Q: How do I establish and keep a “tax home?”
A: Full disclosure, I am not a tax professional. However, I have worked in the industry for 5 years and this information comes straight from a tax professional in addition to my accounting department.
It’s important to realize why travelers receive tax free benefits. The thought is, since a traveler is “duplicating living expenses,” they should be able to receive tax free money to cancel out the expense of living in a new location. In order for you to receive said tax free money, you must have an established tax home.
As a reminder, a tax home is considered your economic home base. There are a few requirements you must meet in order for a location to be considered your tax home.
For one, you must have performed part of your business, i.e. earned income, in that area. You must also have lived in that area. In addition, you must be financially responsible for the residence which could include rent, taxes, or repairs. You also must not abandon that tax home. So, you have to return frequently to visit that tax home.
That said, in the research I have found, you have a couple of tasks to do to establish and keep a tax home.
In order to establish a tax home, you need to show that you pay fair market rent for the place you use. The price could be any amount depending on where the location. Search craiglist for examples of pricing. Pay rent to whomever using checks to create a paper trail.
Now, in order to qualify as a traveler, you need to work outside of the location where your tax home is located. There is no specific amount of miles away from there you need to meet to qualify. You just have to be outside of reasonable commutable distance.
Have other questions about travel? Please comment below!
If I own my own home in Georgia, but am traveling outside the state. Does this apply for me? My son still lives in the home and I pay my mortgage monthly. Aureus pays my rent in Louisiana.
Hi Shannon! Yes, you qualify for those stipends because you are “duplicating expenses” by paying mortgage back at home and because you need to pay for housing in your assignment location! Thanks for reading and for asking questions!
I own my home, which is paid off. I’m still responsible for the insurance, prop. tax, etc. Would I still qualify?
Yes Wendy. That should still qualify. While you don’t have a mortgage, you still have expenses associated with owning a home.