Travel and Moving Expenses

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Do you travel for business reasons—say, to see clients or customers or to attend conferences? Moving because of a job change? Travel to obtain medical care from doctors and hospitals or perform volunteer services on behalf of charitable organizations like religious institutions and schools? When Form 1040 time rolls around, lots of perfectly legal travel write-offs are available—but only for those who are aware of them and how to cash in on them. “Julian Block’s Tax Deductible Travel and Moving Expenses” is an indispensable reference that offers clear, concise, uncomplicated and immediately useful advice on how to get the biggest deductions possible, without running afoul of the Internal Revenue Service

Reviews for previous editions:

James E. Maule, a professor at Villanova University School of Law and Graduate Tax Program, blogs on taxes. Below are his takes on the book.

Julian Block’s Return Trip to the World of Travel and Moving
About two years ago, in Julian Block: On The Road Again, I shared my reactions to Julian Block’s “Tax Deductible Travel and Moving Expenses: How To Take Advantage Of Every Tax Break The Law Allows!” To borrow a once-overused phrase, “He’s back!” He’s back with a new edition, slightly renamed as “Tax Tips for Travel and Moving Expenses: How to Take Advantage of Every Tax Break the Law Allows.” The exclamation point is gone. I don’t think that suggests Julian has lost enthusiasm for the topic, because he once again has produced a tax guide that, like its predecessor, is “no less concise, readable, and helpful.”

This time around, Julian begins his journey with an introduction that emphasizes the need for taxpayers to avoid paying taxes that they do not owe, the wisdom of structuring decisions and keeping records in ways that minimize the chances of overpaying taxes, and the woeful pervasiveness of tax ignorance among American taxpayers. These observations could serve as an introduction to just about any tax book.

Julian begins his substantive discussion by explaining standard mileage rates, making certain to differentiate between those that apply to business trips, those that apply to medical travel, and those that apply to travel undertaken on behalf of a charity. He mixes in tips, such as the warning to keep track of tolls and parking fees because those are not built into the standard mileage rates.

He then turns to moving expenses. He delineates the distance test and the time test, explains how these apply differently to employees and self-employed persons, gives examples, notes how the rules apply to a person heading off at a distance for his or her first job. Because most moving expenses are incurred in connection with a new job, Julian reviews the principles applicable to the deduction of job search expenses. He gives examples of what types of expenses would be deductible, and the conditions under which they would qualify.

Returning to travel expenses, Julian considers those incurred by investors, the difficulty of identifying a person’s tax home for purposes of computing deductions for travel away from home, and the consequences of taking a spouse along for a business trip. He provides advice on being prepared for possible audits by keeping good records, and on what to do if a mistake in an already-filed return is discovered.

Commuting expense deductions get detailed treatment, though for most taxpayers the opportunities to deduct local transportation expenses is quite limited. On the other hand, transportation expenses of going from one work location to another work location do qualify, and Julian analyzes the scope of and limitations on these deductions.

Vehicle expense deductions have long been an area of controversy, taxpayer error, and confusion, and so it is not surprising that Julian focuses on these issues in depth. He explains the difference between using actual expenses and the standard mileage rates. He discusses how having a home office affects the analysis. Again, he emphasizes good record keeping. In a twist rarely discussed, Julian explains the tax considerations affecting the decision on whether to put a vehicle in a child’s name or to let a child use a vehicle titled in the parent’s name. One factor to be considered is the deduction for casualty losses, which Julian explains so that the titling question can be understood.

Another form of travel expenses that trigger trouble for taxpayers is the so-called educational travel expense. After explaining how some education expenses, though not travel costs, might justify a deduction or credit, Julian explains why it is no longer possible to deduct travel expenses on the theory that the travel itself is educational.

Under certain circumstances, a travel or transportation expense qualifies for the charitable contribution deduction. Julian’s book includes a discussion of when this sort of travel so qualifies, the requirements that must be satisfied, and the limitations that apply. The discussion includes explanations of other charitable-related expenses that are not travel or transportation expenses, as well as the ins-and-outs of travel away from home overnight on behalf of a charity, including the rules designed to prevent deductions for disguised vacations. Though the issue is factual, the taxpayer must have responsibilities to do things that benefit the charity, but the deduction is not lost simply because the taxpayer enjoys performing these tasks for the charity. Julian includes a wonderful quote from a Tax Court case, that “suffering has never been made a prerequisite to deductibility.”

