Hello,
I am a Technical Architect. We live in Austin, TX. Me, My wife(homemaker) & daughter live in Austin.
My employer is based out of New York city, NY. And we are implementing a project for a client in New York city (at client place). I travel all 12 months (excluding vacation & PTO & work remotely for at least 2 weeks an year).
My travel schedule is Sun afternoon(6 pm) - Thursday afternoon (6 pm) reaching Austin around 1.00 am(CST,Friday am). I am in Austin with family on Friday, Saturday & Sunday afternoon.

2010:
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Last year (2010), I travelled only 7 months (May - Dec 2010) and my employer says this is not long term travel and said that all Travel expenses are not taxable. They paid directly for Air fare, Hotel, Car, Gas from their credit card and I reimbursed standard per-diem meal rate & cab fare to and from airport at home(Austin) and/or parking fees.

2011:
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I am still continuing to Travel to New York city for the same project and expect to travel the whole of 2011 and beyond.
This year they have changed the Travel expenses model. They are now paying a Travel stipend by check every month (along with my regular salary & Travel stipend included in the pay-stub) to cover all Travel expenses (Air fare, Hotel, Car, Gas, Cab fare, Parking, Meals). This stipend amount is not included in the yearly W-2.

My questions:
(1) What is my Tax Home (NY or TX)?
(2) Based on the scenario explained, is this long term travel? I am working or staying in New York city for less than 180 days(consolidated). Do I have to pay NY state & city taxes on my W-2 income? Resident or part time resident?
(3) Are the Travel expenses for 2010 taxable to employer & I?
(4) With the Travel stipend option - Do I have to fill in any relevant sections on Form 1040 or Form 2106 filling the expenses and re-imbursements?
(5) For 2011 - Is the Travel stipend amount taxable for me(whole or part)?
(6) If the Travel stipend amount partly taxable for me: example: If the stipend amount is $30,000 for entire 2011. And I expense entire $30,000 the balance will be zero. In this case are there any tax consequences for me? Do I have to fill form 2106 with expenses and re-imbursements and sum it to 0?
(7) If the Travel stipend amount partly taxable for me: example: If the stipend amount is $30,000 for entire 2011. And I expense about $25,000 the balance will be $5000. In this case are there any tax consequences for me? Do I have to fill form 2106 with expenses and re-imbursements and pay the Tax for $5000 only?
(8) If expenses are more than stipend - example: If the stipend amount is $30,000 for entire 2011. And I expense about $35,000 the balance will be $5000. In this case can I claim tax deduction for $5000?

Please advise.

Appreciate all your help.

Regards,
Srini

1) For the federal return, your tax home is Austin, Texas.

2) However, the money earned while located in NY state IS subject to NY state income. It is less clear whether you are subject tp NY City income tax. I suspect that if you maintain an apartment in NY Cty rather than stay in hotels, NY state would also consider you to be a part-year resident of NY City and this subject to NYC income taxes.

3) The travel expenses are deductible to the employer since they are reimbursing you for the your expenses incurred. As long as the reimbursement is based on travel expense reports submitted by you, the reimbursement remains tax-free.

4-8) Once your employer pays you based on a stipend amount (a set amount per pay period irrespective of how much travel you do), then, in my opinion, the stipend becomes taxable income and then you must deduct the travel expenses using Form 2106. However, there IS a limit as to how much you can deduct, because the Alternative Minimum Tax (AMT) will kick it at some point and offset any benefit from claiming the travel deduction. The exact dollar amount at which the AMT kicks in depends on your income level.