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Old 02-12-2015, 13:31   #31
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Re: Deductibility of Travel Expenses

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I just don't get it. It is a simple question with a simple answer. To qualify the EMPLOYMENT has to be temporary. If the work site changes as in construction that is still commuting and is not deductible unless you were hired for one specific job. So if you take a temporary gig with a definite end point or date you are on solid ground. The other and easier issue is your residence. You need to be able to demonstrate that your boat is your full time residence. The travel distance at the time you took the job will probably determine your maximum travel deduction so moving your boat further away would be on you but you would be limited by the actual expense if you move closer. Last and very important, expenses beyond travel are deductible, lodging being the most important. That can include the cost of gifts in lieu of rent if you stay with friends.
On meals the government assumes that you always need to eat so no go on those restaurant bills. All the above for an employee.
As a business owner travel by employees to work sites will be deductible if you reimburse the employees or pay directly. Claiming travel for yourself would be a big red flag and might draw much more attention then you can endure.
The only simple question with a simple answer is will I die? Everything else in law is not an absolute and subject to interpretation. What is important is the judge interprets it the same way your attorney did when he gave the advise.

Sailor_Gal stated that it is difficult to claim a home office on a boat. You have to pass the litmus test. Since we are talking about being employed and paid as a W2 employee, we have to pass the litmus to extend as a remote worker. Primarily the question of am I working remote for my convenience or "for the convenience my employer" If the answer to that is not squarely on the employer, then the IRS can classify it as "merely appropriate and helpful," no deduction. And is it my exclusive work place being the other.

This is where it gets sticky according to my attorney. If I tell my employer, I am quitting to go sail and they offer to keep me employed and work remote, is that for their convenience or mine?

My question to Sailor_Gal is if the above are met and my home passes the smell test, what precludes it from moving? Is there anything that states it must be stationary in order to maintain the deduction?

As it is really not the home office deduction that is helpful, it is the employee expense and employer deduction for travel to the other offices from the boat (home office) and lodging and meal expenses while there and away from the home office (boat).

We are not talking about temporary locations, if the boat qualifies as my exclusive work place and passes the other smell tests. If I move the boat to a new marina in another state, does that disqualify the status?

If the travel and lodging costs are consistent and still within the normal and customary costs for other remote workers, what difference does it make if the travel is from Grand Cayman or St Augustine, FL?

The only difference between say travelling to the oil rigs is that my home office is moving while the other offices are stationary.

Really, we are not looking to screw the IRS or not pay fair share, just how to continue to operate as a remote worker for a few more years while still travelling the seasons and tied to communication and larger airport restrictions. From what I was told and read, it was feasible. From what you are saying it may not be?

This question is really for sailing_gal, thank you.
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Old 03-12-2015, 06:08   #32
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Re: Deductibility of Travel Expenses

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Sailor_Gal stated that it is difficult to claim a home office on a boat.
That's because, to qualify as a deductible home office, the space has to be used EXCLUSIVELY for work. Unless you have a really big boat, I think it is going to be awfully hard to find a space that you set aside for work, and never use for anything else.
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Old 03-12-2015, 07:08   #33
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Re: Deductibility of Travel Expenses

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That's because, to qualify as a deductible home office, the space has to be used EXCLUSIVELY for work. Unless you have a really big boat, I think it is going to be awfully hard to find a space that you set aside for work, and never use for anything else.
What you are forgetting is that some of us are actually working over 40 hours per week remotely for an employer and happen to live on a boat. Yes, most of us have a designated space that has our laptop, printer, and files needed to perform our job and since we are spending the bulk of our time actually working, it is pretty much exclusive. The IRS actually does understand that we all don't live in huge homes with separate offices, and what they are trying to protect is how much you are going to deduct for your costs on that actual space as a percentage of the overall space in your home.

Not everyone is out to cheat the IRS, we are looking for the same options that are afforded us at home under the exact same pretense.

Simple question. If bricks and mortar currently qualify, what changes legally when moving aboard the boat and cruising around working hours?
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Old 03-12-2015, 08:22   #34
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Re: Deductibility of Travel Expenses

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What you are forgetting is that some of us are actually working over 40 hours per week remotely for an employer and happen to live on a boat. Yes, most of us have a designated space that has our laptop, printer, and files needed to perform our job and since we are spending the bulk of our time actually working, it is pretty much exclusive. The IRS actually does understand that we all don't live in huge homes with separate offices, and what they are trying to protect is how much you are going to deduct for your costs on that actual space as a percentage of the overall space in your home.

Not everyone is out to cheat the IRS, we are looking for the same options that are afforded us at home under the exact same pretense.

Simple question. If bricks and mortar currently qualify, what changes legally when moving aboard the boat and cruising around working hours?
I think you are a bit confused. The home office deduction is one of the most frequently denied deductions. If there is any sign you use the space for other purposes, it no longer applies. Unless you are on a mega yatch and designate a room specific for work, you are going to be facing an uphill battle claiming that you use the main salon table for work 8hr/day. An auditor is likely not going to give they guy living on a boat the benfit of the doubt.

