January 20, 2022
Note: The Roundup is taking today off today. It will return tomorrow.
The tax law says your "tax home" is the place where your job is. With the rise of remote working, it's not always obvious what that means.
The location of your tax home matters because travel expenses have to be "away from home" to qualify for tax breaks. If your job is in Iowa but your spend a lot of time in Florida, the tax law says your trips back and forth are just a long, and non-deductible, commute; any employer reimbursement is income, instead of tax-free expense recovery.
The IRS Business Travel Expense page explains:
Generally, your tax home is the entire city or general area where your main place of business or work is located, regardless of where you maintain your family home. For example, you live with your family in Chicago but work in Milwaukee where you stay in a hotel and eat in restaurants. You return to Chicago every weekend. You may not deduct any of your travel, meals or lodging in Milwaukee because that's your tax home. Your travel on weekends to your family home in Chicago isn't for your work, so these expenses are also not deductible. If you regularly work in more than one place, your tax home is the general area where your main place of business or work is located.
The pandemic has shown that some people can work from just about anywhere. The tax law says a residence can be a tax home if the taxpayers have no other "primary" place of business.
What if you decide to travel to multiple scenic locations and do your work wherever you go? IRS Publication 463 explains:
If you don’t have a regular or main place of business or post of duty and there is no place where you regularly live, you are considered an itinerant (a transient) and your tax home is wherever you work. As an itinerant, you can’t claim a travel expense deduction because you are never considered to be traveling away from home.
Remember, too, that working in multiple places could mean you have to file in multiple states.
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