W2 and Per Diem


J

John

I'm getting a contract that is located 150 miles away from
my home, but in the same state. I was told that they can
only do W2 with me, no 1099 or corp to corp. Since it is a
very short contract (~8 weeks), they can not do any per diem
on top of my pay.

My question is whether I can do per diem by myself later
when filing the tax return.
 
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D

Dick Adams

John said:
I'm getting a contract that is located 150 miles away from
my home, but in the same state. I was told that they can
only do W2 with me, no 1099 or corp to corp. Since it is a
very short contract (~8 weeks), they can not do any per diem
on top of my pay.

My question is whether I can do per diem by myself later
when filing the tax return.
Appears to me to be a third-party subcontract. If that is
the case, the general contractor can partition the rate to
recognize expenses before or after the fact. The problem
is they just don't want to do it.

Estimate your expenses, multiply by .35, add that to the
contract, and tell them to pay you that, partition the
expenses, or find someone else.
 
B

Barney Bird

John said:
My question is whether I can do per diem by myself
later when filing the tax return.
The answer is yes, but not without limitations. As an
employee, your temporary living expenses must be figured on
Form 2106. The totals from Form 2106 get carried to
Schedule A as miscellaneous itemized deductions subject to
the 2% of adjusted gross income (AGI) floor. Also, if the
amount involved is large enough, and depending on other
factors, you trigger an alternative minimum tax (AMT)
liability.

Barney Byrd
(e-mail address removed)

To contact me directly, use the correct spelling of my last
name in the e-mail address above.
 
D

Dave Woods, EA

John said:
I'm getting a contract that is located 150 miles away from
my home, but in the same state. I was told that they can
only do W2 with me, no 1099 or corp to corp. Since it is a
very short contract (~8 weeks), they can not do any per diem
on top of my pay.

My question is whether I can do per diem by myself later
when filing the tax return.
Per diem for what? Any mileage getting to and from the
location is non-deductible commuting. Even if the company
paid you some sort of mileage allowance, it would be taxable
to you.

--
David M. Woods, EA
Boston, MA 02109

Postings here are general information only and not to be
relied upon as advice.
 
M

Michael T Wing CPA

EA Dave Woods said:
Any mileage getting to and from the
location is non-deductible commuting.
Isn't there a (somewhat confusing) rule that allows deductible
mileage for "commuting" to a temporary job location outside of
the "metropolitan area" where you normally live and work? 150
miles is would easily span the largest metropolitan area in my
state (Seattle-Tacoma-Everett). Might be different if you were
talking about Los Angeles, but still 150 miles is quite a
distance and would seemingly be beyond the area where you would
"normally" work.

MTW
 
D

Dave Woods, EA

Isn't there a (somewhat confusing) rule that allows deductible
mileage for "commuting" to a temporary job location outside of
the "metropolitan area" where you normally live and work? 150
miles is would easily span the largest metropolitan area in my
state (Seattle-Tacoma-Everett). Might be different if you were
talking about Los Angeles, but still 150 miles is quite a
distance and would seemingly be beyond the area where you would
"normally" work.
There is a rule for that, but in the facts given, the poster
was hired TO work in this location. A temporary work
location must be a location other than one in which you
normally work. If someone hires me tomorrow for a job in
NY, whether or not it is a temporary job, it's not a
temporary work location away from my regular location, the
temporary job IS the regular location. From Kleinrock:

Transportation expenses include the expenses of traveling
from one work place to another and of traveling between the
taxpayer's residence and a temporary work place within the
metropolitan area, provided (1) the taxpayer has one or more
regular work locations away from the taxpayer's residence,
in which case the taxpayer can deduct daily transportation
expenses incurred in going between the taxpayer's residence
and a temporary work location in the same trade or business,
regardless of the distance.

--
David M. Woods, EA
Boston, MA 02109

Postings here are general information only and not to be
relied upon as advice.
 
