business travel

[Kea]

Client is retired but is about to take on a project as a consultant (independent contractor) for 4-6 months in another state. This will most likely be his only job for the year.

I know you can take travel expenses away from your tax home when you take a job that is expected to last less than a year and does last less than a year. But if this is the only job and is in another state, does that change his tax home? He will be maintaining duplicate living expenses and his family will remain in his main home. He will also travel home every couple of weeks.

I'm pretty sure this all counts as travel, but after reading the section on tax home, I'm starting to 2nd guess myself. (been doing that a lot lately)

If he rents an apartment as opposed to staying in a hotel, does that make a difference? It should still count since it would be cheaper than staying in a hotel that long. But does IRS look at it as more "permanent" even if less than one year?

He will be based in Pennsylvania. From there, he will probably also be traveling to New York and maybe a few other places for meetings or presentations. I presume that he will need to file a Penn state return, but probably not the other states.

Thanks.

[OldJack]

You answered all your questions correctly. It would all be travel expenses as long as the expenses are reasonable.

[Kea]

Thanks so much!

[schirallicpa]

Don't forget per diems. Usually the per diem beats actual.

Use the GSA website: http://www.gsa.gov/Portal/gsa/ep/contentVi...tType=GSA_BASIC

[Kea]

Yes, you are correct. I, too, have had clients be able to claim a much higher per diem than actual meals & incidentals.

[SunTaxMan]

Everything looks good until....

"but probably not the other states"

Nexus, source income, in any of those states will generate liability for tax.

If he is "opening an office" in those states, definitely. If he is just "holding a meeting" - in a hotel, e.g., maybe not, BUT.....

If I were an agent of state revenue/tax office, I would take position that any income generated from my state, is/has been generated because of a physical presence (marketing) in my state and that equals nexus. This is NOT direct mail, or telemarketing - not even via a web site. This is PHYSICAL presence!

If the "business" form is other than a sole proprietorship, and this taxpayer is an employee of the business, that "marketing" meeting needs to be tracked in payroll for that state = nexus.

[Kea]

It's all sole proprietor. I don't know for sure yet the extent of the business that he will do in the other state(s).

I'll ask him to track hours in each location - in case it's needed.

Thanks