Temporary Work for Fun, Profit, and Retirement

Temporary Work for Fun, Profit, and Retirement
By Eva Rosenberg, EA

The most fun I’ve ever had working was doing temporary work. Between jobs, I updated my résumé, called up a couple of temp agencies, and pestered them each morning until they put me to work.

The beauty of temp agencies is that you get access to companies who might never have considered offering you an interview, much less a job. You get to evaluate them to see if they stack up as an employer to your standards. You don’t have to interview. You simply show up and do a good job. They’ll generally offer to hire you.

Here’s my retirement fantasy: before choosing a retirement destination, I’d travel around the country in my RV. I’d get familiar with people and communities by doing temp work for weeks or months at a time through Robert Half Accountemps®. (You’d choose the agency best suited to your talents.)

Not only would I make money and get job offers, but I’d also get to know a community through the people I met at work. Besides, there’s juicy material there for a book and a blog, don’t you think?

Temporary work offers two primary tax benefits:

1) When doing true temp work (see below), you can take a deduction for all your mileage and auto expenses.

2) When your temporary job takes you away from home overnight, you can deduct the cost of meals and lodging.

Deduct your actual costs for a hotel room or an apartment, or use the IRS’s per diem rates. (See TaxMama’s Resources for the per diem tables.) You must choose one or the other for all your travel for the year—you can’t choose actual expenses for some trips and per diem rates for others.
Even when your employer reimburses you, it’s worth exploring the per diem tables. Sometimes, they are higher than the rates you actually paid. One client’s travels generated over $18,000 using the per diem rates, instead of the $8,000 or so he actually spent. After deducting the reimbursements, you might even have a substantial employee business expense deduction.

What deductions can’t you claim?

Although you probably need an especially good wardrobe for temp work, you don’t get to take deductions for your wardrobe costs. Your meals are not deductible, either. However, if you are taking out key personnel at various businesses to pump them for information about how to get hired permanently, you might get away with those meal expenses. Be sure to keep notes on the business purpose of the meal.

As a full-time temp, your mileage and travel won’t be deductible. When voluntarily temping for a year or more as a career choice, the temporary work is your main job. When temping for more than a year while still seeking full-time work, document your efforts to find a permanent job.

As for you RV-ers working your way around the country with no permanent home—without a home, there’s nowhere to travel from, so none of your mileage or travel expenses are deductible. However, if you are traveling and writing—and getting paid to write—you just might be able to pick up your costs as business expenses. Do some proper planning, and you can write off your life!

Eva Rosenberg, EA is the publisher of TaxMama.com, where your tax questions are answered. Eva is the author of several books and ebooks, including Small Business Taxes Made Easy. Eva teaches a tax pro course at IRSExams.com.