Confusion on housing stipend

KatieBell · Mar 19, 2008

The home you own but do not live in is not your tax home. You dont have any ties to it (yet!) except for owning it. To have a legal tax home however, you must be able to prove that you are duplicating expenses and maintaining a home elsewhere. (Like for me I own a home and can show that I regularly return there,and that I pay bills like electric etc I have community tieswith my church and other organizations there) If you are not paying rent to parents, or somehow "contributing significantly" to maintaining that home, I am thinking your parents home doesn't entirely qualify you for a tax home either. To be on the strict legal side of things you may have to have your housing stipend taxed, rather than tax free. In general your parents address would be fine, but it might be a litte hard to explain in an audit. Your recruiter may also tell you not to worry about it, but in the end your recruiter is not going to the audit, you are.

Tax homes are complex things, and a lot of people dont understand how they work entirely. it involves alot more than an address.

there is a person who does travel tax info and his site is very helpful (Which is where I got all my info when Istarted to travel...) wish I had the link handy.

BrandiannRN · Mar 19, 2008

Thank you! So, as long as I have receipts from all last year and this showing that I pay rent to my mom then I should have "duplicated" but maybe I should just have it taxed that way I won't have to worry.

KatieBell · Mar 19, 2008

As long as you have cancelled checks or some traceable thing saying that rent is paid to your Mom, even while you are on assignment, then you should be fine. (even if your mom turns around and gives you that money back!! i would definitely not have your housing stipend taxed as long as you can show that money is being paid for rent on a continuous basis. and I think since you have been living there, and have family thereis is obvious even to crazy tax people that youhave ties to the area.

Best Wishes. I just drove through Ok on my way to NM and I have to say it was the friendliest state ever!!! (even considered doing an assignment there because people were so nice.)

Medic15251 · Mar 20, 2008

maybe I should just have it taxed that way I won't have to worry.

That would be a mistake if you actually do have a tax home. You would basically be throwing money away each month.

The above poster mentioned paying your mom the rent then your mom paying you back. This too is a bad idea because it is illegal. If you pay your mom rent she has to declare it as income and pay taxes on it.

KatieBell · Mar 20, 2008

Yes of course mom has to declare it as income, but there is nothing stopping Mom from giving her child a gift, if she so chooses.

ERRNTraveler, RN · Mar 20, 2008

Actually, the home you own can be your tax home, because you are paying a mortgage payment for that home. So by traveling, you would be duplicating your living expenses.

KatieBell · Mar 20, 2008

Actually this scenario has been discussed multiple times on another forum. Many travelers want to buy an inexpensive home in a compact state and then call it their tax home. According to the tax experts it is not their tax home, because they have never really lived there, worked there or developed significant ties to the community.

Just paying the mortgage is not enough, especially when it comes to being audited. This I get from the Traxel Tax expert, not out of my own mind.

In addition, you can't rent out your tax home while you are gone because then it is not your residence anymore, it is the residence of the tenant. And it goes on and on. Tax homes are really very complicated.

ERRNTraveler, RN · Mar 20, 2008

Ok, I am assuming that she occasionally visits the home that her and her fiance own, and that they are planning on living there when they get married. They are paying a mortgage there, and, to prevent the pipes from freezing, have probably hooked up and are paying for utilities there (electric, heat, water, etc....) She never said she was renting it out. According to Kobaly.com, this could be considered a tax home because she is duplicating her living expenses.

KatieBell · Mar 20, 2008

In general a mortgage goes a long way in proving a tax home.

But the other criteria is that you need to prove some sort of ties to the community, not just own a home and maintain it in some area. Yes, she is duplicaitng expenses and may occasionally visit the home, but since she has never actually lived in the home, it would be difficult to prove any sort of ties to the community, which is the other criteria of a tax home.

Several people have tried to gain compact state status by buying a home in a compact state and maintaining it, and have been told that this is not a tax home until they establish what appear to be binding ties to the community (your vehicle is registered to that address, you vote there, and stay there for extended periods of time).

If she were to be audited using her OKC mortaged home as a tax home, I think the IRS wouldn't blink an eye, but technically, she needs to be duplicating expenses, and showing significant ties to the community in which you claim your tax home. Planning to live somewhere in the future usually doesn't satisy the IRS.

This was debated rabidly on another forum, and the two criteria that were needed by the travel tax experts were the duplicating of expenses, and demonstration of significant ties ot the community.