I’d like to try and crowdsource an answer to a tax question I’ve had over the years but never felt like I had a good answer to:
IRS Topic 511, Business Travel Expenses, describes qualifying expenses while travelling. It is written with a very employee-centric tone, which isn’t particularly helpful for me as a self-employed consultant who works primarily out of his own home office.
1) Is New York City “close enough” to New Jersey to consider it the same “general area” or does travelling to New York City count as valid business travel in my case?
Suppose I have a client (one of many) for whom I travel, once a week, from my home office in New Jersey to their office in New York City. Since I earn the majority of my income working out of my home office in New Jersey, I think it’s appropriate to consider New Jersey my “tax home.” But, the tax topic is worded using the phrase “general area” which is vague. How is this supposed to be interpreted?
2) What does the IRS consider an “assignment”?
Topic 511 refers to temporary and indefinite “assignments” and talks about durations less and greater than one year. For the self-employed consultant, are clients considered “assignments”? Are individual projects for a client an “assignment”? I can’t find a definition for “assignment” in the IRS Tax Glossary.
Most clients of mine are of the “indefinite” kind, ones I intend to work with for at least a year or more. Individual projects for my clients generally span anywhere from less than a single day up to several months, but never a year or more.
I think this qualifies my one-day-a-week on-site visits as “short term travel” and therefore my travel expenses are deductible, but given sufficiently loose interpretations in the IRS’s favor, it makes me nervous. How is this supposed to be interpreted?
Naturally, I can arrive at my own conclusions and interpretations of what this all means. What I’d like to know is if anyone here has dealt with the IRS with respect to these two issues, and what their official stance is.
I suppose I could try and call the IRS and try to explain this to them and get an answer, but I’m not too keen on getting a verbal one-off interpretation by some call center representative. Getting this in writing is somewhat important, for obvious reasons.