# US TAX - Deductible Travel Expenses



## Full Bodied Red (May 9, 2017)

I've searched around the forum but can't find anything similar so hoping for some help, please.

I've been offered a job by a US University where I'd be on their US payroll as a permanent, full time Lecturer but for domestic reasons, we can't relocate from the UK to the USA.

As the the University are keen that I take up the offer, they have proposed that I work full time from home, in the UK, and visit my students at the University for a couple of weeks at a time, three or four times per year.

The University say they would be unable to re-imburse my travelling expenses if I choose to continue living in the UK, although they might be able make accommodation available for me on campus if it's available when I visit.

Ther UK Tax Authorities have said that my circumstances are quite rare, there is no specific Tax Law in the UK to cpover them, and it would require an individual case review before deciding whether the expenses could be deductible from my UK Tax Filing which I will still have to do because I will still be UK resident.

My question is whether the IRS would allow me to deduct my travel expenses when I file my annual Tax Returns in the USA as it's not really commuting from home to my place of work - my place of work would actually be my home in the UK and which would be written into the contract with the University.

Any help / advice would be appreciated.

Many Thanks


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## Bevdeforges (Nov 16, 2007)

This may well come down to what visa (if any) you are on, and how the university is paying you (i.e. as an employee or as a contractor).

The problem with being on the university payroll is that they will most likely withhold US Federal taxes, possibly State taxes and US Social Security. You will most likely, however, be filing an NR tax return (i.e. non-resident). If you were a US citizen, you'd be filing a regular resident return, probably be eligible for the Foreign Earned Income Exclusion, where you would claim back all or most of your Federal tax withheld. The State withholdings would then be the issue, as some states don't allow for the FEIE. 

You might be better served if you could work as a contractor for the university - in which case you'd be responsible for making payments to the UK tax authority and could avoid the need to reclaim taxes withheld that you aren't subject to. (And in which case, your travel expenses would be part of the expenses of your "self-employment.")

I think your first step has to be to ask the university how they are planning on dealing with you "on the payroll." Ideally, if they could pay you in the UK, with all the appropriate payments made to the UK tax service, that would be ideal. But there's a reasonable chance they haven't really thought of how they are going to do this.
Cheers,
Bev


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## Moulard (Feb 3, 2017)

To be deductible for tax purposes, expenses incurred for travel, meals, and entertainment must be ordinary and necessary expenses incurred while carrying on your trade or business.

Pub 463 clearly indicates that any travel away from your tax home (and/or your normal place of business) for the purposes of business are in fact deductable if they involve overnight travel. If you are a tax resident of the UK, then it you should be able to deduct travel to the US to visit your employer. Further if you are only visiting the UK occassionaly, it is clear that your main place of business is within the UK.

Thus I believe your travel expenses (to the extent that they are work related) would be deductable using Form 2106 for travel costs, per diem etc while you are in the US. 

There are formulas available that indicate how to apportion a combined work/pleasure trip.

Of course for the period of time that you are in the US, your income is not foreign earned and not eligible for the foreign earned income exclusion.


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## Bevdeforges (Nov 16, 2007)

Moulard said:


> Of course for the period of time that you are in the US, your income is not foreign earned and not eligible for the foreign earned income exclusion.


Except for the little matter that the OP appears not to be a US citizen, and thus not ordinarily subject to US taxation at all. (Unless he is on a long-term visa which would make him US resident.) As a non-resident alien, I even kind of wonder whether he'd be taxable on the portion of his income earned while he is physically in the US. The big complicating factor is that he'll be paid by a US employer for work done outside the US.

I think the employer needs to get involved here to clarify what exactly his status will be. And the possibility of being a contractor would definitely simplify much of this situation - certainly from the UK point of view.
Cheers,
Bev


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## Moulard (Feb 3, 2017)

Fair point. 

While not directly relevant to the actual question at hand, I assume that FBR will need an appropriate non-migrant working visa. I would recommend caution as I do know of visiting academics who have been denied entry (both on the "right" and "wrong" type of visa.

Best bet is a careful read of Pub 519. 

A quick skim suggests that my original comment still applies and that 



> You may be able to deduct your ordinary and necessary travel expenses while you are temporarily performing personal services in the United States.


and that you can...



> Use Form 2106 or 2106-EZ to figure your allowable expenses that you claim on line 7 of Schedule A (Form 1040NR)


If all that fails.



> ... nonresident alien teachers and researchers must file with Form 8233 to claim a tax treaty exemption from withholding of tax on compensation for dependent personal services


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## Bevdeforges (Nov 16, 2007)

If the OP will only spend a few weeks a year in the US, does he actually NEED a visa at all? And as a non-resident alien, is he actually taxable on his salary/pay simply because the employer happens to be in the US (since all but the few weeks or work is being done overseas)? 