When taxpayers must travel in order to obtain medical treatment for themselves or their dependents, the expenses, including meals and lodging costs, can qualify for the medical expense deduction. The rules are complicated, and Julian goes through the various requirements. He provides a list of different travel situations in which the IRS and the courts have allowed deductions. He also points out situations that don’t qualify, such as the cost of making a religious pilgrimage to seek a miracle cure.

Julian’s book includes a series of questions and answers, with the questions reflecting the sort of situations in which taxpayers often find themselves. Julian’s answers are like the rest of his book. They read as though someone recorded a conversation between Julian and a taxpayer in his office, in the taxpayer’s living room, or in a quiet restaurant. His style is, as I’ve mentioned in the past, folksy. He is down-to-earth. He doesn’t overwhelm the reader with technical terminology, complex sentences, abstract theory, or convoluted explanations. This makes his book, like his others, valuable for the taxpayer who wants to understand what’s going on when using tax software, or what needs to be collected and brought to the tax return preparer.

Julian Block: On the Road Again
Like every traveler filled with wanderlust, Julian Block the tax author cannot sit still. He took a look at one of his books and decided it was time for revamping it. Four years ago, he gave us “Travel and Moving Expenses.” Now he’s back with a new edition, “Tax Deductible Travel and Moving Expenses.” Four years is a long time in tax law. Things change. Julian chauffeurs us through all sorts of tax issues involving travel and moving.

Readers of Mauled Again know that Julian is a veteran at this. In previous posts, I have taken a look at several of his books. His latest journey through the tax law is no less concise, readable, and helpful.

The tour begins with a general overview, in which Julian lays the groundwork for what he is doing by explaining “The Basic Rules” and mapping out why he needs to do this in “Most Americans Don’t Understand Basic Tax Terms.” How unfortunately true. When he suggests that too many Americans don’t understand AGI, AMT, standard deduction amounts, and tax credits, he’s right. As with many things on life’s highways, once understood it seems simple but until the light bulb goes on, the challenge appears insurmountable. Julian’s explanation is much like the light switch. It’s there, but it takes an effort to turn it.

After mapping out the rest of the book, Julian turns to strategies that affect all of the deductions he addresses. He shares information about filing status, timing, and “red flags for audit.” His tips for dealing with automobile and travel expense audits will smooth the ride for taxpayers who didn’t quite pay attention earlier when filing returns or even earlier when engaging in transactions. Thus, his tips for “Correcting Past Mistakes” come in handy for those who made a wrong turn during tax return preparation time.

The next stop is the commuting issue. The classic “commuting expenses are not deductible” axiom meets the case of the “Commuting Cops” and one of my favorite cases that I have my students read, Margaret Green v. Comr., involving the professional blood seller, which gave the world the classic explanation, “Unique to this situation, the taxpayer was the container in which her product was transported to market.” Travel between job sites and the hauling of tools and equipment get their proper due.

Automobile expenses may be one of the more confusing, erroneously applied, and audit attracting deductions in the tax world. Both the actual expense method and the standard mileage rate method are examined, along with the impact of home office use. Julian brings not only tax law, in the form of casualty and disaster losses, but also insurance premium computations and liability exposure, into the picture when he discusses the best way to handle the title for a child’s first car.

Another bumpy road on the travel expense circuit is the question of whether the expenses of a spouse who accompanies the taxpayer on a business trip are deductible. One might expect a simple answer, but the analysis of this part of tax law resembles more a detour with missing signs than the wide open road of a lightly-traveled interstate highway. Julian shepherds the reader through this aspect spousal teamwork before turning to the similarly thorny issue arising when spouses work in different cities.

What about travel to and from locations where business-related education takes place? Or travel that in and of itself is educational? Or travel undertaken to find employment? Or travel on behalf of a charity? Or travel in order to obtain medical care? Or travel to attend investment seminars and shareholders’ meetings. What’s deductible? What’s not? Julian explains these rules in ways that are easily understood by someone who is not a tax professional and hasn’t had the benefit of sitting through a tax course. To those of us who have been in tax courses, as students or teachers, or who have prepared tax returns, those questions are familiar ones. Julian then tosses in one to which I’ve not previously given any thought. Are gamblers permitted to deduct the cost of traveling to the places where they are trying to make money? Curious? The answer is in the book.

Julian shifts gears at this point, turning to the moving expense deduction. He explains the distance test, the time test, the definition of tax home, and the classification of the various expenses paid when moving from one house to another. His list of what is not a moving expense is a valuable checklist.

The book concludes with several questions and answers about travel and moving expense deductions. All in all, Julian has maintained his usual folksy and effective style, and has delivered another book useful, as I noted in Tax Travels and Tax Moves: Book It with Block, not only to “students who are trying to go further into tax law than time permits their course instructors to take them,” but also “taxpayers and tax return preparers who need to learn or refresh their understanding of these two very specific areas of tax law.”