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D

D. Stussy

Isn't there a (somewhat confusing) rule that allows deductible
mileage for "commuting" to a temporary job location outside of
the "metropolitan area" where you normally live and work? 150
miles is would easily span the largest metropolitan area in my
state (Seattle-Tacoma-Everett). Might be different if you were
talking about Los Angeles, but still 150 miles is quite a
distance and would seemingly be beyond the area where you would
"normally" work.
The U.S. Government used a 40 mile radius, at least as of
1994 when I left them - to qualify as "travel away from
home." The temporary location could not be within 40 miles
of either the residence or the permanent duty station
(office).
 
D

Dave Woods, EA

That's the rule for travel WITHIN the metropolitan area. For
travel OUTSIDE the metro area, it is my understanding that
it IS deductible so long as the job is temporary, meaning
(for this purpose) not longer than one year. It is
apparently not necessary to simultaneously maintain a
"regular" work location inside the metro area when this
particular rule applies.

By the way, I "disagree" with this rule, but it does appear
to be on the books somewhere. The logic, I suppose, is that
you are "away from (tax) home" when traveling outside of
your normal metropolitan area.
I disagree with your assessment. If one only has one work
location, it's commuting whether the job is temporary or
not. This isn't a case of being moved to a different
location, the person was hired TO work in this place. That
the job term was finite should be irrelevant. The poster
was hired TO work a specific job at a specific location.
Whether that job is expected to last a month or a year
doesn't change the nature of commuting.

--
David M. Woods, EA
Boston, MA 02109

Postings here are general information only and not to be
relied upon as advice.
 
M

Michael T Wing CPA

EA Dave Woods said:
I disagree with your assessment.
I disagree with your disagreement. <g>

Note the following (especially item #1) from Rev Rul 99-7:

-----quote-----

HOLDING

In general, daily transportation expenses incurred in going
between a taxpayer's residence and a work location are
nondeductible commuting expenses. However, such expenses are
deductible under the circumstances described in paragraph
(1), (2), or (3) below.

(1) A taxpayer may deduct daily transportation expenses
incurred in going between the taxpayer's residence and a
temporary work location OUTSIDE the metropolitan area
where the taxpayer lives and normally works. However,
unless paragraph (2) or (3) below applies, daily
transportation expenses incurred in going between the
taxpayer's residence and a temporary work location
WITHIN that metropolitan area are nondeductible
commuting expenses. [emphasis added]

(2) If a taxpayer has one or more regular work locations
away from the taxpayer's residence, the taxpayer may
deduct daily transportation expenses incurred in going
between the taxpayer's residence and a temporary work
location in the same trade or business, regardless of
the distance. (The Service will continue not to follow
the Walker decision.)

(3) If a taxpayer's residence is the taxpayer's principal
place of business within the meaning of section
280A(c)(1)(A), the taxpayer may deduct daily
transportation expenses incurred in going between the
residence and another work location in the same trade or
business, regardless of whether the other work location
is regular or temporary and regardless of the distance.

-----end quote-----

MTW
 
D

Dave Woods, EA

Well, it's clear that the job outside of the metropolitan
area has to be "temporary." Once it is no longer temporary,
then that location apparently becomes "where the taxpayer
normally works." So, basically you get one year (assuming
the job is not "indefinite" to begin with) to work this
angle.

I don't necessarily like this rule because, like you, I view
it as essentially being "commuting." But, I guess the logic
is that if I would be able to deduct the cost of common
carrier travel (air, etc.) to an "away from home" temporary
job location, then there is no reason why I shouldn't be
able to similarly deduct the cost of auto travel.
Well I think its safe to say neither of us would feel
comfortable being a guinea pig taking that position.

--
David M. Woods, EA
Boston, MA 02109

Postings here are general information only and not to be
relied upon as advice.
 
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M

Michael T Wing CPA

EA Dave Woods said:
Well I think its safe to say neither of us would feel
comfortable being a guinea pig taking that position.
I don't know about that. <g> My main concern with be with
the vagaries of the term "metropolitan area."

MTW
 
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