Tax Planning for Professors on Visits and Sabbaticals

With today's expiration of the AALS deadline for accepting a visiting professorship for the 2009-10 academic year, I thought it would be a good time to re-post the article, Tax Planning for Professional Sabatticals, by Myron Hulen (Colorado State University, College of Business), William Kenny (Portland State University, School of Business Administration) & Anne L. Christensen (Montana State University, College of Business). Here is the abstract:

A sabbatical leave and a visiting position at another university offers professors many professional and financial advantages. Among the financial advantages are often favorable taxation of the expenses incurred and income earned at the expenses earned at the visiting university. This paper discusses the tax implications of a visiting position including the rules of eligibility for traveling deductions, rules for deducting travel and transportation expenses, implications of taking a position outside of the United States, the problems caused by the Alternative Minimum Tax and other related issues. Also covered are the recorded keeping requirements and the use of the federal per diem allowances.

Note the comment about the AMT, which can be an enormous problem for visiting professors.  Deborah Geier (Cleveland State) offers this helpful advice:

It is really important for visiting professors to negotiate well with their institutions. Insist up front that your travel expenses (to and from) and living expenses while there (rent) are "reimbursed employee business expenses" and thus excludable under Treas. Reg. § 1.62-4(c). Do NOT negotiate for a higher salary, out of which you will pay these expenses yourself (which are deductible only the exent in excess of the 2% floor under the regular tax and are not deductible at all under the AMT).