all of my stuff in a storage while I was away for the internship (would this qualify as duplicate living expense?). I have a job at the university (research assistant at least 1/2 time). However, supposedly, its purpose is to further my education. So I am not sure if it count as a regular business. Also, I can demonstrate my attachment to my local tax home while I was away. I spent a substantive amount of money for flying back and forth. and spent a substantive amount of money to move back and forth for the internship purpose.

Thanks for your help.

Reply to
forcamoro

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