We're stumped on this one....here's the scoop:We currently live in an AZ apartment. We also are on the title to a house in AZ & have a mortgage on it(retired parents live there though). We've both been offered 1yr+ contract jobs in VA/Washington DC area and the jobshops want to pay us some of the hourly contract rate as "per diem".Here's the question: How much can we take as per diem and for how long?We don't know what we will do after a year if we take positions in DC. We may just stay there a while...We've heard rumors (from other contractors) that you can take per-diem for one year only, but is it true and is it a tax year or 12 months? On the amount, do we have to limit it to US govt "CONUS" numbers & do we keep receipts for every trip to the gas station or McDonald's?The US treas web site is particularly confusing. We looked at pub 1524, but that just shows the CONUS rates...no answers! We're drowning in numbers....-- drowning in the desertb&r katz
I did a contract job for 1 1/2 years and there weren't any challenges, though I was ready. Presumably the person contracting you will provide housing for you--this isn't taxable to you, even if it comes with all furniture, linens, pots and pans, cleaning service, cable TV, etc. You can deduct a fixed daily amount in the catalog--the CONUS number, I think--without showing any receipts. If you go to good restaurants, it gets hairier and a 50% may apply. Something around $30 a day for food you can deduct, which differs according to the city. My job was originally for a month. After a week or so they said, "We don't yet have a permanent person. Would you stay 3 more months?" This continued for 18 months. If at some point the job becomes "permanent", you can't continue the arrangement. If after several months the group contracting your services looks like they are hiring someone "permanent" or you have finished the job and are no longer needed, the presumption is that you either return to AZ or go somewhere else. If there are questions, having an AZ license plate on your car and AZ voter registration in your wallet would be helpful. You could put your furniture in the house your folks are living in and have that address for voter registration; you should not appear to have "moved" to the temporary job. It would also be well to vote as an absentee voter in AZ. If the contractor designates the CONUS number as "per diem", that is fine--then you will not pay income tax or social security on that sum, though you could not deduct a further amount on your own taxes. These temporary jobs can be very rewarding and give you a whole new outlook on life. Enjoy!
Thanks for the info. Looks like it will work out better for us tax-wise to go for the per diem. Turbo Tax seems to handle it just fine too as the amount is reported on a standard W-2 form along with regular income (but NOT in box 1, which is taxable).katz R&B
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