Final Preparation for Traveling...

NedRN · Apr 18, 2014

What are you doing with the current place you live? If you just use an address of convenience such as your mom's, you have lost your tax home and all your compensation, including provided housing or stipend, is now fully taxable.

So unintended consequences aside, your plan for mail is as good as it gets. Don't overlook changing really important addresses, like your BON address. Don't depend on just a simple change of address at the post office. Changing your address at the post office may also result in credit card cancellation as those bills will not forward, but be returned.

Personally, all my bills are on auto-pay one way or another. Thus I can never miss a bill date and suffer loss of service or late fees.

KrichRn88, BSN · Apr 19, 2014

Thanks. I rent know so I'll be giving it up. I really have no taxable properties or anything so hopefully after traveling i might find something/ someplace to live. I do already have auto pay and electronic bills already. Im not sure what you mean with the tax home and stuff. They are providing it....can you explain further? Thanks

NedRN · Apr 19, 2014

If you have a home and travel for business, those "replacement" expenses you incur such as housing and restaurant meals are tax deductible. This is the basis for agencies to provide housing, per diems, and travel pay tax free as "reimbursements". If you are not traveling away from a "tax home", you are itinerant (without a home) and thus are never away from home. Home is where you are working, just like most employees. Thus there is no special tax treatment, and you must pay taxes on all compensation, including housing, per diems, and travel pay.

KrichRn88, BSN · Apr 19, 2014

Ok. So I'm 25, if i just said my home was my mom's house then is there a difference. I don't see how much sense it makes to continue to pay rent and utilities on somewhere I'll never be again. Right?

MereSanity · Apr 19, 2014

But, paying taxes on that "extra income" may be less in the long run when compared to paying for a "tax home" and not living there (taxes, rent or mortgage, upkeep, utilities).

NedRN · Apr 19, 2014

Ok. So I'm 25, if i just said my home was my mom's house then is there a difference. I don't see how much sense it makes to continue to pay rent and utilities on somewhere I'll never be again. Right?

If you will never be there again, then it cannot be a tax home. One requirement of a tax home is that you return "regularly". If it is not your real home, of course you won't do that.

Does it make sense to pay rent and utilities? Sometimes. Lets say you rent a room (as a mostly absent roommate - perhaps even in your mom's house) for $400 rent/utilities. The tax benefit is around $10,000 to $12,000 a year for most travelers. Subtract $4,000 from that for tax home costs and you are way ahead!

Let's consider buying an inexpensive home and getting a roommate. Half the mortgage cost will be borne by the roommate, and you are building equity with the entire amount. Lots of possibilities on the numbers, but chances are (barring another collapse of housing values), you will be far ahead of traveling itinerant. You will also have a place to go between assignments, and a place to get mail. A roommate (or mom) can also screen mail for anything important enough for immediate attention.

Traveling as an itinerant may be the best way to go. But faking a tax home carries risks if audited of large amounts of back taxes, penalties, and interest.