Healthcare Traveler - February 2009 - (Page 28)

Pass the Hat What really is a “tax home”? This concept is probably the most important, confusing, and misunderstood tax rule for travelers and agencies, alike. Joseph Smith A A tax home determines whether reimbursements for transportation, lodging, and meals are treated on a tax-free basis. ccording to the Internal Revenue Service (IRS) Tax Code, there are very specific rules governing this term, yet between areas of certainty, there is a gray middle ground that relies on the facts and circumstances of an individual’s situation. This gray area is often the source of the confusion. Despite the ambiguity, the concept of a traveler’s tax home is very important. It determines whether reimbursements—such as allowances and stipends —for transportation, lodging, and meals are treated on a tax-free basis. A basic definition In the eyes of the Tax Code, a tax home is the geographical area where you earn the majority of your income. It is not the permanent residence where you maintain legal ties—such as where your driver’s license, personal effects, or family members are located. This is an important distinction as the IRS views a permanent residence and a tax residence as distinctly different items. In effect, a tax home is simply a point of reference to determine from what place you have deductible travel expenses—not a mailing address. To illustrate, say Pitcher X, a professional sports player for the San Francisco Giants has a house, spouse, and kids in Houston, Texas. San Francisco, California, is his tax home since that is where he makes the majority of his income, where he spends the most time, where he plays the most games, and where the team is permanently located. It does not matter that his commute from Houston is significant, or that he has a home and family in Texas. The irony of this is that if Pitcher X has a road game in Houston, then his transportation, meals, and a portion of his lodging expenses are deductible, even though he is at home, in terms of his permanent residence. Since he is away from his tax home on business in Houston, he has deductible and reimbursable expenses. Similar to Pitcher X, if a person has two permanent jobs, say, one full-time job in San Francisco and an occasional, seasonal, or second job in Houston, San Francisco is still the person’s tax home. That is where he works the most hours, spends the most time, and makes the majority of his income. The transportation, lodging, and meal expenses related to the job in Houston are deductible since, again, he is away from his tax home on business. It does not matter where he lives when he does not work. » www.healthcaretraveler.com 28 Healthcare Traveler February 2009 http://www.healthcaretraveler.com

Table of Contents Feed for the Digital Edition of Healthcare Traveler - February 2009

Healthcare Traveler - February 2009 Editor’s Desk Contents In a Flash Paws for Thought Field Notes Med Ec-cerpts The Economic Meltdown What Really is a “Tax Home”? Beach Therapy Drug Update Professional Update Advice of Counsel Cityscape Advertisers’ Index Name It Contest Rules On Assignment Tax Facts Dot.com Big Deals Allied Corner Going the Distance Classifieds Tales from the Road

Healthcare Traveler - February 2009

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