You can always take the deduction but for practical purposes, you are unlikely to get to keep it when the IRS comes calling.
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Old 03-12-2015, 08:54   #35
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Re: Deductibility of Travel Expenses

I generally apply the un-reimbursed business expense rule for work related travel but do not take a home office deduction.

Since 100% of my work can be done remotely, all travel from my boat location to either my company office or a client office is at the convenience of my employer. However, my employer reimburses me those expenses as an IRS "accountable plan".

The instances where I don't get reimbursed is so uncommon that I never reach an dollar value that its even worth mentioning to the IRS. It costs more money to file than a simple form.
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Old 03-12-2015, 09:12   #36
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Re: Deductibility of Travel Expenses

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...and since we are spending the bulk of our time actually working, it is pretty much exclusive.
Sorry, but "pretty much" doesn't count. If you get audited by the IRS, and the space is not used EXCLUSIVELY for work, then your home office deduction will be denied. The rules are quite clear on this.

And you do, on a boat, get the exact same options as in a brick and mortar home. If you use your kitchen table at home to work from 8 hours per day, and then eat dinner there when the day is done, the IRS will deny your attempts to claim that as a home office. Same as with your saloon table, or navigation station. Use it for ANY OTHER PURPOSE, and you cannot claim it as a home office.
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Old 03-12-2015, 09:59   #37
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Re: Deductibility of Travel Expenses

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I generally apply the un-reimbursed business expense rule for work related travel but do not take a home office deduction.

Since 100% of my work can be done remotely, all travel from my boat location to either my company office or a client office is at the convenience of my employer. However, my employer reimburses me those expenses as an IRS "accountable plan".

The instances where I don't get reimbursed is so uncommon that I never reach an dollar value that its even worth mentioning to the IRS. It costs more money to file than a simple form.
THANK YOU!
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Old 03-12-2015, 10:22   #38
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Re: Deductibility of Travel Expenses

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Sorry, but "pretty much" doesn't count. If you get audited by the IRS, and the space is not used EXCLUSIVELY for work, then your home office deduction will be denied. The rules are quite clear on this.

And you do, on a boat, get the exact same options as in a brick and mortar home. If you use your kitchen table at home to work from 8 hours per day, and then eat dinner there when the day is done, the IRS will deny your attempts to claim that as a home office. Same as with your saloon table, or navigation station. Use it for ANY OTHER PURPOSE, and you cannot claim it as a home office.
I still disagree with you unless I can find any court cases that point otherwise. Is it worth it is another question. If the deductions were normal and customary, documentation kept to substantiate and below adhered to, it is a legal move. The exclusive clause is there to protect the IRS from someone claiming over use of their home or boat for the purpose of doing business.

As far as space that is exclusive, it is easy enough to store my files in one cabinet and call that small 2 square foot space exclusive. It is not the home office deduction that is important, but whether it needs to be established for travel back to the main office and lodging to be a qualified expense for my employer.


§280 ...

In the case of an employee, the preceding sentence shall apply only if the exclusive use referred to in the preceding sentence is for the convenience of his employer. For purposes of subparagraph (A), the term “principal place of business” includes a place of business which is used by the taxpayer for the administrative or management activities of any trade or business of the taxpayer if there is no other fixed location of such trade or business where the taxpayer conducts substantial administrative or management activities of such trade or business.
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Old 03-12-2015, 12:37   #39
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Re: Deductibility of Travel Expenses

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It is not the home office deduction that is important...
Well maybe we're having a communication problem here, then, because the home office deduction is what I was talking about. To claim a home office deduction, the use must be exclusive.

Of course, you can still work from home without claiming a home office deduction. In fact, I work from home quite often, but do not claim a home office deduction for the very reasons mentioned--I do not have a space that is exclusively dedicated to working from home.

So, if you are simply talking about working from home, and establishing the boat as your home, sure, no problem at all with that. Your home can be your principal place of business, even if you don't have any particular place in that home that qualifies for a home office deduction. "Principal place of business" and "home office deduction" are two completely different things that, for the most part, are unrelated to each other.
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Old 03-12-2015, 12:41   #40
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Re: Deductibility of Travel Expenses

In short, do not take home office deduction and only deduct travel expenses required by your employer that are not reimbursed by your employer or contract. The likelihood is that you will never reach either of those minimums of deductibility unless you are an I-9.
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Old 05-12-2015, 00:58   #41
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Re: Deductibility of Travel Expenses

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I still disagree with you unless I can find any court cases that point otherwise. Is it worth it is another question. If the deductions were normal and customary, documentation kept to substantiate and below adhered to, it is a legal move. The exclusive clause is there to protect the IRS from someone claiming over use of their home or boat for the purpose of doing business.

