When you work in a different state than the one in which you live, you could qualify for a variety of work-related tax deductions. The specific deductions you can take depend on whether you work as an employee, whether you are reimbursed for some or all of your expenses, and how far from your home you work.
In some parts of the country, it is possible to live in one state while working 10 minutes away in another state. Because of this possibility, the IRS states that travel for work purposes is the act of going outside of your normal metropolitan area. The travel that you do around your normal work area cannot be counted as part of your tax deductions, but the travel back to your home and from home to work again may be eligible if the distance is far enough.
If you travel outside of your normal work area for a temporary work assignment that isn't expected to last longer than one year, then the expenses you incur when traveling back home and from home to work again can be counted towards your deductible expenses.
If your travel expenses are not reimbursed by a client or employer, you can deduct them from your federal income tax return. If you use your own vehicle to travel for work purposes, you can take a flat rate per mile deduction or you can elect to deduct the actual expenses you incur when driving your car. Actual expenses include gasoline, repairs, oil changes, new tires, parking fees, registration and licensing. If you use your vehicle for personal and work purposes, you can only deduct the work-specific portion of the vehicle's mileage or expenses.
When you travel outside of your normal work area, there are several related travel deductions you can take on your federal income tax return. If you must stop and rest while traveling, you can deduct the cost of your lodging. If you need to eat a meal while traveling between work locations, you can deduct 50 percent of the cost of your meal. You can also deduct telephone expenses, air and cab fare if applicable, and other support services such as copy or fax machine services.
- IRS.gov: Topic 514 Employee Business Expenses
- IRS.gov: Topic 510 Business Use of Your Car
- IRS.gov: Publication 529 (2010), Miscellaneous Deductions
- Internal Revenue Service. "Topic No. 511: Business Travel Expenses." Accessed Jan. 5, 2019.
- Internal Revenue Service. "Publication 521: Moving Expenses," Pages 5-6. Accessed Jan. 5, 2020.
- Internal Revenue Service. "Publication 463: Travel, Gift, and Car Expenses," Pages 4-5.
- Internal Revenue Service. "Publication 463: Travel, Gift, and Car Expenses," Pages 6-7.
Kathy Burns-Millyard has been a professional writer since 1997. Originally specializing in business, technology, environment and health topics, Burns now focuses on home, garden and hobby interest articles. Her garden work has appeared on GardenGuides.com and other publications. She enjoys practicing Permaculture in her home garden near Tucson, Ariz.