Mileage Deduction for 1099 Contactor

[TAXMAN]

Ok after reading all this. Question is: tp is a partime ref. All his games are 75 to 400 miles away. Does not do local games. Is paid on a 1099 from the basketball association, not from any school or person. Some mileage is reinbursed by the association. Sometimes he calls a game on Friday and stays to call a game on Sat. Makes on average 4k to 6k per year. Are we saying that without OIH tp mileage may NOT be deductible?

[Jack from Ohio]

Ok after reading all this. Question is: tp is a partime ref. All his games are 75 to 400 miles away. Does not do local games. Is paid on a 1099 from the basketball association, not from any school or person. Some mileage is reinbursed by the association. Sometimes he calls a game on Friday and stays to call a game on Sat. Makes on average 4k to 6k per year. Are we saying that without OIH tp mileage may NOT be deductible?

Since being a ref is not a full time job, does not require an office in the home, and he does not have an office in the home, then you are correct. Commuting miles and not deductible.

[Mr. Pencil]

All his games are 75 to 400 miles away. Does not do local games.

Although it is not commute in the ordinary sense, it is probably not deductible travel either. Read about Tax Home in Pub 463. The basic issue is whether he has a regular or main work location. That is his tax home even if it is 400 miles away from his residence.

If he doesn't have a main work location, his residence MIGHT be the tax home if he regularly works nearby, but I don't think the facts-and-circumstances rule goes so far as to allow travel for a part-time second job. That would be an interesting question to research or take to Tax Court.

[Janitor Bob]

Topics such as this are what I love about taxes....these ideas/situations that are so interesting to think about and get views from different perspectives from other preparers....Love it.

[BulldogTom]

Again, I am mostly on board with Mr. Pencil. But I am a little more aggressive on the "out of area" exception. This is a very grey area in the tax law. You can deduct your travel out of the area that you normally work. What that means is not exactly clear in the code or rulings. It is a facts and circumstances. In the example above, I would say that any travel that requires an overnight stay is pretty safe to take (remember, this is the tax law according to Tom, not uncle sam, we are talking facts and circumstances). Then you get into the 400 range. I would think that is outside of the normal work area. 75 miles seems to be an hour and a half drive, not so much a safe bet. The distances in between, who knows, it is facts and circumstances as to whether the client is working out of his normal work area. Other factors would have to be taken into consideration.

Tom

Hollister, CA

[TAXMAN]

TP has full time job 12 miles from home (w-2). TP gets schedule of games to call in normally Oct and runs thru the march madnes. If tp does not keep certification current he is not allowed to call games. Could this be considered temporary?

[Mr. Pencil]

I am a little more aggressive on the "out of area" exception. This is a very grey area in the tax law. You can deduct your travel out of the area that you normally work. What that means is not exactly clear in the code or rulings.

It is not all that gray. Pub 463 says, "You are traveling away from home if your duties require you to be away from the general area of your tax home (defined later) substantially longer than an ordinary day's work, and you need to sleep or rest to meet the demands of your work while away from home."

That's been whittled down a bit so it does not necessarily require an overnight, but it takes more than just a dinner break. There are some famous court cases about traveling nurses and airline crews--hardly anyone wins on this issue. But it remains a popular position amongst our colleagues.

[kcjenkins]

I'd say that any travel THAT WAS REIMBURSED would be deductible to offset the reimbursement, the rest would not be. Which I'm guessing is the trips requiring the overnight stays. The rule for an itinerant may apply here.

[Medlin Software, Dennis]

Programmer by day, baseball official for avocation.

http://www.naso.org/Resources/TaxTips/Expenses.aspx

http://www.naso.org/Portals/0/TravelExpenseConsiderations.pdf

No home office, no transportation deduction when leaving from home.

If one leaves their primary location/job for a second location, you can deduct transportation expenses.

The only time I do not leave my first job for my avocation is for training meetings, although that is changing after reviewing this information...

[BulldogTom]

Programmer by day, baseball official for avocation.

http://www.naso.org/Resources/TaxTips/Expenses.aspx

http://www.naso.org/Portals/0/TravelExpenseConsiderations.pdf

No home office, no transportation deduction when leaving from home.

If one leaves their primary location/job for a second location, you can deduct transportation expenses.

The only time I do not leave my first job for my avocation is for training meetings, although that is changing after reviewing this information...

Nice plain english interpretation of the rules. Thanks for posting it.

Tom

Hollister, CA

[MAMalody]

A different slant. Would you consider the mileage deductible if he had a qualifying office in the home, however, chose not to deduct the office in the home?

