Tax home question

[JMoore_2007]

Alright, so I'm looking into starting my first travel nursing assignment. I have a question regarding the tax home situation. I've read up on it a lot and I have a basic understanding of what a tax home is. I currently own my own place (mobile home). I have been there a few years. I pay all the rent/utilities/etc. So I know this would qualify as my tax home when I'm on assignment. My dilemma though is this: I live in Pennsylvania. It gets very cold and with winter coming up, I'm not comfortable leaving my place empty while I'm on assignment. Even with someone periodically checking in on it for me, all it takes is one day with the furnace going out or something and frozen pipes etc. I could have a serious mess on my hands without even knowing it while being away. I also know I can't simply rent it out and have that still qualify as my tax home. So I'm leaning towards selling it prior to starting a travel assignment.

I'm not too keen on the idea of being an itinerant working though either, and missing out on the tax free perks you get by traveling. So my question is this: Would I be able to say rent a room from a friend/relative? I'm not talking like they let me live there for free, or for $25 a month. I know that still doesn't qualify me for a tax home by definition. I'm talking legitimately rent off of someone. For example: 400 a month to rent a room. Totally by the books. They'd claim it as income for their own personal taxes. I'd actually stay there between assignemnts. Does it matter if it were a relative I was doing this with? Or does this too still qualify as a tax home for me? I'm hoping so, that way I get the best of both worlds. Still qualify for the tax free benefits of traveling, without the worrying of leaving my place empty during the winter for god knows what to happen while I'm gone.

[NedRN]

I would suggest a consult with TravelTax - free and you will get all your questions answered. Moving your tax home at the same time you switch work modes from staff to travel is full of pitfalls that are individual and personal. I know a lot about tax homes, but for this shift, you really need professional advice. Ideally though, it would be best if you stayed in your current area to rent a room. I know TravelTax will say that the rental should be at fair market rate, but if you find a legitimate place to stay that sticks to his other criteria, I think it is fine to get a bargain (by definition, I believe that is fair market), especially from someone not related to you. One other thing that can greatly strengthen and establish your tax home status is working there, perhaps per diem with a local agency or even a hospital if their requirements are not too onerous.

"Returning home regularly", a rather ambiguous instruction from the IRS, also helps prove your tax home status. A home is where you want to go home regularly to, and where your car is registered, driver's license, board registrations, physician, friends, family and so on. None of these factors are absolute, rather you are building a preponderance of supporting evidence.

An easier way to go if practical and comfortable for you and your trailer has two bedrooms is to get a roommate. Solves a lot of problems including mail and avoids establishing a new tax home.

Another word of advice for you, while you certainly should do the right thing to claim tax-free benefits because the consequences after a couple of years of doing so can be extreme if you are caught, the tax home issue is not going to trigger an audit by itself. Any audit will be because of something else.

But let reiterate once again, I'm not a tax professional, and I won't be at your audit!

[JMoore_2007]

Thank you for the information. I will contact TravelTax and get their take on it. Yes though, when I was considering renting a room from a friend or relative, it would be in this local area I currently live. Same town. Seemed the easiest solution to me. Everything of mine is tied down to this location (drivers license, vehicle registration). I thought as long as I'm paying fair market value, which I would be, then it perhaps wouldn't be an issue. I'd be returning here between my assignments. I'd even be keeping my nursing job here, that I've done full time for the past 5 years, as per-diem. Leaving the option to pick up a shift or two between assignments as well. Hope to hear back from TravelTax that this is alright. I'm fairly firm on selling my mobile home. If this were to be an issue, then perhaps I'd rent a new place in this same area that I alone pay for as I have been doing where I currently live. Anything can happen to any place during a harsh winter when it sits vacant, but the idea of it being a mobile home just seems like a higher risk I'm not so sure I'd want to do.

[NedRN]

Your plan sounds like a solid tax home to me. You do want to make sure your costs are lower than the tax savings. This is about $10,000 a year for most travelers. Annual costs of less than that mean you are ahead!