Married Couples Working In Different Cities
By Julian Block
Just about all of the people who rack up frequent flyer miles fall into two categories. Either their jobs require lots of travel or they are vacationers.
But an ever-growing number of them are "commuter couples" who live apart in an effort to keep their jobs or advance their careers. By one estimate, more than 1 million wives work and maintain homes in one city, while their husbands do likewise in another city. With more women launching careers and advancing into positions of greater responsibility, the number is likely to keep increasing, notwithstanding the delays caused by heightened security measures imposed after the terrorist attacks on September 11.
Understandably, the minuses outweigh the pluses for dual-career couples who live apart for the sake of their jobs. Yes, those who have honed their time-management skills find it easier nowadays than previously to make the commuting workable, with careers becoming more mobile and workweeks more flexible. In fact, these being the harried times they are, a good many partners in long-distance marriages now spend as much time together as their stay-at-home counterparts.
Nevertheless, few couples favor living apart. Add up the inconvenience, expense, strains to career and family and the arrangement seems to defeat the reason for getting hitched. And if all the social and emotional troubles associated with separations from loved ones were not enough, throw in some troublesome tax issues for commuter couples: the way the IRS defines the location of their "tax home" and how that usually derails deductibility of travel expenses.
The IRS unreservedly blesses business-expense deductions of 100 percent for lodgings and 50 percent for meals when travelers are on a trip that takes them "away from home" overnight. But buried in the fine print is the IRS definition of "home": It is where a person's principal place of business or employment is located, even though his or her family or spouse resides elsewhere.
This should raise no problems for most people; they work at one job in the same place in which they live with their families. But couples who live apart have to grapple with a complicated issue: how do they identify their tax home and determine whether their outlays for meals and lodgings qualify as away-from-home travel expenses?
To illustrate the tax problem, consider the case of Robert and Margaret Coerver. Each had separate jobs and residences, his in Wilmington, Delaware, and hers in New York City. During the first two years of their marriage, she kept her job and apartment in New York and made frequent trips to Wilmington. Margaret contended she was entitled to deduct her rent and food while in New York, as well as her New York-Wilmington travel, because she and Robert filed jointly and their tax home was in Wilmington, where he lived.
But the Third Circuit Court of Appeals backed the Tax Court, which barred any write-off for these expenses. Because her stay in New York was "indefinite," the appeals court ruled, her tax home did not shift from New York to Wilmington, even though she and her Delaware-based husband filed jointly. In the court's eyes, Margaret was never "away from home" while in New York, so her rent and food there remained nondeductible. Nor could she deduct New York-Wilmington travel, since those trips also were for personal reasons.
Then there was the case of George and Mary Leyland who also found out the expensive way how the rules can twist and turn. They lived in New Haven, where he worked for the Census Bureau and she was with IBM.
It all began when the Bureau sent George to Boston for a year-long training program at the Harvard Business school. The couple gave up their New Haven apartment and rented one in Boston. They also joined a New Haven club and took a room there for Mary, which George shared when he traveled to New Haven. While George was in Boston, Mary sometimes journeyed there on business for IBM.
At filing time, the couple claimed their tax home was in New Haven, and deducted their Boston expenses. But the IRS viewed the matter somewhat differently. The agency readily conceded that Mary's tax home was in New Haven, as her job location was unchanged. This, of course, entitled her to deduct unreimbursed business expenses while in Boston on assignment by IBM.
But the Tax Court agreed with the IRS that New Haven was no longer George's tax home, since he gave up his apartment there and moved to Boston. True, his Boston assignment started out as "temporary," rather than "indefinite." Nonetheless, the court found that George chose to shift his tax home to Boston, because he was reimbursed by the Bureau when he took his furniture with him and he was paid a per-diem allowance by the Bureau when he traveled from Boston to New Haven on assignment. Therefore, the court determined that he was never "away from home" while in Boston, and his rent and food there were nondeductible. But, of course, that finding did entitle George to deduct unreimbursed business expenses while in New Haven on assignment.
The Tax Court also ruled against Marianne and Donald Felton, an Indiana couple. Marianne was on the faculty of a school located about 100 miles from the town where Donald worked and where they both resided. Usually, Marianne stayed two nights a week at her job site.
The Tax Court held that Marianne's tax home was where she worked. Her decision to live with her husband was made for personal reasons; hence, the travel outlays in issue were nondeductible personal expenses, the court ruled
Marianne, said the court, "argues that failure to consider personal elements in a case such as hers puts undue strain on two-job families. While her point perhaps is appealing sociologically, it has no basis in law." Translation: As far as the IRS and the courts are concerned, the law is the law, and they are without authority to make exceptions and allow deductions for commuter couples.
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