If you travel for work, you may be able to claim tax deductions for some of the expenses you incur while you're away from home on business. But your "home," in this sense, isn't necessarily where you live. It's where you work—what the IRS refers to as your "tax home."
The article below is accurate for your 2017 taxes, the one that you file this year by the April 2018 deadline, including a few retroactive changes due to the passing of tax reform. Some tax information below will change next year for your 2018 taxes, but won’t impact you this year. Learn more about tax reform here.
General definition of a tax home
The IRS defines your tax home as the "entire city or general area" of your workplace. If you work in Pittsburgh, for example, then your tax home is the entire Pittsburgh metro area. The tax home designation doesn't have anything to do with where you actually live—the place where you lay your head at night. You could live 100 miles from your workplace and commute, but the workplace would still be your tax home.
Why your workplace is home
The tax home designation exists for the purpose of deducting work-related travel expenses, which is why your workplace, rather than your house or apartment, is "home." Imagine if you really did live 100 miles outside Pittsburgh but worked in the city.
If you were allowed to count your house out in the country as your tax home, then, theoretically, you could consider any money you spent in Pittsburgh to be a work-related travel expense. The IRS is wise to these kinds of tricks, which is why "tax home" is what it is.
When you have no regular workplace
Some people have workplaces that are divided among several places. In such cases, the IRS expects you to choose one as your work home based on several criteria:
- How much time you spend in each place.
- How much work you actually do in each place.
- How much money you make in each place.
Of these, the IRS says time spent in each place is the most important.
If you work at home or travel to assignments directly from home, without a fixed workplace, your tax home may well be your actual home. If you don't have a fixed workplace and you have no fixed home address, the IRS might consider you itinerant, in which case you wouldn’t be able write off any travel expenses because you're never "away from home."
Employees vs. the self-employed
The tax home rules are generally the same for employees and self-employed persons, although the degree to which they can deduct business-related travel expenses differs. In general, employees can deduct only work-related expenses for which they haven't been reimbursed by their employer, and they can't deduct the full amount. Instead, these expenses can be taken as an itemized deduction, subject to 2% of adjusted gross income, on your tax return. Usually, self-employed people can deduct all ordinary and necessary business-related expenses from business income. For both, travel expenses must be incurred away from their tax home to qualify for deductions.
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