The words home base refer to a brick and/or stick home that you must leave periodically for work or business purposes. It allows the worker to deduct all of his duplicated expenses while he is “a way from home”. The term home base should not be confused with the term domicile, which is your state of residence. Nor should it be confused with the term tax home. Tax home is a term used by the Internal Revenue Service to indicate where your income is earned. It may be in your home town or state (domicile) or at your home base, but could be in another state if no work is performed at your home base or within your domicile state. If you need to travel to another state or location in the course of your work you may deduct not only the travel expenses to get there and back but also the housing and living costs that are duplicated while you are there: rent (campground fees, housing (pro-rated cost of your RV), utilities (elect., water and all hookups and propane), and vicinity travel while you are on the job. Sometimes even food and laundry may be deducted.
Some RVer’s have asked me about renting out their home base while they are out on the road. What effect does this have on their deductions? If the home is rented, then it is no longer considered a residence but rental property. The rental income and expenses are reported on Sch E Rental Activity. Since your housing and living expenses are now no longer being duplicated but being paid for by the tenant , they are no longer deductible as “away from home” work related expenses.
Which is best: deducting the “away from home” expenses or renting the house out? That is a very complex question and requires a lot of analysis as to other items on your Sch A Itemized Deductions. It also requires consideration of your long term desires for the house (eventual sale and subsequent capital gain / loss), care and condition of the house while you are away, and your skills as an absentee landlord.
If you have a home base and are thinking about renting it out, talk with your tax advisor about the consequences before you decide to make this move. Should you like to be a client of mine, you may send me an email requesting a consultation via phone. If you have ordered the DVD set Workamper Tax Pro Secrets from Workamper News’s web site, you are entitled to a 50% discount off of the hourly rate.
Email me at george@BusinessAndTaxPlanning.com.