In today’s economy, employees may be displaced from long-held jobs. They travel to new assignments and locations as businesses cut costs. Sometimes, employees may have to choose between being laid off or reassigned. In these situations, workers have often tried to deduct business or employment travel under IRC § 162(a)(2). Usually, CPAs must tell them their travel expenses are more likely considered personal rather than business-related and therefore not deductible.

RULES FOR DEDUCTIBLE TRAVEL

Section 162(a)(2) allows a deduction for “ordinary and necessary expenses … in carrying on any trade or business, including … traveling expenses (including amounts expended for meals and lodging other than amounts which are lavish or extravagant under the circumstances) while away from home in the pursuit of a trade or business.” Congress later added that, for purposes of this provision, “the taxpayer shall not be treated as being temporarily away from home during any period of employment if such period exceeds 1 year.” In other words, even though a worker might consider a job to be temporary, unless it clearly can be expected to last a year or less, related travel expenses usually are not deductible. In Durrance v. Commissioner (TC Summary Opinion 2010-12), facts the Tax Court considered indicating a reasonable expectation that the taxpayer’s job would last at least a year, preventing deduction of travel expenses, included that the taxpayer signed a one-year lease for an apartment in the new location and the position paid an annual salary. See also Revenue Ruling 93-86.

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