Expenses for living away due to job

[bisjoe]

What is the name of your state? Washington

I am considering a two year temporary job in the Bay Area, Califonia, and live in the Seattle area. If I accept it I will have to spend at least $800-1000/mo for a small apartment, and air fares to see my family some weekends. Moving the whole family for two years is not an option.

The job pays just over $100k but I would also have to pay CA state income taxes (there's none in WA) and the rent and travel would drastically cut into my income. I realize that some moving expenses are deductible, but what about these recurring expenses of rent and travel required by my acceptance of this position?

 

[BelizeBreeze]

What is the name of your state? Washington

I am considering a two year temporary job in the Bay Area, Califonia, and live in the Seattle area. If I accept it I will have to spend at least $800-1000/mo for a small apartment, and air fares to see my family some weekends. Moving the whole family for two years is not an option.

The job pays just over $100k but I would also have to pay CA state income taxes (there's none in WA) and the rent and travel would drastically cut into my income. I realize that some moving expenses are deductible, but what about these recurring expenses of rent and travel required by my acceptance of this position?

Take ye to a tax accountant now. I began my career in Seattle while living in Wasserburg, Germany and was able to write-off more than $4,000 a month

 

[LdiJ]

What is the name of your state? Washington

I am considering a two year temporary job in the Bay Area, Califonia, and live in the Seattle area. If I accept it I will have to spend at least $800-1000/mo for a small apartment, and air fares to see my family some weekends. Moving the whole family for two years is not an option.

The job pays just over $100k but I would also have to pay CA state income taxes (there's none in WA) and the rent and travel would drastically cut into my income. I realize that some moving expenses are deductible, but what about these recurring expenses of rent and travel required by my acceptance of this position?

Before you accept the position you need to think through the finances very carefully.

First, I suspect that you are being a bit optimistic regarding how much its going to cost you to live in the Bay area. I suspect its going to cost more than you anticipate. I doubt that utilities and general living expenses are included in your figures. Then you need to add in the CA state taxes, plus the travel.

Even if you are able to write off some of the re-occurring expenses...the value of that write off is only 25% of the total.

Therefore, you need to be sure that the job would actually end up giving you a net benefit.

 

[bisjoe]

Thanks.

Perhaps I should give more info. I am aware of the higher cost of living there, as I actually worked for the same employer there until 1993 when we moved here. When we left we sold a 50 year old 1100 SF house for 190k and for the same price bought a newer one with 3,000 sf here. That's why I would never consider selling my house and moving there for just two years. I also do have friends and family where I could live there rent-free, but would rather not do that. From my research on housing, not needing more than a studio apartment, and flying back once a month, if I didn't get any tax break at all I would still have an increase of 30% in income. There's also full benefits worth another 30%, plus there will no doubt be overtime which could help with additional trips. My main reason for considering this is that it is a computer system replacement, I worked on the original system back in the late 80's early '90s and would like the chance to work on the replacement.

If as you suggest there could be a write-off of 25% of the rent alone, that would amount to less than $4,000/year deduction, probably not help significantly. I will talk to a tax accountant to find out for sure, but with the income tax there at about 9%, no guarantee of overtime, and being away froim my family, I really do have a lot of thinking to do.

 

[BelizeBreeze]

Motel 6 and trains to and from the FInancial District $1,400 a month

 

[LdiJ]

Thanks.

Perhaps I should give more info. I am aware of the higher cost of living there, as I actually worked for the same employer there until 1993 when we moved here. When we left we sold a 50 year old 1100 SF house for 190k and for the same price bought a newer one with 3,000 sf here. That's why I would never consider selling my house and moving there for just two years. I also do have friends and family where I could live there rent-free, but would rather not do that. From my research on housing, not needing more than a studio apartment, and flying back once a month, if I didn't get any tax break at all I would still have an increase of 30% in income. There's also full benefits worth another 30%, plus there will no doubt be overtime which could help with additional trips. My main reason for considering this is that it is a computer system replacement, I worked on the original system back in the late 80's early '90s and would like the chance to work on the replacement.

