QUESTION DETAIL
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I am a 1099 contractor in an 18+ month contract in Florida. I live in Alabama and had to temporarily relocate. The organization I contract with pays my house rent and utilities while I'm here. I submit receipts and they reimburse me. The problem is that all the reimbursement will show up on my 1099 as income when it's not. To further complicate things my accountant told me that since I'm on-site in Florida 100% of the time, then this is considered my home and I can't write off those reimbursements. Is there any way I can write off the reimbursements so I don't get taxed on them? It doesn't seem right that they are paying my bills and then I get taxed on that and am having to keep up my home mortgage in Alabama too.
ANSWER
The BIDaWIZ Team's Answer:
Technically, the expenses that are reimbursed are for premanent housing. The IRS defines permanent housing provided by an employer as lasting over one year and not a deductible business expense. Since your contract is in excess of a one year, unfortunately you cannot deduct those housing expenses that were reimbursed. In addition, the reimbursement is considered a permanent taxable benefit to you and thus you would need to report it on your tax return.
