Just about all the people who rack up frequent flier miles fall into two categories: either their jobs require lots of travel or they are vacationers. But an ever-growing number of travelers are “commuter couples,” married people 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.
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. Careers have become more mobile and workweeks more flexible. In fact, with our lives as harried as they are, a good many working 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 as 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, particularly the way the Internal Revenue Service defines the location of their “tax home” and how that usually derails the 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’s 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 pose 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 a separate job and residence, his in Wilmington, Del., 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 U.S. Court of Appeals for the 3rd Circuit backed the U.S. Tax Court’s ruling, 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.
Julian Block is a nationally renowned tax expert. He may be reached at email@example.com.