2011 Virginia Legislators' Tax Guide: Ordinary Business Expenses


As noted here, legislators are employees of the Commonwealth of Virginia. Generally, expenses which are ordinary and necessary to the performance of the legislator's duties are deductible on their federal income tax return.

Where to Deduct

The appropriate form for detailing deductible business expenses is Form 2106 — Employee Business Expenses. This form is subject to revision from time to time by the IRS. In the past, some legislators may have attempted "above the line" deductions of their expenses. Chief Counsel Advice 199939001 and the instructions to form 2106 state that this is not proper, and Form 2106 should be used. Since legislators are employees, business expenses must be deducted on Form 2106.

Where appropriate, each section of this guide has a reference to a line number on Form 2106 to help you understand the questions and answers contained in this guide and to assist you in properly reporting your tax deductible information on your federal income tax return.

 "Tax Home"

"Home" as used by the IRS is not necessarily synonymous with domicile or residence. A taxpayer's "tax home" has to be determined in light of all facts and circumstances relative to a particular taxpayer. The determination of what is allowable for traveling expenses depends on what is considered a taxpayer's tax home.

If, for example, your duties as a legislator were your main source of income, Richmond, being your principal place of employment, would probably be your "tax home" for IRS purposes. Your living expenses while at home in Richmond would be nondeductible. State legislators who normally reside in the Richmond area cannot deduct their commuting expenses.

Generally, the answers in this guide assume that Richmond is not the legislator's tax home. Thus, the answers will not apply to legislators who normally reside and work in the general vicinity of Richmond, including those whose "tax home" is Richmond.

A state legislator can elect under IRS § 162(h) to use his or her legislative district as a "tax home." A legislator making the election is treated as having spent an amount equal to the greater of the state per diem or the federal per diem while in the state capitol. If the state per diem is greater than the federal per diem, it cannot exceed it by more than 10 percent. When a legislator's tax home is farther than 50 miles from the state capitol building, the legislator is deemed away from home on legislative business on each legislative day and on each day he attends committee meetings where his or her presence is formally recorded.

You may wish to consult your CPA or tax adviser who can assess your situation and advise you as to the treatment of these expenses in your particular case.