As far as space that is exclusive, it is easy enough to store my files in one cabinet and call that small 2 square foot space exclusive. It is not the home office deduction that is important, but whether it needs to be established for travel back to the main office and lodging to be a qualified expense for my employer.


§280 ...

In the case of an employee, the preceding sentence shall apply only if the exclusive use referred to in the preceding sentence is for the convenience of his employer. For purposes of subparagraph (A), the term “principal place of business” includes a place of business which is used by the taxpayer for the administrative or management activities of any trade or business of the taxpayer if there is no other fixed location of such trade or business where the taxpayer conducts substantial administrative or management activities of such trade or business.
You are mixing two different subjects.
- Home office deduction: Unless you can dedicate an entire cabin, they are going to deny it. A file cabinet or drawer isn't going to work.
- Establishing your work location: You can't call out the boat, you have to call out an address (ie: the address of the marina where you keep your boat). Same as you can't call out your house, you call out your houses address. The IRS forms generally include your official address.

Where the work location becomes an issue is the IRS is not likely to accept any travel costs except from your home (as in the one you put on the IRS forms).
- If you just live on your boat in a marina, it's no different than the rules for living in a house.
- If you actually cruise (as in moving to a new location every few days to few weeks), the time away from your established address is likely to be treated as personal travel and just like the example of taking a vacation to Hawaii, they aren't going to let you deduct the cost of returning from vacation to your office.
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Old 05-12-2015, 05:49   #42
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Re: Deductibility of Travel Expenses

I may just take this conversation and submit it to a professional class that I teach- it is getting humorous. Obviously, the original poster wants to take a deduction. He is asking for tax advice in a truly stupid place to try to get reliable tax advice, or rather, to get an answer that he wants. I will submit one last piece of the Internal Revenue Code to this discussion. Code Section 162- it says
"There shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business..."

So go and think about whether the IRS or the Tax Court (if you would be willing to go there) would consider your moving yacht an ordinary and necessary business expense. And keep in mind the burden of proof is yours. Then do whatever you want- you're signing the return.

Are there court cases on this sort of thing? Yes. Would I look up the cites for you? Not for free.
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Old 05-12-2015, 12:13   #43
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Re: Deductibility of Travel Expenses

Not complicated. If you are a subcontractor you can try to deduct travel but I would expect maximum penalties if you lose in tax court. If the employer pays travel and properly declares it you will get away with not declaring the income. If you are close with or a relative of the employer his not sending a 1099 might open the door to major problems but if the relationship is arms length you both are most likely ok. I know in the past employers provide vehicles and gas cards and never sent 1099's. However, they required vehicle logs to demonstrate it was not personal use. Also as an independent contractor I billed for expenses including travel to the job but also submitted a vehicle log. The key difference was that the job was clearly temporary and travel to the employer's office was very infrequent. If you actually do most of your work at home and just travel for meetings and presentations you would be ok but your 'home office' smells like a fraud to me.
Sounds like you want to chase small bucks at great risk. I urge you to rethink this one.
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Old 05-12-2015, 12:48   #44
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Re: Deductibility of Travel Expenses

I promised myself I wouldn't post anymore here, but here goes. First of all, a file cabinet is not a home office, it is a piece of equipment used for work. You can probably take a deduction for the file cabinet. If you are a W-2 employee, it is subject to the 2% miscellaneous floor for itemized deductions. Now, does that 2 square feet of space qualify as a home office? Are you sitting on top of it while you work? A home office presumes that it is a space where you actually DO something, not where you merely store your files. In all honesty, I cannot imagine any space on a boat that is exclusively going to be used for work. Claiming a home office for space where you store records does not meet the definition of what is required for a home office. You need to be doing some activity in that exclusive space. And you must use it on a regular basis.

You also may very well be considered a "Tax Turtle". Your tax home is not the boat, but the geographic location of where you work. If that location constantly moves, then you are considered a tax turtle- and the IRS (and Tax Court) could very well conclude that you have no tax home, therefore, no travel is deductible. This is not an uncommon problem for long distance truck drivers who do not pay the costs of maintaining a stationary residence somewhere. You can probably just google "Tax Turtle" and you will find more information on that.

But as I said before, do you what you want. IMHO, "yacht" and "tax deduction" are two items that should rarely be in the same sentence.
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Old 05-12-2015, 18:25   #45
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Re: Deductibility of Travel Expenses

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...

But as I said before, do you what you want. IMHO, "yacht" and "tax deduction" are two items that should rarely be in the same sentence.
Ha, probably best they not be...can certainly attract attention.

They used to be for me, IRS didnt like that (among other things)...so they audited me. Big hassle, but ironically they not only discoverecd no violations, but that they owed me money (professional accounting & representation makes a big difference). I'm hoping that will discourage similar behavior on their part in the future.

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