Temporary vs. Indefinite Work Assignments - Tax on Housing?

[slsu]

What is the name of your state (only U.S. law)?: New Jersey.

I work as a software consultant (employee) for a company in NJ, and am on a billable project for a client in PA.

The project is expected to last for another 2 years. We are closely approaching our 1 year on-site, and I have concerns on what becomes taxable after 12 months on a project.

Currently, I have been paying for related travel expenses (hotel, car rental, meals, gas, parking/tolls) out-of-pocket, which is billable to the client. I am later reimbursed by my company.

The primary concern is around lodging. I have been staying at a hotel for the past year, and am looking to transition into a longer-term housing situation (not relocation). My company has not offered to put me up in a corporate apt. Instead, I am looking to rent an unfurnished apt + utilties + rent furnishings. The idea is to expense out (monthly) the apt in the same manner as a hotel.

Question: It seems that the project duration would put me in the "Indefinite Work Assignment" category, which I understand has tax implications if an assignment lasts longer than 12 months. Is it a correct assumption that all related travel expenses now become taxable? For example, do hotel and meal reimbursements now become taxable?

How can this be so, if I end up paying all the expenses out-of-pocket up front?

Any prompt responses would be greatly appreciated!

 

[LdiJ]

What is the name of your state (only U.S. law)?: New Jersey.

I work as a software consultant (employee) for a company in NJ, and am on a billable project for a client in PA.

The project is expected to last for another 2 years. We are closely approaching our 1 year on-site, and I have concerns on what becomes taxable after 12 months on a project.

Currently, I have been paying for related travel expenses (hotel, car rental, meals, gas, parking/tolls) out-of-pocket, which is billable to the client. I am later reimbursed by my company.

The primary concern is around lodging. I have been staying at a hotel for the past year, and am looking to transition into a longer-term housing situation (not relocation). My company has not offered to put me up in a corporate apt. Instead, I am looking to rent an unfurnished apt + utilties + rent furnishings. The idea is to expense out (monthly) the apt in the same manner as a hotel.

Question: It seems that the project duration would put me in the "Indefinite Work Assignment" category, which I understand has tax implications if an assignment lasts longer than 12 months. Is it a correct assumption that all related travel expenses now become taxable? For example, do hotel and meal reimbursements now become taxable?

How can this be so, if I end up paying all the expenses out-of-pocket up front?

Any prompt responses would be greatly appreciated!

The whole idea of temporary vs indefinite is not that you get to deduct expenses the first year, its that you don't get to deduct expenses at all if you know that the position is indefinite.

You only get to deduct expenses on a temporary assignment. There can be some exceptions to that, but that is the general rule.

You knew from the outset that it was at least a 3 year project.