Oh pleaeaasse, Flexcare

traveltax · Aug 26, 2014

I think I need to jump in here and run through the tax home rules

1) A tax residence and a permanent residence are two separate things

2) A tax residence is your principal place of income, not where you choose to live. For most people this is easy because they have one job. If they two concurrent jobs, same thing, follow the money. Same for seasonal positions.

3) A permanent residence is where one has legal ties like a drivers license, car registration and voter registration

4) When an individual does not have a principal place of income, are in constant motion working temporary jobs (like travelers), there is an exception to this rule that allows the tax residence to default to the permanent residence.

5) To qualify under this exception, you must meet two of the following three requirements

A) Have significant income at home

B) Have substantial expenses maintaining your residence which are duplicated when you are away from home working

C) Have not abandoned your historical place of work/lodging, have family members at your home (spouse and dependents, lateral and lineal), or use the lodging frequently when home

Basically, you either work at home or have a financial burden to keep a home that you travel from. Toke payments to maintain the home will not fly in audits unless you have income there.

Flygaze · Aug 26, 2014

Regarding the "historical place of work," if I change from full time to PRN at my current job, can I still maintain that as a tax home? It definitely won't qualify as "significant income at home" bc I will be making more money at my travel assignment.

NedRN · Aug 27, 2014

B) Have substantial expenses maintaining your residence which are duplicated when you are away from home working
C) Have not abandoned your historical place of work/lodging, have family members at your home (spouse and dependents, lateral and lineal), or use the lodging frequently when home
Basically, you either work at home or have a financial burden to keep a home that you travel from. Toke payments to maintain the home will not fly in audits unless you have income there.

Hey Joe!

There is no doubt this traveler has a tax home, having never lived anywhere else. The question is if she still has a tax home away from home on business. There is also no doubt that she will incur expenses from working away from home that she would not incur if she simply stayed at home. There is also no question but what substantial costs are incurred from maintaining that tax home.

Exactly how are you parsing the importance of who is bearing that cost? In this case, it is her parents. Technically, they are allowed to gift her up to $20,000 a year tax-free, and she could use that to pay rent as a workaround if you insist that there is a paper trail regardless of history.

What if she lives with decades long spouse or boyfriend and he pays for all costs at home? Does the lack of personal payment also mean that this cannot be a tax home, again no matter the history? What if she lives with her children rent free, who believe that that is paid for by the 18 years of housing she provided them?

The costs of a tax home haven't changed just because someone else is paying for them.

HikingNinja, BSN, MSN, DNP, RN, APRN, NP · Aug 27, 2014

This topic is so complicated, you really need a tax pro who specializes in traveling before you get started. I contacted Travel Tax and they *****spoke with me at length about tax homes, gave me numerous and varied examples (trust me, they are numerous - its amazing how the IRS views situations that in my mind and so similar, but apparently not similar enough to them to constitute a tax home). We went over my exact situation and what I would need to do to maintain my tax home. In my situation, I've been able to keep my local per diem job and will work and pay taxes on this income for the 3-4 months I will spend here each year. As my per diem at home rate is nearly 3 times higher than the taxable hourly rates I've been quoted for travel assignments, I will be able to maintain my current tax home.

I really recommend calling or emailing and setting up a chat with the peeps at Travel Tax. They were super helpful, gave me numerous examples, and went over my exact situation and what I would need to do to keep my tax home. All in a free consultation. And they have a great workbook you can download that walks you through these things too.

traveltax · Aug 27, 2014

Regarding the "historical place of work," if I change from full time to PRN at my current job, can I still maintain that as a tax home? It definitely won't qualify as "significant income at home" bc I will be making more money at my travel assignment.

If you are keeping/maintaining a home (financial burden), then you will meet 2 of the 3 criteria that I posted. If your income at the PRN job has income that is equal to a typical 3 month travel assignment, then you would most likely meet the first criteria as well.

The "Historical place of work" points to the area that you lived and worked prior to traveling, not so much the one location

traveltax · Aug 27, 2014

Hey Joe!
There is no doubt this traveler has a tax home, having never lived anywhere else. The question is if she still has a tax home away from home on business. There is also no doubt that she will incur expenses from working away from home that she would not incur if she simply stayed at home. There is also no question but what substantial costs are incurred from maintaining that tax home.
Exactly how are you parsing the importance of who is bearing that cost? In this case, it is her parents. Technically, they are allowed to gift her up to $20,000 a year tax-free, and she could use that to pay rent as a workaround if you insist that there is a paper trail regardless of history.
What if she lives with decades long spouse or boyfriend and he pays for all costs at home? Does the lack of personal payment also mean that this cannot be a tax home, again no matter the history? What if she lives with her children rent free, who believe that that is paid for by the 18 years of housing she provided them?
The costs of a tax home haven't changed just because someone else is paying for them.

Who bears the cost is significant. If she lives rent free with parents or relatives (except spouse, SO) then she is not bearing the costs or at least, her portion of the costs. Use logic here, why should one get a tax break for housing when they only have one place that they pay for whether a perm home or a travel assignment. The purpose of these laws is to mitigate the duplicated expenses due to he travel requirements of work.

NedRN · Aug 27, 2014

Hi Joe, Please note my restraint in making jokes about accepting tokes. That would be quasi-legal at best in only a couple states. ;-). Also, IRS and logic!

Are you able to cite a reference for an SO exception versus other types of paid housing?

traveltax · Aug 27, 2014

Are you able to cite a reference for an SO exception versus other types of paid housing?

Can you elaborate? what do you mean by "other types of paid housing"?

If you have a spouse or a SO that you live with, chances are that you will have shared expenses for the housing if that is what you mean

NedRN · Aug 27, 2014

I did elaborate above. The nurse who has only lived with her parents. I can make up other examples. You made the distinction of an SO being allowed.

traveltax · Aug 28, 2014

I did elaborate above. The nurse who has only lived with her parents. I can make up other examples. You made the distinction of an SO being allowed.

Regardless of circumstance, living with relatives without making any financial contribution to the home will not rise to the level of a tax residence unless you earn significant income at home

NedRN · Aug 28, 2014

Except with a significant other you said. Can you give an IRS citation?