J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

20.6 Local Lodging Costs

Lodging costs are generally deductible only on trips “away from home” (20.7). However, the IRS allows an exception for certain local lodging costs that enable you to participate in a business meeting or training. An IRS safe harbor allows the deduction if: (1) the lodging is necessary for you to participate in or be available for a business meeting, conference or training, (2) if you are an employee, your employer requires you to stay overnight, (3) the lodging does not extend for more than 5 days and does not recur again within the same calendar quarter, and (4) the lodging is not lavish or extravagant under the circumstances. For employees, the deduction must be claimed as a miscellaneous itemized deduction subject to the 2%-of- adjusted gross income floor (20.30).

Even if the safe harbor does not apply, the IRS allows a deduction for local lodging costs that have a bona fide business purchase under all the facts and circumstances.

If your employer pays for lodging that satisfies the safe harbor or the facts-and-circumstances test, the value of the lodging is considered a “working condition” fringe benefit that is excludable from your pay (3.9). Similarly, if you pay for qualifying local lodging and are reimbursed by your employer, the reimbursement is excluded from your pay provided the reimbursement is made under an “accountable” plan (20.32).

According to the IRS, local lodging that an employer temporarily provides to a new employee who is searching ...