Can I Claim a Work Away From Home Allowance on My Taxes?

Navigating tax deductions can be a complex task, especially when it comes to claiming allowances for work-related travel. With the rise of remote work and flexible job arrangements, understanding which expenses qualify as deductible is crucial. The Work Away From Home Allowance offers taxpayers an opportunity to claim additional costs incurred while working far from their primary residence.

This article examines the criteria for eligibility, including distance requirements, employer versus self-funded expenses, and necessary documentation, to help taxpayers make the most of these allowances within the current tax framework.

Qualifying Distance Requirements

Distance is a pivotal factor in determining whether travel expenses are deductible. To qualify, the work location must be at least 50 miles from the taxpayer’s primary residence, measured by the shortest route. This ensures that only significant travel costs are eligible. For instance, commuting to a project site 60 miles away may qualify, whereas a 30-mile commute likely will not. Additionally, the work assignment must be temporary, typically lasting less than one year. Taxpayers should document the start and end dates of their assignments to establish the temporary nature of their work.

Employer Coverage vs. Self-Funded Costs

Distinguishing between employer-covered expenses and self-funded costs is essential when claiming the Work Away From Home Allowance. Expenses reimbursed by an employer under an accountable plan are not deductible by the employee, as they are not personally incurred. Under such plans, employees must provide detailed records and receipts and return any excess reimbursement to the employer. For example, if a $500 travel expense is reimbursed under an accountable plan, it remains tax-free when properly documented.

Self-funded expenses not reimbursed by the employer, such as lodging, meals, and transportation, may be deductible. However, the Tax Cuts and Jobs Act of 2017 temporarily eliminated miscellaneous itemized deductions for unreimbursed employee expenses through 2025. This change underscores the importance of negotiating reimbursement agreements with employers to offset work-related travel costs.

Receipts and Recordkeeping

Proper documentation is critical for claiming the Work Away From Home Allowance. The IRS requires detailed records to substantiate travel-related deductions. Taxpayers should keep receipts that specify the nature, amount, and purpose of each expense. Digital tools that scan and store receipts can simplify recordkeeping. Categorizing expenses, such as transportation, accommodation, and meals, aids in accurate reporting. Supporting details like the date, location, and business purpose of expenses should align with IRS guidelines.

Documenting expenses as they occur minimizes errors or omissions. Maintaining a travel log with dates of travel, destinations, and business activities can further support claims and provide a clear narrative alongside numerical data.

Tax Liability Considerations

Effectively managing the tax implications of the Work Away From Home Allowance requires careful planning. Deductions reduce taxable income, potentially lowering a taxpayer’s overall tax rate. However, taxpayers must account for the Alternative Minimum Tax (AMT), which can negate certain deductions. The AMT ensures that high-income earners pay a minimum level of tax, regardless of deductions claimed. Calculating potential AMT liability is essential to avoiding unexpected tax bills.

State taxes also factor into the equation, as state tax codes vary widely. While some states allow similar deductions for work-related travel, others do not. Taxpayers should review both federal and state tax obligations to ensure compliance and optimize their tax outcomes.

Residency Requirements

Residency status plays a significant role in determining eligibility for the Work Away From Home Allowance. Tax authorities evaluate whether a taxpayer’s primary residence—or “tax home”—aligns with their primary work activities. A tax home is defined as the location where a person regularly conducts business, which may differ from their physical residence. Taxpayers must demonstrate that their personal residence remains their primary economic and familial base, supported by evidence such as homeownership, voter registration, or utility bills.

Temporary assignments introduce additional considerations. The IRS generally treats assignments lasting less than one year as temporary, allowing taxpayers to maintain their original tax home. However, if an assignment exceeds one year or becomes indefinite, the work location may be reclassified as the tax home, disqualifying the taxpayer from claiming travel-related deductions. Monitoring assignment durations and consulting a tax professional can help ensure compliance with residency rules.