Tax Travels and Tax Moves: Book It with Block 

Julian Block has added another title to his expanding list of tax books that permit a tax novice or someone not educated in tax law to grasp a discrete topic while working through a text of manageable size.

Summer 2007 brings Julian’s latest work, “Travel and Moving Expenses.” Off I go on a trip, and out comes Julian with a book about the tax implications. How nice. Now perhaps if I could deduct the cost, but that’s not going to happen, and if I had any inclination to think that it would, and I don’t, Julian’s book would have steered me away from running aground with a bad tax return.

Julian’s book is helpful not only because it showed up with coincidental timing and with good advice for me, but also because it takes the reader through what can best be described as a maze of tax law dead-ends, roundabouts, detours, and temporary roadblocks. Moving from the theoretical statement that travel expenses paid or incurred in carrying on a trade or business or the principle that moving expenses are deductible to the practical task of applying those concepts to a taxpayer’s bundle of receipts and business records is about as daunting as finding one’s way around Europe without a GPS. Julian’s book is a nice, entry-level GPS for those trying to navigate the travel and moving expense deductions.

Julian begins in the same place I do when I teach these topics, specifically, the rule that commuting expenses are not deductible, unless one of several exceptions applies. He takes the reader on a tour of cases and rulings in which taxpayers have and have not docked their specific circumstances within the safe harbor of the tools exception and the “between jobs” exception. Drifting beyond what I have time to cover in the basic course, he takes readers on a tour of the restrictions applicable to the expenses of having one’s spouse come along for the ride, so to speak. He explores the challenges faced by spouses who work in different cities, once a rare concern but now a situation faced by increasing numbers of couples. Julian closes out the travel expense section of the book by reminding all of us, myself included, that deductions are not allowed for the cost of travel that is in and of itself educational, in contrast to travel that is deductible because it transports the taxpayer to a place where the taxpayer takes courses the cost of which qualify for the education expense deduction. This is a subtle distinction that often derails students dealing with these issues for the first time.

With respect to moving expenses, Julian takes the reader on a path that leads from the distance test, through direct costs of moving household items and expenses of travel to the new location, past the time test and the closely-related test, and to the cul-de-sac of nondeductible moving expenses. He outlines the paperwork that the taxpayer needs to prepare and maintain. He describes how taxpayers can accelerate the tax savings from the deduction by adjusting withholding so they are taking home more money each pay period rather than waiting for a larger refund the following spring.

Julian then devotes a chapter to travel expenses that qualify for the charitable contribution deduction, another chapter to those that qualify for the medical expense deduction, and yet another to those that qualify for the for-profit activity or investment deduction. These are travel expenses often overlooked by taxpayers and their return preparers.

As he has done in earlier books, Julian makes certain that the reader sees examples of the rules as applied to specific facts. Students who are trying to go further into tax law than time permits their course instructors to take them will benefit from strolling through this book. So, too, will taxpayers and tax return preparers who need to learn or refresh their understanding of these two very specific areas of tax law.

From MOTOR HOME GUIDE
Money Matters By Janet Groene

Tax expert Julian Block phoned me with an alert for full-timers who do volunteer work. “I just returned from a northern California state park where my volunteer guide was an absolute gem— an RVer who donates her services,” he said. “However, she was astonished to learn she had been missing out on hundreds of dollars a year in tax deductions.

“The guide and her husband stayed in their RV for three months,” Mr. Block continued, “and that meant substantial deductions for meals. The round trip from [her home] to the park north of San Francisco had to be well in excess of 1,200 miles. That would mean another deduction for fuel and tolls, and she also wore a uniform.” He added that the cost of buying and cleaning uniforms also is deductible.

Whether you’re a full-timer or a part-time motorhome enthusiast, Mr. Block said you can deduct 14 cents per mile (or the actual cost of gas and oil if you keep records) for RV trips connected with volunteer work for non-profit causes. Also deductible, he said, are three meals a day while you’re on a volunteer mission. Moving costs also are deductible if you live in your coach and must move for a job-related reason.

If you file your taxes using the “long form” and list your deductions, you might want to read Mr. Block’s book before filing your tax return. While he doesn’t specifically mention RVs, his rules apply to RV travelers the same as to auto travelers.

It’s important to discuss deductions with your own tax expert, but Mr. Block’s tips are valuable, because they alert people to deductions they never knew existed. This California RVer had never mentioned her RV volunteerism to her accountant, because she had no idea that many of her RV expenses were deductible.

 

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