[Radiant]

Hi I saw a similar posting to the question I needed answered but had an additional question to it.
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I work for a consulting company and I travel for work. My company covers my expenses like hotel, meals, airfare etc. I turn in expense forms rather then receive a per diem rate for expenses.

I understand that expense reimbursements are non-taxable but also there is a rule that if the employee has been getting reimbursement for more than 12 months in a row (without a break of 20 consecutive days) then all the expenses are taxable.

My assignment is for a SINGLE location that was originally scheduled for 6 months but has been extended for another so if I do not take the break in the next few months it would be considered an indefinite assignment rather then a temporary.

If I am consulting within the same state as my tax home, am I still required to take this break or is this break required regardless of where you live because it is based on the temporary vs. indefinite status?

Thank you!

[AtlantaTaxExpert]

I have bad news.

Even if you take the break of 20 consecutive days, then return to the same location doing roughly the same work, the IRS considers the job to be NO LONGER temporary in nature, in which case the per diem reimbursements become taxable income.

In order for the job at the same location to be considered a temporary job once again, you need to work at a separate location for AT LEAST a month (and preferably several months) to establish a new work location.

If the IRS investigates, they will take a holistic view of the situation. If there is even a hint that your intent was to return to the original location and that the intervening job was done just to keep the per diem reimbursement non-taxable, they will deem ALL of the per diem payments as taxable retroactive to the first day you received them.