Excluded: Travel Expenses and Company Vehicles

Question 1

What are travel expenses?

Answer 1

1. expenses while away from your tax home on business
2. Include:
   - transportation
   - lodging
   - meals
   - laundry
   - misc items

Question 2

Tax Home

Answer 2

1. area of principal place of business or official duty station
2. Not the taxpayer’s abode
3. IF the taxpayer has no regular placer of business then their abode becomes their tax home

Question 3

“Away from tax home” requirements

Answer 3

1. substantially gone longer than an ordinary work day
2. must require rest, sleep or relief
3. Does NOT need to be a 24 hour period

Question 4

Requirements to be considered Qualified Travel Expenses (excluded) (3)

Answer 4

1. must be away from tax home for a temporary period (<= 1 year)
2. Away for a business purpose
3. Requires overnight stay or substantial sleep/rest

Question 5

How are travel expenses treated if the taxpayer’s temporary job lasts more than one year?

Answer 5

The travel expense paid/reimbursed are considered commuting and are not excluded from wages

Question 6

When are Per Diem for Qualified Travel expenses taxable?

Answer 6

When the amount reimbursed > Federally allowed per diem (excess is taxable)

Question 7

If a taxpayer takes a DOMESTIC trip and the trip has both a personal and business portion, can the travel expenses be excluded?

Answer 7

1. IF THE PRIMARY PURPOSE WAS BUSINESS: travel is deductible in full
2. IF THE PRIMARY PURPOSE WAS PERSONAL: No deduction/exclusion for travel and lodging

Primary = greater number of days

Question 8

If a taxpayer takes a FOREIGN trip and the trip has both a personal and business portion, can the travel expenses be excluded?

Answer 8

Allocate between personal/business days UNLESS:

1. Trip is 7 days or less
2. < 25% of the time is personal OR
3. TP has no substantial control over the arrangements

Question 9

How are travel days counted?

Answer 9

Business Days
+ weekends/holidays if the day before and after were business days
________________
Travel days

Question 10

What are the requirements for a Travel Advance to be considered a non-taxable fringe benefit?

Answer 10

1. accountable plan
2. reasonable timing between advance and travel
3. advance reasonably calculated not to exceed estimated expenses
4. related to employer’s business
5. excess returned

Question 11

Are payments for meals away from home but not overnight included in GI?

Answer 11

Yes because no rest/sleep was required

Question 12

When is lodging provided by an employer excluded from an employees wages?

Answer 12

1. on employer’s premises
2. for employer’s convenience
3. As a condition of employment
   Example: Apartment manager residing at the complex

Note: If TP could have chosen extra pay instead of meals/lodging then amount is included in wages

Question 13

Types of meals provided by an employer that would be excluded from the employees wages (4)

Answer 13

1. workers on call for emergency during lunch period
2. nature of the business requires short lunch breaks
3. eating facilities not available in the area
4. meals furnished to restaurant employees

Question 14

Requirements for business meal expenses to be excluded from employees wages (3)

Example: Sales Representative

Answer 14

1. business purpose
2. accountable plan rules
3. actual expense method

Question 15

What is considered personal use of an Employer provided vehicle? (3)

Answer 15

1. commuting miles
2. vacation/weekend use
3. use by spouse/dependents

Question 16

What are the 3 valuation methods used to determine personal use percentage of a company vehicle?

Answer 16

1. Auto Lease Valuation Rule
2. Vehicle Cents/Mile Valuation Rule
3. Commuting Valuation Rule

Question 17

What is the maximum valuation of a vehicle for the Cents/Mile Valuation Method?

Answer 17

$50,400

Question 18

How much can an employee deduct on their personal tax return for reimbursed business expenses?

Answer 18

None for 2018-2026

Question 19

What happens if an employer reimburses an employee for more than the Federal Mileage Rate?

Answer 19

The excess is included in GI and is taxable. Reimbursements <= Federal mileage rate are not taxable

Question 20

The two methods that can be used to determine the non-taxable reimbursement amount for Employer-Provided Vehicle Expenses?

Answer 20

1. Federal standard mileage rate

2. Actual expenses

Question 21

When are travel advances taxable? (3)

Answer 21

1. non-accountable plan
2. expenses not substantiated
3. excess amounts received are not reimbursed
   Taxable to the amount not reimbursed/substantiated

Question 22

What is the Special Valuation Rule for Commuting because of unsafe working conditions?

Answer 22

1. $1.50/trip is taxable - remainder excluded from wages
2. Hourly employee who makes < $130,000/year
3. employee normally walks/public transit to/from work
4. unusual/unsafe working conditions
5. company has a written policy

Question 23

How does record keeping by the employee affect taxable wages for personal use of a company vehicle?

Answer 23

Employee does not keep records = 100% taxable both business and personal use
Employee keeps records = business is excluded and personal is taxable

Question 24

Requirements for Travel Advances to be a non-taxable

Answer 24

1. accountable plan
2. related to employer’s business
3. reasonable timing between advance and travel
4. Advance reasonably calculated and does not exceed estimated expenses
5. excess amounts are returned

Question 25

What is “listed property”?

Answer 25

1. property provided by an employer for use off premises
2. has a personal use aspect
   Example: Company car

Question 26

Is listed property included/excluded from wages?

Answer 26

1. Business use: excluded
2. personal use: included
   If substantiation requirements are not met the entire amount is included in wages