Your Personal Home Is Not Necessarily Your Tax Home!

Author: Keith Huggett

Where you live plays a huge role in structuring your tax plan.  It is not necessarily your tax home however.  Your tax home is defined as where you maintain your principal place of work.  This could be 100 miles away from your home.  Another thing you should be aware of is that business travel and business transportation are two different things.  Business travel is when you travel away from your place of business (tax home) overnight or long enough to require sleep. You deduct the cost of business transportation as a cost of going to and from tax deductible business destinations.

Here are 5 tips for your personal and tax home:

1. Have your personal home within 50 miles of your tax home.
2. When your personal home is within 50 miles of your tax home, claim the home-office deduction under the administrative office rules so you can eliminate commuting to your outside-the-home-office.
3. Deduct overnight business travel when you travel on business outside the area of your tax office.
4. If you have more than one business on which you spend the most time and make the most money is the principal business. It's the location of your tax home. Overnight travel outside the tax-home area of the principal business to a secondary business is deductible.
5. If you have one business with multiple offices in different cities, the office where you spend the most time, do the most important things, and make the most money is your tax home. When you travel away from this office overnight to a secondary office, you are in business travel status.