Tax Deduction for Temporary Housing Out-Of-State

by Fraser Sherman
Save your hotel bills. If you're ever audited, the IRS will want your lodging costs documented.

Moving isn't much fun, but sometimes it's tax deductible. If you spend part of the year working out-of-state, you may be able to write the costs of your temporary home on your tax return. If moving permanently to a new job requires temporary housing, that's deductible too. You can't double-dip, though, so don't claim the same expense as a moving and a business-travel deduction.

Tax Home

You only get to write off lodging when you're away from the place you call home -- your tax home, that is. Suppose you own a home in Atlanta but you work in Baltimore for six months. Legally, Atlanta's your tax home so the cost of going to Baltimore and renting rooms there is deductible. If the Baltimore gig lasts more than a year, Baltimore is your tax home until your job is up. Your lodging isn't deductible in that case.

Deduction

The IRS doesn't care whether your job is out-of-state or just out-of-town: if you're away long enough you need to sleep, your lodging is deductible. You can also take 50 percent of your meal costs, plus incidentals such as dry-cleaning, mailing or faxing things back to your home. The IRS doesn't allow "lavish" travel expenses, though there's isn't a set cut-off amount you have to fly under. Instead, the agency judges lavishness case-by-case.

Claiming the Write-Off

If you're self-employed, you deduct your out-of-state expenses on Schedule C, along with your other business costs. Don't try to push the envelope, if you want to avoid an audit. If, say, you bring your spouse with you on a job assignment, that's fine, but you can't write off her bills unless she's actually working on your business. Likewise, catching a Baltimore Orioles game isn't deductible just because you're away from home on business, unless you're doing it to entertain a client.

Moving

If you relocate permanently for a new job out-of-state, moving costs are deductible. That includes any hotels or motels you stop at along the way to your new house, and for the first night in your new tax home. After that, there's no lodging write-off. You claim moving expenses on the front of your Form 1040, as an adjustment to income. The IRS usually requires that you make the move within one year of starting your new job if you want to write it off.

About the Author

A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.

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