Tax Home
A taxpayer's tax home is the regular place of business or post of duty, regardless of where they maintain their personal residence. The tax home determines whether travel expenses are deductible as business travel.
Exam Tip
Tax home = place of business, NOT residence. Temporary (<1 year) = travel deductible. Indefinite (>1 year) = tax home shifts. Itinerant = no tax home, no deductions.
What is a Tax Home?
The tax home is the entire city or general area where a taxpayer's principal place of business is located. It is NOT necessarily where the taxpayer lives.
Determining Tax Home
| Situation | Tax Home |
|---|---|
| One regular workplace | City of workplace |
| Multiple workplaces | Main place of business |
| No regular workplace | Where taxpayer regularly lives |
| Itinerant worker | Wherever they work (no tax home) |
Tax Home Factors (Multiple Workplaces)
| Factor | Weight |
|---|---|
| Time spent | Total time at each location |
| Business activity | Degree of activity at each |
| Financial return | Income earned at each |
Travel Expense Deductibility
| Scenario | Deductible? |
|---|---|
| Travel away from tax home | Yes (lodging, meals at 50%) |
| Commuting to regular workplace | No |
| Temporary assignment (<1 year) | Yes |
| Indefinite assignment (>1 year) | No (tax home shifts) |
Exam Alert
Tax home = principal place of BUSINESS, not residence. Temporary assignments (<1 year) allow travel deductions. Indefinite assignments shift the tax home. Itinerant workers have no tax home and cannot deduct travel.
Study This Term In
Related Terms
Schedule C (Profit or Loss from Business)
Schedule C is the IRS form used by sole proprietors and single-member LLCs to report business income and expenses. Net profit is subject to both income tax and self-employment tax.
Self-Employment Tax
Self-employment tax is the combined Social Security (12.4%) and Medicare (2.9%) tax that self-employed individuals pay on net earnings from self-employment, totaling 15.3%.
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