Temporary assignment vs. Indefinite assignment.
Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for 1 year or less.
An assignment or job in a single location is considered indefinite if it is realistically expected to last for more than 1 year, whether or not it actually lasts for more than 1 year.
If the assignment or job is indefinite, reimbursements must be included in the employee's income even if they are called travel allowances and the employee accounts to the employer for them.
Your Intent is critical in determining temporary vs indefinite, and it can change during the assignment. For example:
IF a company INTENDS for the assignment to last 1 year or less and THEN the reasonable reimbursed expenses for lodging, meals, and transportation are considered ordinary business expenses and are not taxable.
IF a company INTENDS for the assignment to last longer than 1 year, THEN the reimbursed expenses should be treated according to the rules of a permanent move.
IF a company's INTENT changes during the course of the assignment, THEN the reimbursed expenses should be treated accordingly (business or permanent) from that point forward.
Expenses that are considered ordinary and reasonable while on a temporary assignment include transportation, lodging, and meals.
While on assignment, a trip home to visit family is taxable unless there is a business reason for the trip as are any reimbursements for family members to visit the employee during the assignment. Shipment of household goods (except for a few small items) are also taxable.
NRI Relocation can help with the complex management of a temporary assignment.
Have questions? Let's talk 800-598-8887.
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