Tax home?

[cardschicarn]

I am taking my first travel assignment beginning next week and am having second thoughts and possible regrets about quitting my staff job. I believe i am considered an itinerant traveler because I do not have a "tax home". I have been living with my parents the last three years while working, getting mail in my hometown, etc... But I do not duplicate expenses because I did not pay rent to them. I know there is a checklist for determining tax home eligibility and two of the options are duplicating expenses (which I'm not) and working in the place of your home (also which I am not).

Do you guys agree that I do not qualify for a tax home? I'm not requesting professional advice, just some quick opinions. Thanks!

[PacoUSA, BSN, RN]

You have been there for 3 years and using that address when you file taxes? That in my view IS your tax home. Start paying your parents something of a rent and then you will legitimize the tax home even more when you travel.

[NedRN]

You have been there for 3 years and using that address when you file taxes? That in my view IS your tax home. Start paying your parents something of a rent and then you will legitimize the tax home even more when you travel.

I agree completely. You are continuing to live in your historical place of residence, not using it as a change of address at the moment you start traveling. Living with family actually improves the strength of your tax home. Presumably your family gets a lot of added value from your presence in lieu of fair market rent.

TravelTax disagrees with this statement, but if I was in your position and got dinged in an audit (very small possibility), I would fight it all the way to tax court. Obviously if you work away from your historical and current home on business, you will incur duplicated expenses that you will not have had if you continued to work at home. I think you have a strong tax home but I am not a tax pro and will not be present if you are audited.

That said, there is no harm in establishing a direct financial connection with your tax home (beside your work history and residency there). I might suggest rather than rent, you take over the utilities. Not only does that get you on the record in a very solid way as obviously contracts with parents are not arm length negotiations, but will help you establish credit in a way that rental payments never will. You can set up utility payments to pay automatically so you don't have to fuss with them while you are on assignment (and will never be late with a payment either).