[Mr. Pencil]

Would you consider the mileage deductible if he had a qualifying office in the home, however, chose not to deduct the office in the home?

No, I don't play games like that. It's plain illegal for an EIC recipient, and in any case I will only prepare a return that completely and accurately reports taxable income to the best of my knowledge.

"Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge."

[MAMalody]

Hmmm. The OP did not talk about EIC, as I recall. Your point is well taken about complete and accurate tax return. I have been accused about every year of "auding" the tax return instead of just preparing it (usually a new cleint). My response has normally been, would you prefer that I audit it or the IRS, and then I usually show them the statement you have indicated. As an IRS auditor I did have a QP list that I paid attention to.

[DANRVAN]

Ok after reading all this. Question is: tp is a partime ref. All his games are 75 to 400 miles away. Does not do local games. Is paid on a 1099 from the basketball association, not from any school or person. Some mileage is reinbursed by the association. Sometimes he calls a game on Friday and stays to call a game on Sat. Makes on average 4k to 6k per year. Are we saying that without OIH tp mileage may NOT be deductible?

The distance factor might change things and the issue goes beyond local commuting. I have seen reference to this situation before where a second job/business is conducted away from your tax home. Your tax home is the general area where you do most of your work or business.

More research needed.

[MAMalody]

Back to the question that Mr Pencil chose not to answer. <<<Would you consider the mileage deductible if he had a qualifying office in the home, however, chose not to deduct the office in the home?>>> In looking at the question I can see where my wording could have been better. I should have said "would you consider the mileage deductible if a person had a qualifying office in the home, howver, he could not deduct it." There are two obvious cases where a person can qualify for office in the home and yet will not take it. Case one is an employee who is not able to itemize his deductions or his misc. deduct does not exceed the haircut. Case two is a pastor, where all their housing expenses are covered by their housing allowances. Sorry for changing the question a little, or upsetting Mr Pencil.

[Mr. Pencil]

the question that Mr Pencil chose not to answer.

Gee, I felt that I had answered the question when the very first thing I said was, quote, "No." Apparently some readers missed it, so let me repeat my answer. No.

However, on further reflection of danrvan's savvy post, I have changed a different part of my opinion. This thread has two issues. Local transportation is commute unless there is a qualified home office or other initial job site. But a person can only have one tax home. So if the weekday job involves more time and income, the weekend job might have deductible travel expenses if it requires substantial overnight or comparable rest away from the tax home of the main job.

[Lion EA]

Thank you, Pencil. I had just asked myself if a taxpayer has a tax home for each job or only his primary job, or even if he can have a tax home for one job but be an itinerant worker for a second job. Your answer sounds logical, but the law doesn't have to be logical. Do you have a cite for that? I want to file that info.

[Mr. Pencil]

Do you have a cite for that?

It was danrvan, not me, who said there is a reference. There is some guidance in Pub 463 and elsewhere about multiple job locations, but they don't really address separate jobs as such. So I think it's reasonable to assume there is not a different rule for that. Whatever the main job location is, that's the tax home.

What are the implications of that? Can a taxpayer even have a qualified home office for a second job? I'd say the same thing--a taxpayer can only have one principal place of business.

[kcjenkins]

That's right,a taxpayer can only have one principal place of business, because that's what "principle" means in this context. Actually, Pub 463 uses "main", rather than "principle", but it's the same thing, only one can be "main".

[easytax]

Ok --- I need a lot of help here ----

Taxpayer makes widgets at home (does taxes, vet, sews, does consultation, what ever) --- garage, kitchen table, whatever --- has full time job besides. Sales widgets at fairs, shows, etc. but business is from home. Leaves where "business" is to do off site things, etc.; but "business" location is home/apartment, etc..

Now, taxpayer can not take home office deduction because they have no "specific use - 100% area" but does the administrative work, billing planning, books, arranging, etc. at sometimes kitchen table, sometimes den, etc..

From what I understand from what is stated here ---- Because taxpayer has a day job, taxpayer CAN NOT have a valid business??? ///Can a taxpayer even have a qualified home office for a second job? I'd say the same thing--a taxpayer can only have one principal place of business. ///. Are they NOT two separate businesses and maybe concepts.

