Final answer:
To determine if software engineer Jim will be eligible for tax-free per diem, certain criteria need to be met. The assignment must be temporary, typically lasting less than a year, and in a location far from the employee's tax home. Jim should consult a tax professional or the IRS guidelines for a definitive answer.
Step-by-step explanation:
When it comes to tax-free per diem eligibility, there are certain criteria that a software engineer like Jim must meet. In general, per diem payments for travel assignments are considered taxable income. However, there are specific circumstances under which these payments can be tax free.
One of the conditions for tax-free per diem is that the assignment must be temporary. This means that it should not exceed a certain period of time, usually less than one year. Additionally, the assignment must be in a location that is significantly far away from the employee's tax home. If Jim is giving up his current residence and moving to another state for the travel assignment, it is likely that he would be eligible for tax-free per diem.
It's important to note that tax laws can be complex and vary depending on various factors, such as the specific terms of the assignment and the individual's tax situation. It is recommended that Jim consults with a tax professional or refer to IRS guidelines for a more accurate determination.