How often should I return home to maintain my tax home?
*Disclaimer: I am not a tax professional.
A general rule of thumb is 30 days. Meaning that for 30 days out of the year you should document yourself being near your tax home. Again, this is not a set number of days by the IRS, but it is a good rule of thumb to make sure you are in the clear in case of an audit.
You don’t want to be put in jeopardy of losing out on your tax free stipends by not maintaining your tax home.
Why Do I Need to Return Home to Maintain My Tax Home?
Basically, the IRS needs you to prove that you haven’t abandoned your home. Because when this is the case, as mentioned in part 1, the IRS labels you as an itinerant worker. Itinerant worker meaning someone who maintains no permanent residence which means someone that will never be considered to be “working away from home”, as they have no home. Which for us means no stipends and as mentioned numerous times, this is where traveling healthcare professionals make the bulk of their money.
Do These 30 Days Need to Be Consecutive?
No. The 30 days can be broken up however you want. Multiple long weekends, a full month, a week here a week there, however it works out in your work/life schedule.
How I Have Followed This “Rule”
For me, I have worked a local contract each year I have traveled so far, so I am able to spend consecutive weekends back near my tax home which covers my 30 days for the rest of the year.
I also know plenty of people that take off time between their assignments to spend time at home with their family friends. 30 days seems like a long time, but most of us will spend near that time home as is. And remember, this isn’t a hard rule, so if you have only been home 28 days, I wouldn’t fret.
How to Prove You Returned Home for 30 Days
It’s always about leaving a paper trail/trace of where you are. I don’t know who still uses cash, but make sure to use your credit card with basic purchases when you are at home. You can also save gas receipts on your trip home or save your plane ticket receipts/itinerary to again prove your time at home.
Some recommend saving a physical copy of your receipts but for me this is more of a hassle than anything. I recommend taking pictures of your physical receipts/itineraries and saving them in a special folder on your phone AND computer. Even a special flash drive isn’t a bad idea.
The other good part about using your credit card for purchases at home, is that you will always have your electronic credit card statement which will provide documentation of the location of your purchases. This may be tedious if you ever get audited, but at least you know the documentation is there.
If you are ever unsure on whether you should keep a receipt or other form of documentation proving you were home, keep it. You can never have too much defensible documentation if you ever were audited.
Conclusion
In order to maintain your tax home and keep receiving your tax free stipends which let’s be honest is the main reason most of us travel, you must try to return home for at least 30 days every year.
This helps provide evidence that you are still using your permanent/tax home and have not abandoned it.
Plus, I’m sure that your family and friends would love to see you!
As always, if you have any questions, please feel free to comment below or if you have any personal questions or want to get in contact with my awesome recruiter, contact me here!
