U.S. employers routinely send employees to other cities (or countries) on assignment. Business travel is often easily classified as “temporary travel” and employers can reimburse employees for travel costs tax free. When an employee is sent on a longer-term assignment or from assignment to assignment without coming back to the “home” office, or has an assignment extended, companies may not realize that reimbursement of the travel costs could be taxable compensation.
Section 162(a)(2) allows an employee or independent contractor to deduct temporary travel expenses while away from home. Employers can reimburse employees for the cost of temporary travel while away from home and can generally exclude the reimbursement from compensation income if the employee properly substantiates the expenses. The problem is that “home” as used in this section does not necessarily have the meaning typical to the word.
Read a March 2016 report [PDF 180 KB] prepared by KPMG LLP: What's News in Tax: Where, Oh Where, Did My Tax Home Go?
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