Hope each of you had a wonderful Christmas and New Year. 2012 is underway and that means yet another tax season.

Our annual tax workbooks are ready for your download. If you have not been to our website in the last few months, you’ll notice a fresh look and much better organization thanks to my wife who is officially working full-time in the office. An added benefit of the workbook will be a fill-in Adobe version which should be posted by the 13th of January. This will allow you to enter information and save it randomly as you assemble your material. As always, if you have any questions along the way any of our helpful staff will be able to assist you.

***Upcoming Seminars and Workshops

A reminder about our January tax workshops and teleconferences. Our live workshops will be held in

  • San Francisco, January 6th and 7th
  • Seattle, January 8th and 9th
  • Fairbanks Alaska, January 10
  • Los Angeles, January 13th and 14th
  • Phoenix, January 15
  • Dallas, January 23

Our teleconferences will be scattered throughout January and the remainder of the tax season.

Details including times, registration and locations can be found on the first page of our website www.traveltax.com

***Federal Tax News

Presidential election campaigns no longer financed through tax returns Have you ever noticed the little checkbox on the first page of a tax return asking whether you want to fund the presidential election campaign? That question is now a thing of the past with recent legislation.

Standard mileage rates: For 2012, the standard mileage allowance for business expenses remains the same at 55.5 cents a mile. Medical/moving expenses are $.23 a mile and charitable mileage at $.14 a mile.

Assistance for returning veterans – Employers that hire returning veterans have an expanded list of incentives and tax credits to encourage their employment. If you are returning veteran or an employer and want to find out more about these programs, the free to contact us

***State Tax News

Professional practice licenses targeted more It all started in California-the practice of pulling a list of active professional practice licenses including nurses and physicians, and cross-referencing the list with state tax return filings. Any non-filer, regardless of whether they earned income in the state, was sent a letter asking for a tax return. If there was no reply within a certain period, a tax lien was filed based on the amount of income reported on the federal return. This practice is now extended to almost every state. We are encouraging clients to file what is known as “zero” returns in states in which they hold licenses, but do not have income. Since the “possibility” of earning income still exists, state tax agencies hungry for additional revenue are pursuing this.

New York no longer accepting federal extensions Most states will typically accept a federal filing extension in place of their own form. Only a few states require separate extension to be filed. New York is now among those requiring a separate extension.

***Other Tax News

Staffing firms under exam: As we mentioned in our last newsletter, there are over a dozen staffing firms under audit by the IRS. We may see some additional changes in the way agencies construct their tax residence statements. One possibility is that some may require proof of mortgage payments or rent for those travelers claiming to have a tax home. A problem that industries employing mobile professionals have had all along is the lack of consistency with screening traveler’s tax homes.

State residency Issues: We have mentioned in previous newsletters that state tax departments have become very aggressive in asserting residency on anybody remotely tied to a state. States are particularly targeting those who have moved to another state but have lingering ties to the former state. It is important to note that most states assume that your residency continues until you have not only established a residence in the new state AND shut the door behind you in regards to the former state. It’s not enough simply to move but it’s equally important to sever all ties to the former residence.

Otherwise the former state of residence will have adequate justification to assert residency under their domestic laws spreading their tax net over your worldwide income.

Receiving per diem for housing while the company provides the housing One issue that is arising frequently in industries employing mobile professionals is when an employer or staffing agency provides the housing for the traveler AND pays lodging per diem, taking out their costs, and then paying the remainder the traveler tax free.

This is not kosher in the eyes of the IRS. A per diem given to an employee as a reimbursement for lodging should be free of any employer involvement in the lodging cost. In other words, per diem is for the employee to use not the employer to dictate its use.

When the employer is involved in the cost of lodging and pays a per diem or stipend in excess, the amount that exceeds the cost is taxable to the employee and subject to employment tax to the employer.

60/40 splits: Another issue that is common among staffing agencies is the practice of paying a blanket per diem or allowance without allocating a portion to meals. Under the regulations, when an allowance, stipend or per diem is less than the published rates, 60% of the payment is deemed to be for lodging and 40% for meals.

Since meals are only 50% deductible to the individual and employer (absent rare exceptions), allowances cannot be held out as 100% deductible payments. An employee’s tax return is also required to reflect this allocation.

Would you like to work as a state tax auditor in California? There on a hiring binge right now. The qualifications are listed below- notice, no experience is required

“We are now accepting applications for our Auditor Evaluator I positions.

The California State Auditor is seeking motivated candidates who already have or are within a year of graduating with a degree in accounting, business, finance, economics, or MPA/MPP/MBA/JD graduate degrees. Candidates must have strong analytical and writing skills and a desire to be challenged. No experience is required; we will train you”

***Last Things

Remember to mark your calendars for October 18 and 19th, 2012 and attend the fifth annual Travelers Conference in Las Vegas. Details can be found at www.travelersconference.com

The filing deadline for the 2011 tax year is April 16, 2012 since the 15th falls on a Sunday.

With the emergence of 2012 a number of tax provisions have expired.

Congress will be quite busy this year deciding which one of these to keep as many of them are popular tax deductions. A list of these can be found at http://clicks.aweber.com/y/ct/?l=EYDex&m=JNIfeKoe1Xkidv&b=qGStyS5xvH0xDs_iod97Xw

Joseph Smith EA

Enrolled Agent, Admitted to Practice Before the IRS



Office 402.379.7818

Fax 877.872.8829

TravelTax LLC

Box 1643 Norfolk, NE 68702