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What is the legal definition of a tax home?

10 posts in this topic

Posted · Report post

Please don't say it is facts and circumstances.

Here is the scenario. Client has a sch. C business in Lodi CA (not office in home, separate location). Also has a full time job in Elk Grove CA (about 25 miles commute). Loses his job in Elk Grove and is unemployed for several months. Works at the Sch. C business all that time, but can't earn enough to make ends meet. So he takes a job with a temporary service in Sacramento (about 35 miles from his home). Works for about 4 months and the assignment ends. Every day during that 4 months he goes to his schedule C business in Lodi after working for the temp service, then goes home.

Client actually kept a perfect log of all of this mileage (trained well by me for his sch. C business - patting myself on the back).

I am sure he can deduct the miles going from Temp Job to Sch. C business location in Lodi.

Not sure if he can deduct travel from home to temporary service job. If it is in his "tax home", I don't think so. If Sacramento is outside the taxpayers tax home of Lodi, I think he can.

Any help on this one? No sarcasm jainen - I know I should know this but I don't and I am confused by the term tax home. I should not be trying to shoe horn a deduction into a return for a client. I should be reading and applying the tax law.

Tom

Hollister, CA

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Posted · Report post

>>I am confused by the term tax home<<

Living in Hollister, you surely can not think 35 miles is a particularly long commute. That would barely get your neighbors to Salinas, and not even to San Jose. And what of the 50,000 cars over Pacheco Pass every day?

Pub 463 explains, "Generally, your tax home is your regular place of business or post of duty, regardless where you maintain your family home. It includes the entire city or general area in which your business or work is located." There are additional definitions for workers with no regular or main place of business.

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Posted · Report post

Yes, the temporaty job and the sch. c business are related to each other. Basically doing the same thing in his business that he did for the temp service on a short term contract.

Tom

Hollister, CA

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Posted · Report post

Next question probably he is getting paid with a W2 or 1099?

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Posted · Report post

W2. He worked for a temp service that paid him on payroll.

Tom

Hollister, CA

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Posted · Report post

Lodi to Sac isn't outside of his metropolitan area. For a temp job to apply, the commute has to be over 50 miles. But I agree that temp job to Sch C biz is deductible. Then back home is commute. My first CPA job was a commute from Sac to Stockton. 55 miles, and a nasty commute in fog season, which of course, coincided with tax season.

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Posted · Report post

Joan,

I have heard that 50 mile rule before, but I have never found it in a code or reg or even a publication. Where does that come from, because if it exists, it would be definative that the temp position is not outside his tax home. Everything I read says outside his tax home, but I have yet to find the definition of a tax home.

I think the IRS does not want to define it.

I would really consider Lodi as part of the Stockton Metropolitan area (Lodi to Modesto) and not part of the Sacramento metropolitan area (Galt to Lincoln?). And if I had a client in South Stockton and they were temporarily assigned in say Rancho Cordova, I would consider that to be a different tax home and I would really push for temporary travel.

Tom

Hollister, CA

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Posted · Report post

>>I have yet to find the definition of a tax home. I think the IRS does not want to define it.<<

Please read my earlier post, in which I QUOTED the IRS defining "tax home." Although that's just from a pub, every word comes from actual language in regs, revenue rulings, and court decisions. The IRS position has hardly changed under many challenges over decades, It all derives from Section 162(a)(2), deduction for business expenses, which is why it is defined as a business location rather than personal residence.

In my opinion, the Sacramento metropolitan region extends more than 35 miles, intervening farmland notwithstanding. On the other hand, some of those rulings I mentioned say that a "temporary" job location is not the same as a "main" job location.

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Posted · Report post

I've seen mileage in court cases. But, usually 50 miles, 80 miles.

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