Tax help

[Mike and Kathy]

Hi. We are work campers.  Full time.  We get paid on W-2s, but move to seasonal jobs. Can we claim the travel to assignments and site rent? On Sched C? TIA

[Kirk W]

Generally speaking the answer is no. IRS topic 511  and also Pub. 463  are what you need to consult but like most such publications, it isn't all that easy to understand and you won't find anything that actually covers your situation. In general, to be a deductible expense, the travel must be away from your tax home and for business purposes only. If you vacation while there, the expense is not deductible. 

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Generally, your tax home is the entire city or general area where your main place of business or work is located, regardless of where you maintain your family home. For example, you live with your family in Chicago but work in Milwaukee where you stay in a hotel and eat in restaurants. You return to Chicago every weekend. You may not deduct any of your travel, meals or lodging in Milwaukee because that's your tax home. Your travel on weekends to your family home in Chicago isn't for your work, so these expenses are also not deductible. If you regularly work in more than one place, your tax home is the general area where your main place of business or work is located.

In determining your main place of business, take into account the length of time you normally need to spend at each location for business purposes, the degree of business activity in each area, and the relative significance of the financial return from each area. However, the most important consideration is the length of time you spend at each location.

You can deduct travel expenses paid or incurred in connection with a temporary work assignment away from home. However, you can't deduct travel expenses paid in connection with an indefinite work assignment. Any work assignment in excess of one year is considered indefinite. Also, you may not deduct travel expenses at a work location if you realistically expect that you'll work there for more than one year, whether or not you actually work there that long. If you realistically expect to work at a temporary location for one year or less, and the expectation changes so that at some point you realistically expect to work there for more than one year, travel expenses become nondeductible when your expectation changes.

At present, very few federal tax returns are audited by a person but all of them are run through a software program that compares deductions take to what are considered norms for other people of similar circumstance. A friend who is an IRS investigator tells me that travel expenses are on of the most likely areas to trigger further investigation. 

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Travel expenses defined. For tax purposes, travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your business. An expense doesn’t have to be required to be considered necessary

I should add that my IRS friend used to say that you can claim anything you chose but the IRS determines if they will accept your claimed deductions. So what are the odds of getting audited? Very low. Less than 1% of all individual income tax returns filed for the 2020 tax year faced an audit, according to the most recent data available from the IRS. That means about 1 in 500 tax returns are audited each year, according to CBS news. 

Edited April 12 by Kirk W
add a thought

[GlennWest]

We traveled full time to jobs. We we wrote off park rent, mileage to and from job, allowed meal expense. Irs has a stand amount allowed for that area. One could keep all meal recipes but standard amount generous. Also work clothes as frc is required. One cannot deduct street clothes. Maybe more but retired now. We used TurboTax. They have all the needed forms

Edited April 12 by GlennWest

[sandsys]

3 hours ago, GlennWest said:

We traveled full time to jobs.

But, those were not work camping jobs. I'd be a little more leery of anything that could be interpreted as recreational rather than occupational. And the work may need to be full time which, I think, few work camping jobs are since most work campers want to be free to explore each area in which they camp. Lots of research to do. So many ifs!

[GlennWest]

1 hour ago, sandsys said:

But, those were not work camping jobs. I'd be a little more leery of anything that could be interpreted as recreational rather than occupational. And the work may need to be full time which, I think, few work camping jobs are since most work campers want to be free to explore each area in which they camp. Lots of research to do. So many ifs!

Well I didn't work full time. My trade was not full time. I worked when work is needed. Basically plant shut downs. For maintaince  and plant emergency. Now I had nothing to write off between jobs.

[Kirk W]

Keep in mind that with so few returns being examined, the fact that you were not challenged does not prove that everything you claimed as a deduction was acceptable under the law or the IRS rules. 

Edited April 13 by Kirk W
correct typo

[GlennWest]

Actually I was audited. Had face to face meeting, showed him my log book and he left. That was the end of it.

[2gypsies]

11 hours ago, Mike and Kathy said:

Hi. We are work campers.  Full time.  We get paid on W-2s, but move to seasonal jobs. Can we claim the travel to assignments and site rent? On Sched C? TIA

I would ask a tax guy rather than a forum!  😉

[Kirk W]

12 hours ago, 2gypsies said:

I would ask a tax guy rather than a forum!

Or read the IRS publications on the subject. And the IRS also has a lot of assistance for tax payers if you choose to use it. Like many people, I was always slow to go to them because I didn't trust them. Eventually my wife worked in an accounting office where tax returns was a major part of the business and doing so discovered that professionals use the IRS help as a primary resource.  And there is no charge for advice from the IRS.

As Glen points out, keeping records is important if you should get called in or an audit. My parents were called in because the computer flagged then for the large amount given to their church and other charities, when compared to their gross income on 2 occasions. My mother always kept detailed records, hand written into a spiral notebook with the date, amount, and recipient of the donation. They were regular supporters of things ranging from their local church, to Boy Scouts, a children's home, a local teen center, and local disaster relief efforts. The IRS examiner looked closely at her record to be sure that it was kept over the course of the year and not all created just for the interview and once he was sure that it was legitimate it was accepted as accurate. Personally kept records are almost always accepted so long as they have been kept over the year and not created during audit preparation. They are pretty good at detecting faked records, as a former coworker of mine once discovered. 

Edited April 13 by Kirk W
add a thought

[Danfreda1]

9 hours ago, 2gypsies said:

I would ask a tax guy rather than a forum!  😉

I’ve said that before. Ask the people who know for sure.