[Tomy]

I am living and working at chicago in H1B status. My employer is at New Jersey. Can I claim my apartment rent of $1250 as expense for the purpose of itemisarion?

I have been living at chicago for the last 3 years.

Thanks,
Thomas

[AtlantaTaxExpert]

Thomas:

No, as your working situation in Chicago is NOT temporary in the eyes of the IRS.

Many foreign workers have taken the position that their entire H-1B work period is temporary and are claiming their daily living expenses as temporary work expenses.

The IRS does NOT agree, and they are aware of this abuse and are putting together a task force to deal with it.

The IRS position is simple: ANY work situation that lasts for more than one year is, by definition, NOT TEMPORARY. It is a permanent relocation. Any expense deduction past one year will automatically be disallowed. Further, if the worker knew going in that the work situation was going to last longer than a year, then he cannot claim the expenses for the first year either.

Once the IRS task force begins reviewing tax returns for H-1B visa holders, I believe there will be a large number of audit notices sent to various H-1B workers. These individuals will be lucky if all they have to do is pay the back taxes (which, with penalties and interest, WILL BE SUBSTANTIAL). If the deductions taken are large enough, the IRS may consider the claiming of such deductions TAX FRAUD, which is a crime. The H-1B worker would then find himself on a plane home in short order, his visa revoked, any bank or brokerage account confiscated for back taxes, and a prohibition on any future work visas to the U.S. This is assuming he is not sent to JAIL first!

Do NOT claim that deduction! It is NOT worth the considerable risk involved!