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?
© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.