If as you suggest there could be a write-off of 25% of the rent alone, that would amount to less than $4,000/year deduction, probably not help significantly. I will talk to a tax accountant to find out for sure, but with the income tax there at about 9%, no guarantee of overtime, and being away froim my family, I really do have a lot of thinking to do.

Actually, I am not suggesting that you can write off anything. In fact, I am pretty sure that you can't. I don't know how BB did it....but this is a voluntary decision to live apart from your family and I honestly don't think that TODAY....you could deduct anything. The time frame of the job is too long. If it was 3 months and you were going to lose your job if you didn't take the temporary relocation....then it would be different......however a two year stint is an entirely different story.

There are some industries where that is possible.....but its very specific to industries where not only is the job gone after a period of time....but the company is gone from the area as well....and generally in those industries the employer bears at least part of the cost of the temporary relocation. Laying fiber optic cable line is an example of that kind of industry.

Its also possible if you are a contractor rather than an employee....but then you would be dealing with the additional cost of self-employment taxes.

You also misunderstood me to some extent on the issue of 25%. Let me be clearer.

If you make 100k and you get to deduct 25k from that for tax purposes....that only saves you 25% of the 25k. Because your marginal tax rate at 100k is 25%. The other 75% is still out of pocket cost to you. Many people think that if its tax deductible, it doesn't really cost them anything....which isn't true.

 

[BelizeBreeze]

Actually, I am not suggesting that you can write off anything. In fact, I am pretty sure that you can't. I don't know how BB did it....

I consulted and hired a tax attorney. That's how.

 

[bisjoe]

Ok, it sounds like I may be able, with the help of a tax attorney be able to deduct some but won't know how much without further help. I have contacted one, and am awaiting his response. I found that by living in the Castro Valley area near the BARTD station if I can get a small studio there are some available for $7-800/mo, and train fare is $2.65 to downtown Oakland where the job is, total about $100/mo. As for my family my oldest has already moved out, the younger two will both be in college, and my wife works at a school so could come down for many weeks during the summers. Yes, it would be a personal sacrifice. I wish I could do it as a consultant since I do already have a business which during the 2 year period is likely to help my tax situation with losses without my being there.

 

[BelizeBreeze]

Ok, it sounds like I may be able, with the help of a tax attorney be able to deduct some but won't know how much without further help. I have contacted one, and am awaiting his response. I found that by living in the Castro Valley area near the BARTD station if I can get a small studio there are some available for $7-800/mo, and train fare is $2.65 to downtown Oakland where the job is, total about $100/mo. As for my family my oldest has already moved out, the younger two will both be in college, and my wife works at a school so could come down for many weeks during the summers. Yes, it would be a personal sacrifice. I wish I could do it as a consultant since I do already have a business which during the 2 year period is likely to help my tax situation with losses without my being there.

Get the monthly card.... (that's a hint)

 

[Snipes5]

This is not considered a temporary job by the IRS. If it is more than a year, and you KNOW that it will be more than a year, you can't deduct your travel, liviing expenses, per diem, nothing. Let me repeat that. NOTHING. Even if you hire a tax accountant.

Move the family to CA, rent out your house, and move back in two years. That's a much better option.

Snipes

 

[bisjoe]

This is not considered a temporary job by the IRS. If it is more than a year, and you KNOW that it will be more than a year, you can't deduct your travel, liviing expenses, per diem, nothing. Let me repeat that. NOTHING. Even if you hire a tax accountant.

Move the family to CA, rent out your house, and move back in two years. That's a much better option.

Snipes

Right, that's what I got from my tax guy when he finally answered me. Moving the family is not an option, my wife has a full time job here and 2 kids in college here in fall, plus for the $ I couldn't afford the housing there for more than a small apt. My decision is to pass on it, if they end up needing my help badbly enough they will have to pay me as a consultant not an employee at a higher hourly rate.

 

[LdiJ]

This is not considered a temporary job by the IRS. If it is more than a year, and you KNOW that it will be more than a year, you can't deduct your travel, liviing expenses, per diem, nothing. Let me repeat that. NOTHING. Even if you hire a tax accountant.

Move the family to CA, rent out your house, and move back in two years. That's a much better option.

Snipes

I am glad that you responded Snipes. I didn't think that he could deduct anything and I was hoping you would chime in and back that up.