This one is tricky - but without residence in the US and assuming the need to be physically present in the US can be limited to no more that 180 days total to meet the VWP requirements, I wonder if the whole tax issue doesn't fall back more on the employer than on the employee.
Cheers,
Bev


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## Full Bodied Red (May 9, 2017)

Hello again….

And many Thanks for your answers / thoughts and I’ll try to clarify them where I can.

It’s all bit difficult to provide clear answers at the moment as The Management Board won’t be meeting for another couple of months to approve the T&Cs which are being proposed at the moment. However, here goes -

*Visa* – Not too sure what sort of visa the University are thinking of. I assume it would be one which allows me to work ( when necessary ) in the USA, but not reside in the USA. Does such a visa exist ? Many years ago, I used to work for a UK multinational, UK resident, and spent a couple of years working three weeks in the US and then three weeks in the UK, and then three weeks in the US, then three weeks in the UK, etc, etc. I remember having a visa ( was it called B2 ? ) which allowed me to work in the US but not reside there – ie, so that I wasn’t too regularly entering the US on a normal Tourist visa. Perhaps the University are thinking along the lines of something similar if that visa still exists ?

*Taxes* – I am assuming and planning on the basis that being on the US payroll will require me to pay US Income Tax and Social Security - unless I can meet some other requirements which would allow me to avoid the withholding taxes as although I will be non-resident. I’m a UK citizen, so I am assuming that the FEIE will not be available to me. Truthfully, I could live with that as the Taxes payable in the US are quite a bit less than I would pay on the same salary in the UK, even more so if the IRS would accept the Travel Expenses as a deductible.

*Contractor / Self Employed* – Apparently this is not possible under the hiring rules at this University unless you are already a Professor. The appeal of the job is that if all goes to plan, I would be awarded a Professorship by the University within two or three years and, then, the employment status could change, of course.

*Payment in the UK* – Although the University has staff based in other countries, similar to what they are proposing to myself, I believe that these are are on different employment terms ( see below ) and there are no other employees in the UK so this is not possible. They can, however, send my net salary to a UK bank account each month, although I was planning on a US bank account and transferring funds myself whenever I need the cash in the UK.

*Days working in the US* – Will definitely be no more than 75 days spread over ( currently as planned ) four individual visits - this we have already agreed on.

Many Thanks, again, for your help / advice, especially reference to the 519 which I’ll work through over the weekend, and I’ll update the thread as I get more detailed info from the University.

Best Regards.


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## Moulard (Feb 3, 2017)

FBR,

As you say, chances are high that you will end up having US social security and taxes withheld from your income. Ultimately simply because it may be easier for them even if other options are available to them. That being the case you would have to file a 140NR. Going back to your original question, you would be able to deduct the cost of your travel to the US to visit them.

The other thing you might want to do is take a look at the UK-US dual taxation convention. It will clearly articulate who has primary taxing rights in your situation. 

You may also want to read up on the UK-US totalisation agreement to understand the social security side of things. Your circumstances are such that you may actually be one of the cases that will want a certificate as while you are employed by the US, you have not actually been sent to the UK by your employer. Nor are you employed by a UK employer working in the US. 
Again the University should be able to address how they are planning on treating you if they have other employees in similar arrangements.

On the visa side of things, best bet is to have a chat with your local consul about the visa requirements and / or get advice from the Uni particularly if they are doing similar with other folks. There are specific academic visa classes that might be applicable. Because you are working for a US employer, and will be in the US for work I fear the VWP may not be appropriate. 

Sorry, this is all pretty much a non-answer.


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## Bevdeforges (Nov 16, 2007)

From the sounds of it, it is likely that you'll be getting a B1/B2 "multi-entry" visa. This is a non-immigrant visa (and thus you remain non-resident for US purposes) so your US tax status is going to be tricky to handle.

As a non-resident, you would normally be free from US taxes (and may well be under some of the academic "exchange professor" provisions of US tax law). The university should be well aware of these. The idea of them keeping you on their US payroll, however, adds a layer of complication to the whole situation, as you will be able to get back the Federal taxes withheld, but possibly not any State tax and most probably not the US Social Security taxes. You really should sort this out with the university before you get started with the arrangement. Maybe ask to speak with one of their other foreign "employees" to see how they are handling things and what problems have arisen for them. 

This is not unlike some US employers I am familiar with, where they handle the "payroll" issue in their usual manner, oblivious of the problems created for the foreign employee working remotely most of the time. For a US citizen (or someone with residence status in the US), it can be resolved fairly simply (other than the state income tax bit - so be very careful to understand what, if any, US address they will be using for you and what the tax consequences of that will be), but as a non-resident alien, things can get complicated pretty quickly.
Cheers,
Bev


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