March 09, 2010

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.

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