Granted the mileage from day job to "fair/show" would be business BUT what about say weekends --- from home (where there is no "official" home office) to that same fair/show ---- it is one trip (not home-job-show, etc.) and that mileage would be deductible SINCE taxpayer is going from "business" (taxpayer does admin., production, sales, etc. to a show/fair/client/customer, etc. and back to "business". Taxpayer is doing this to have profit (hobby,etc. not in discussion), so valid business deductions are allowed ---- including mileage, etc.

Maybe I am getting "business" and "job" mixed up ---- although can not a referee be in the business of officiating???

The IRS tried to say the 2 out of 5 years needed to be profitable but the court (no, I do not have the cite BUT it was BIG news years ago) clarified that all a taxpayer needed was a profit motive/intent so if businesses can survive without a profit ---- as long as they are looking to be profitable (eventually) the 2 out of 5 looses out.

I know several people who run their "businesses" when they get up ---- go to a "day job" and run their "businesses when they come back ---- all without having an "official" home office because they do NOT meet the "only space test, etc." --- but they conduct business from their locations, etc.

[MAMalody]

You can have a day job and a side business. If the business use of the home is the principal place of business for the side business you are okay. It will still qualify if you use it exclusively and regularly for administrative or management activies and you have no other location where you would conduct substantial administrative or management activities of this side business.

[easytax]

You can have a day job and a side business. If the business use of the home is the principal place of business for the side business you are okay. It will still qualify if you use it exclusively and regularly for administrative or management activies and you have no other location where you would conduct substantial administrative or management activities of this side business.

THANKS !

I was starting to believe I was MORE confused than I knew.

Editing as the wording "exclusively" lends a question to the --- administration and/or management done from say a kitchen table or a couch in a living room, etc. ---- the space is not "exclusively" used for the business per say BUT that is where business is conducted, etc.

As time and strength, will look for some pubs, etc. to support.

Also --- (if we talk absolutes) most business places do not "exclusively" use the business premises for business - staff -- party, sleep, "hook-up", eat, any number of things that might NOT be business use --- but are they denied the "business" use? ------- It just might come down to how big a hammer the "business" owners, etc. have ---- but the "little guy" (would "little person be more PC?) has the harder road with the BIG BAD IRS, etc.

Going to sleep now --- rambling once more .........

[Mr. Pencil]

If the business use of the home is the principal place of business for the side business you are okay. It will still qualify if you use it exclusively and regularly for administrative or management activies and you have no other location where you would conduct substantial administrative or management activities of this side business.

Here is my challenge. Give me ONE single reference--any code or reg section, any IRS ruling or pub or notice, any court decision, any tax guide like CCH or even a rumor rag like Kiplinger--ANY published tax adviser who agrees that one taxpayer can have two principal places of business.

[jklcpa]

You can have a day job and a side business. If the business use of the home is the principal place of business for the side business you are okay. It will still qualify if you use it exclusively and regularly for administrative or management activies and you have no other location where you would conduct substantial administrative or management activities of this side business.

Here is my challenge. Give me ONE reference. ANY code or reg section, any IRS ruling or pub or notice, any court decision, any tax guide like CCH or even a rumor rag like Kiplinger--ANY published tax adviser who agrees that one taxpayer can have two principal places of business.

From Pub 587 - Business Use of Your Home. Specifically see the example.

More Than One Trade or Business

The same home office can be the principal place of business for two or more separate business activities. Whether your home office is the principal place of business for more than one business activity must be determined separately for each of your trade or business activities. You must use the home office exclusively and regularly for one or more of the following purposes.

• As the principal place of business for one or more of your trades or businesses.
• As a place to meet or deal with patients, clients, or customers in the normal course of one or more of your trades or businesses.
• If your home office is a separate structure, in connection with one or more of your trades or businesses.

You can use your home office for more than one business activity, but you cannot use it for any nonbusiness (i.e., personal) activities.

If you are an employee, any use of the home office in connection with your employment must be for the convenience of your employer. See Rental to employer , later, if you rent part of your home to your employer.

Example.

Tracy White is employed as a teacher. Her principal place of work is the school, which provides her office space to do her school work. She also has a mail order jewelry business. All her work in the jewelry business is done in her home office and the office is used exclusively for that business. If she meets all the other tests, she can deduct expenses for the business use of her home for the jewelry business.

If Tracy also uses the office for work related to her teaching, she must meet the exclusive use test for both businesses to qualify for the deduction. As an employee, Tracy must also meet the convenience-of-the-employer test to qualify for the deduction. She does not meet this test for her work as a teacher, so she cannot claim a deduction for the business use of her home for either activity.

[Mr. Pencil]

From Pub 587

Thank you. Finally we get something real in this thread.