An Update on Lodging Expenses | Tax Tip of the Week | No. 153

A Potential New Deduction

Previously, an employee was not allowed to deduct personal expenses and lodging expenses if the event did not include travel away from home.Proposed regulations were recently written that would allow a deduction of these expenses if they occurred in the taxpayer’s home town.  The IRS has stated they will allow these deductions to be taken immediately, versus waiting, for the regulation to become permanent.  In order to take these deductions you must meet all of the following tests:• The lodging is necessary for the employee to participate fully in or be available for a bona fide business meeting, conference, training activity, or other business function.• The lodging does not exceed five calendar days and does not occur more than once each calendar quarter.• The employer requires the employee to remain at the activity or function overnight.• The lodging is not extravagant or lavish and does not provide a significant element of personal pleasure.This new regulation also means taxpayers may deduct these expenses on any tax returns that are still “open” (three years from filing date/two years from payment of tax) by filing an amended return.It pays to keep up with the ever changing tax rules---we hope this one helps you!As always, give us a call if you have any questions.

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