Storing possesions

NedRN · Mar 5, 2014

If you own a home, you can leave your possessions there! In any case, you need an address of record for taxes, car title and drivers license, nursing license, and similar legal or financial (banks/credit cards/bills) communication.

You appear to be referring to a "tax home", an IRS construct that helps to determine if you are eligible for special tax treatment of expenses incurred while working away from such a tax home "temporarily". All "duplicated expenses" incurred just because you were not working at your tax home are fully deductible. Such duplicated expenses would be housing, travel, and meals (increased costs because you are eating out presumably).

The baseline is that your employer can reimburse you for these receipted expenses, but the amount of paperwork this causes for employees, employers, and the IRS is exceedingly burdensome so there is an alternative solution. The IRS accepts the GSA (General Services Administration) tables for housing costs and meals and incidental expenses (M&IE) which are generally called per diems as they are accounted for by the day spent away from home. Google GSA per diems for actual maximum numbers.

To use the GSA figures (agencies don't usually use the maximum allowed), you have to have a tax home and a business purpose - for travelers the business purpose is proven by your contract and your timesheets (I recommend scanning your timesheets and keeping them forever for this and other reasons). Thus if you are audited, you can prove that these were legitimate reimbursements while away on business.

Cross Country, the originator of so-called Tax Advantage based on these tax-free reimbursements, found that it increased travelers take home pay by 10 to 20 percent, just with some bookkeeping. The fundamentals of the travel business is that hospitals pay an agency an all-inclusive bill rate for every hour a traveler works. So there is a limited pot of money to work with. Tax Advantage shields a significant amount of money from taxation, as much as perhaps $40,000 a year. Not only federal income taxes, but state and local taxes, and FICA (or Social Security, often called payroll taxes) that accounts for another 15% of taxes between the employer and the employee portions.

So all told, Tax Advantage can as much as a third of that $40,000 a year, or over a $10,000 cash benefit to the traveler per year in actual taxes saved. That's a lot! Now it does depend on your personal circumstances to determine if the cost of keeping up a tax home with rent, mortgage, utilities, and maintenance is worth it. But now you have a figure you can work with.

This is just a basic outline and there is a LOT more to it. It is good to figure this out before you start traveling, because if you accept Tax Advantage and are not eligible for it, that will be a lot of built up tax liability if you get audited. Add interest and penalties and you might be looking at a tax bill of $50,000 after three years. That would take all the fun out of it for sure!

Agencies don't have to do the level of due diligence that a private party would have to if audited, so it is up to us to protect ourselves. You can read much more about tax homes and requirements on the traveler sites PanTravelers and TravelTax. But based on your home ownership, I can give you a tip: don't rent your home out. That effectively abandons your tax home and you will be itinerant for tax purposes (without a home) even with some address of convenience. There is a way around this, do a house share. You are required to have a place to return to at anytime (including a bedroom that is for your exclusive use) so you would have to do a contract with roommates that reflect this.

One requirement of maintaining a tax home is that your return home "regularly". The IRS doesn't define this term, so it is up to you to determine how often you go home. But a tax home consists of a multitude of factors and if it really fits the definition, you will need to return home: to vote, see your primary physician, and so on. I would say at least every 12 to 16 months, but don't invite me to your audit!

BTW, this was the short answer to your general question!

LPNMary · Mar 6, 2014

If you don;t need something to the point you need to store it, get rid of it. The money you save by not storing stuff can be used to buy new stuff when you need new stuff. Blows my mind what so many people pay for storage for basically junk- Americans just can't part ways with stuff. It's just amazing- there are even lots of TV shows about hoarding, storage wars, etc. On the other hand it can be great fun to go to storage places and bid on the contents of the 1000's of people that can no longer pay the rent to store their 'stuff'. so their lockers are put on auction- everyone of those places has monthly auctions. On another note- what about people that spend $5000 or even $10,000 to haul their 'stuff' cross country? If you do the math most folks will realize they can buy new stuff at their destination for less than what it costs to move their old stuff...

BonnieSc · Mar 7, 2014

I think there's a difference between storing stuff you can't fit into your own home and storing stuff because you're a traveler and only need minimal things with you. I don't need to take my sewing machine or nice cooking equipment to every new travel assignment, but it would be silly to get rid of them with the plan to buy them again in a year.