Tax question

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Specializes in ICU.

When I signed up with my travel company, there was a form that declared permanent residency. The form stated that one had to make reasonable and substantial payments to maintain a dwelling in their permanent state. What is a "reasonable and substantial" payment? I let my lease expire, and I crash at my parent's house between assignments. Any advice?

Thanks!

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Specializes in ED, Hyperbarics, EMS.

I am not offering legal advice, for that you should consult your attorney or tax professional. However, the form they gave you is to protect them, it really isn't a binding agreement on you. They just want to make sure that the IRS or state revenue services can't come back on them later and say they knowingly aided you in tax evasion. How you handle residency and tax status is largely between the government and yourself.

So long as your parents live in the same state as you, and you go through all the motions to make that your legal address, and at the end of your assignment you INTEND to return to that state, you have minimized your problems. There are MANY MANY "catches" to residency and domicile, so it is worth consulting a tax professional if you are planning on making travel a long-term thing (more then one contract) because they will be able to advise you based on your individual situation.

Austin

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Specializes in Stepdown/Tele/MS.

In order to get the tax free money, you need to show the IRS that you have a "Tax Home". The stipends you get from the IRS assume you are being burdoned with having to travel and will have some double expenses.

Unless you can show that you have a permanent address in the state you are from and that you intend to go back, be wary of the IRS.

For me my burdon is that I own my home and have to pay a morgage and utilities. I still have a checking account and all my CC's Bills ect show my address. My cars plates are still registered and my drivers liscence is from my home state.

Long story short, you could possibly get around all of this by claiming your parents address as your own by having your mail forwarded there and making that address your official address. I believe you would also need to write your parents a check for some money as well to show you are paying rent/utilities.

Always talk to a tax proffesional that has experience with travelers. I go to HR Block Premium and request a person with experience. It costs about $150 extra to do it, but the peice of mind is worth it.(Not to mention all the money I save tax free:smokin:

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Yes, please consult a tax attorney.

It is likely fine to "rent" from your parents, but they would then need to claim that as rental income on their taxes.

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Specializes in Adult & Peds psych, PICU, nsg mgmt.

I'm just curious about anybody's feedback or suggestions...trying to decide what I want to do...

My apartment is $485/month plus electric (about a hundred a month in the winter, half that in the summer).

Would I be better off financially:

a) keeping it and getting the tax-free allowances and deductions -or-

2) not keeping it and traveling without a tax home and getting none of the tax-freebies?

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Specializes in ED, Hyperbarics, EMS.

You don't need to pay your parents anything in rent, nor would they have to show your rental income. Your arrangement for housing with your parents is between you and your parents, and it is perfectly acceptable for them to house you rent-free.

Keeping your apartment would be the "most correct" method of proving residency/domicile. It's also a waste of over $6,000/yr. You must[\b] have a domicile ("tax home") somewhere, it is not optional, but you could change your domicile each time you go to a new travel position/location. That would entail changing your address on EVERYTHING, getting a new driver's license, registering to vote, changing your insurance, etc. Each time you moved to a new location, you have to sever all ties with the last location. A pointless exercise, in my opinion, even ignoring the "tax advantaged" money they are talking about.

The most important part about your domicile is the INTENT to return. If you are leaving somewhere to travel temporarily there but do not INTEND to stay, then you are "traveling," not "moving." So if you change all your insurances, driver's license, vote registration--basically ALL of your ties in the world--to your parent's address, and INTEND to return there when you are finished traveling (even if only for a short time between assignments) then that is your domicile. Even if you DON'T return in between assignments, so long as you don't establish ties to a new location and always INTEND to return to your "domicile" when you are finished traveling, you should be fine. If you stay in one place too long (generally anything over a year is bad) or start to "mix and match" addresses, you will have a problem.

Personally, I would just use a service like Escapees THey are set up for RVers (who have MUCH MUCH larger residency problems then anyone travelling) and are in the traveller- and tax-friendly state of Texas. They have a guide somewhere on their website "How to become a Texan" which talks a lot about domicile and tax status.

I've found a lot of contradictory information in these forums, so all things considered, if you are uncertain of who's advice to follow (not that you should be getting legal advice from the internet, incidentally) it will be better for you to just consult with a professional (so you can blame them if things go wrong.) It won't cost that much and will save you some heartache later on.

Austin

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From what I read on the IRS website about a tax home, no, it is not the intent. It is the DUPLICATION of expenses that the tax code talks about.

Please look at www.traveltax.com

He specializes in travel professionals.

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Specializes in ED, Hyperbarics, EMS.

The tax code being what it is, it is all shades of gray. As I said, the most correct thing to do would be to maintain a residency in a place of your choice. It is a no brainer to prove to the IRS at that point. However, I personally believe that is a waste of money and energy. Regarding residency, the most important concept is one of intent, and to say that is wrong is completely incorrect.

You need to remember that as a traveler you are a temporary employee and are establishing no ties to the community. You live there for your employer's convenience, and are being reimbursed for reasonable expenses as part of that temporary employment. You intend to return to your residence at the conclusion of your assignment, though sometimes you are unable to because your next assignment/other factors do not allow the time for that.

Duplication of expenses--while I understand the premise--is a poor test, and is unreasonable. An example: If my "home" were a cabin in the mountains, that is a perfectly good home. Even if I did not have telephone, cable tv, internet, etc, that does not mean it is still not my home. If as a result of my job, I was gone 11 months of the year, that does not make it less of a home--it is still mine, and I "live" there, because I intend to return. Even if I disconnect electricity because I am there so infrequently it is economically viable to run a generator, and as a result I have no expenses, that does not invalidate it as a home. The principle can be applied to anything: If I were to live with my parents, yet the arrangement I had with them does not include any financial remuneration, that does not make it less of a home. That does not change if I were to accept a travel position.

The problem that is going to come about is if you "move" into your parents without any actual intention to live there. (Especially if it is in a different state.) If you do not make efforts to show that is your new home, by changing your driver's license, vehicle registration, car insurance, renter's insurance, voter registration, have all your bills updated to reflect your new "permanent" address, etc. If you do not make the effort, and the IRS says you do not live there because your vehicle is registered in the state you are traveling in--you are screwed. They need to prove either that you do not live there or that you do not intend to live there. If they can't prove those things, then technically speaking they can't challenge your taxes on that basis. The burden of proof in taxes is sadly a "guilty until proven innocent" situation, so even if you are technically correct, you may still be screwed. Taking any deductions outside the standard is a risk, because the IRS can kick any of them back with limited recourse on your part.

With ALL that said, I still highly recommend seeking out a tax professional or attorney to get legal advice from, as the above is not legal advice. Each person's situation is uniquely different, and each professional has a different take on what is correct, as the tax law is very complicated. The money involved is minimal for the piece of mind (particularly with conflicting advice).

Austin

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