I recently started at Accenture in a Management Consulting job. I will be traveling for a long term project (11ish months). At my old firm my credit card expenses were paid directly, now they will be paid through my paycheck. Will this affect my income on my tax return? Could this potentially move me to a higher tax bracket? Also heard people say we may have to pay compensatory taxes - can someone help me understand this more?
Mar 15, 2016
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In general, your core business expenses (e.g., travel to client site, hotels, etc.) should not flow through to your income. At least they haven't in my experience. The only expenses that technically should are alt. travel (e.g., go to NYC for a weekend vs. back to your home city) or bringing a spouse to your client destination. Technically, this benefit is legally taxable.
Regarding compensatory taxes: I don't know the details, but my understanding is that, after 12 months of traveling to the same client in the same city, the IRS thinks that you should just move to that city, and so they begin treating your travel expenses as taxable income. I think most firms somehow compensate employees for this when it becomes a problem (although 12+ month engagement are pretty rare), but, again, I'm not sure on the details.
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