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My wife and I both have professional jobs and make pretty good money. My wife also got a part time job (W-2) at a ski resort this winter, mostly for fun, and was paid hardly anything (and only worked 10 days). She paid out of pocket to stay in the cheapest hotel on site on the nights connecting her work shifts. As a sidenote, for whatever it's worth, the hotel cost more than she earned on the resort, so with respect to that job she made negative money (but both the hotel costs and the income at the resort are drops in the bucket compared to our primary incomes). Also as a sidenote, the ski resort is in the middle of nowhere, and if she didn't stay on that resort she'd have had at least an hour drive each way, in potentially dangerous conditions, from the next closest options. The resort gave her zero accommodation options as part of her compensation, she was on her own to pay out of pocket, which is why she did. I should also note that I sometimes tagged along and shared the room with her, if that is relevant (but it was the smallest cheapest room on site).

  • Is the hotel cost deductible?
  • If yes to the above question... what year should the deductions apply to, considering that the hotel stays took place in 2019, but were all paid for in 2018.
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    The second half of your question hinges on whether you are using a "Cash Basis" or "Accrual Basis" when you file. Nearly all individual taxpayers use the Cash Basis method. And you can't change from one method to the other without permission from the IRS. If you have used the Cash Basis method in the past, and if the hotel cost is deductible, it will be deductible in 2018 -- when it was paid for. – Doug Deden Apr 8 '19 at 14:38
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    @DougDeden This has nothing to do with cash vs accrual. Cash vs accrual determines when revenue is earned and when expenses are incurred. This has, maybe, to do with whether this person's wife was a W-2 employee of the employer or a 1099 contractor of the company. – quid Apr 8 '19 at 17:12
  • @quid Isn't "when expenses are incurred" exactly what the (second half of the) question is asking? They were paid for in 2018, but the service was delivered in 2019. Thus, if they are using Cash Basis for their taxes, they would deduct it (if deductible) in 2018, but if they are using Accrual Basis, they would deduct it (if deductible) in 2019. At least that's my understanding, based on IRS Publication 538. – Doug Deden Apr 8 '19 at 19:37
  • No. Individuals are never operating on an accrual basis; there may be some wild exception to this, but it would be an extremely rare exception. If this person was a 1099 contractor then this was a business expense incurred last year, potentially against zero income, but nonetheless incurred and deducted against the business last year (unless that business operates on an accrual basis which again would be exceptionally rare for a sole proprietor to operate on an accrual basis). If this person was a W2 employee then the whole thing is probably a non-starter. – quid Apr 8 '19 at 19:41
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No it's not deductible. Any job-related expenses are solely the responsibility of her employer (with some exceptions such as uniform costs or business use of your car).

The IRS rule is fairly clear that only ordinary and necessary expenses are deductible. As you said, she COULD have drove the hour+ commute, so the hotel wasn't strictly necessary.

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    Correct conclusion (not deductible), but the main reason is that no business expenses are deductible for W-2 employees anymore. For other cases (independent contractor) where "ordinary and necessary" applies, it is also useful to note that "necessary" doesn't mean what you suggest: "A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary." – nanoman Apr 10 '19 at 5:39
  • Thanks! FWIW, today I managed to get in touch with a friend of a friend who is a professional accountant and he said pretty much the same thing. – The111 Apr 10 '19 at 5:49
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The previous answers don't seem to account for OP's crucial edit that the wife was a W-2 employee. Unreimbursed business expenses are no longer deductible by employees as of tax year 2018. So regardless of the justification for the hotel, it is not deductible.

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I am not a lawyer (IANAL), nor am I a CPA, but my advice is: don't claim it.

My understanding is that since you were a W-2 employee you would have to exceed some percentage of AGI (adjusted gross income) in 2018 for the amount to not "disappear" from an itemized return (because your AGI is great... it dwarfs this expense).

Since it isn't a significant expense (to you... considering your AGI) just eat the cost and leave it off your tax return.
If you are audited I don't think the IRS considers a one-hour commute excessive and may only allow that lower amount. And yes, I read the part where you said it might be dangerous to drive that hour (and I agree) but we aren't talking about what should happen... we're talking about what might happen in an audit :–)

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  • Commutes aren't deductible, regardless of length. – chepner Apr 9 '19 at 16:22
  • @chepner I didn't mean to imply that the commute is deductible. The hotel cost was the question, and I was pointing out that the IRS may only allow the daily rate of the less expensive hotel (regardless of it being an hour away, and regardless of the real/perceived danger). – J. Chris Compton Apr 9 '19 at 17:17
  • My (poorly made) point is that I don't think staying at a hotel to shorten (or make safer) your regular commute is a deductible expense. This table has an entry for deducting lodging, but reporting to your regular place of work probably doesn't count as a business trip. – chepner Apr 9 '19 at 17:31
  • @chepner You aren't considering the fact that it is not a commute, but instead may fall under temporary assignment or job, for which certain expenses are indeed deductible. – user71659 Apr 9 '19 at 23:37
  • @user71659: It wouldn't, because "main place of work" for the ski resort job is on the resort. There are two jobs, each having its own "main place of work", and neither having a temporary assignment. – Ben Voigt Apr 10 '19 at 5:58

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