Skip to main content

Temporary Versus Indefinite Assignment (travel deduction issues)

Question:

A missionary was sent by his home church in one state to another state two years ago to help start a church and other ministries. His church sends monthly support. Can he claim the rent and utilities for his rental house in the mission location as business (travel) expenses? He maintains a permanent residence back in the state of his home church. Also, if the housing qualifies as travel expense is there a limit to the amount he can claim, such as an amount equal to the ministry support received?

Answer:

Travel away from one's tax home is only deductible if it is on a temporary assignment. IRS Publication 463 discusses temporary versus indefinite assignments.

"If your assignment or job away from your main place of work is temporary, your tax home does not change. You are considered to be away from home for the whole period you are away from your main place of work. You can deduct your travel expenses if they otherwise qualify for deduction. Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for 1 year or less.

"However, if your assignment or job is indefinite, the location of the assignment or job becomes your new tax home and you cannot deduct your travel expenses while there. An assignment or job in a single location is considered indefinite if it is realistically expected to last for more than 1 year, whether or not it actually lasts for more than 1 year.

"If your assignment is indefinite, you must include in your income any amounts you receive from your employer for living expenses, even if they are called travel allowances and you account to your employer for them."

It seems apparent that a missionary in the situation posed in the question above certainly does not qualify for business travel deductions on his housing away from his original tax home.

Comments

Popular posts from this blog

Rental of a Church Parsonage to a Non-Minister

Question: A church owns a parsonage, but the pastor does not use it as he owns his own home. The church rents the parsonage to a tenant other than a minister or employee of the church. Will the church be responsible for paying income tax on these monies as Unrelated Business Income (filing a Form 990-T) even if the money is used to carry on the business of the church? Answer: Whether the money is used for church purposes is irrelevant.  IRS Publication 598  states: "If an exempt organization regularly carries on a trade or business not substantially related to its exempt purpose, except that it provides funds to carry out that purpose, the organization is subject to tax on its income from that unrelated trade or business." Fortunately, in the case of rental income from real property, such income is "excluded in computing unrelated business taxable income" (Publication 598). Caution: see content below regarding debt-financed property.  However, a second concern not a...

Housing Allowance and Form 1099-MISC Reporting

Question: A church provides its minister a housing allowance but believes it must report the full amount of compensation (including the non-taxable housing allowance portion) on Form 1099-MISC in order to demonstrate the full earnings of the minister. (Starting in 2020, Form 1099-MISC is replaced with Form 1099-NEC for non-employee compensation.) If the church reports his compensation, including the housing allowance, on the Form 1099-NEC as taxable income, will he be able to deduct his housing expenses somewhere else on the Form 1040? Answer: This question brings up a couple of issues. First, most ministers are properly classified as employees who receive Form W-2 , not as independent contractors who receive Form 1099-NEC . Box 1 on Form W-2 reports taxable compensation. It is reduced to reflect the church's designation of a portion of his pay as non-taxable housing. Then, in Box 14 (Other), Form W-2 typically reports as a memorandum item his additional non-taxable, housing allowa...

What you need to know about QuickBooks Desktop changes

  QuickBooks Warning for QB Desktop 2021 :   QB Desktop Pro, Premier, Enterprise, Accountant, & Mac 2021 versions are facing a service discontinuation after May 31, 2024. What this means : You can still use your desktop product but will no longer have access to QuickBooks Desktop Payroll, Desktop Payments, live technical support, Online Backup, Online Banking, and other services through QuickBooks Desktop 2021. QB will not provide security updates after June 1, 2024. The 2021 discontinuation warning is not new, but Intuit’s July 31, 2024 product announcement will change the landscape.   After July 31st – Intuit will only be offering QB Desktop Enterprise for new subscribers. The only entities who will still be able to continue to use their current desktop product’s full functionality and receive security updates will be those who have an existing active subscription by July 31, 2024.   Intuit has publicly stated, “all future innovation will happen in Quick...