Tax home?

[LindaK]

My client is a drywall installer. His home is in one town, where his wife and son live. It is where he grew up and he does not plan to move. He does about 25% of his work in that area. The bulk of his work is in another area about 4 hours away. After a few years of this, he bought a house in the work area, just to avoid motel bills.

At what point does his tax home shift? Or isn't that a consideration here? Can he deduct the house payment...or depreciate it...or just deduct the interest? His employees & subs stay there too.

Thanks for your input on this.

[erchess]

Tax Home is a Vague Concept

I think that in his case, the area around his residence, the area four hours away where he does the most work, and the route he travels in between are one tax home. That would let him take the maximum mileage deduction. He can in any event take mileage from job to job but considering the whole area one tax home lets him take the mileage from his first stop after leaving the family home all the way until his last stop of perhaps another day before returning to the family home. Am I getting overly happy here, anyone? As I see it the alternative is that only the area four hours away is his main tax home and that would mean that his travel between the two areas would not be deductible. That is of course the conservative position but in my opinion the other is defensible. It would help his case if he did some business in between the two locations from time to time.

He can in any event claim the mortgage interest and taxes on the second office as deductions. The expenses attributable to his private area of that structure go on his Sch A and only if he itemizes while those attributable to the parts used in the business go on Sch C or whatever form the business uses.

If he pays for food for both himself and other business people he can deduct half of the expense of the total meal but if he eats alone that is a personal expense.

[LindaK]

It would help his case if he did some business in between the two locations from time to time.

He does indeed do business in the 'between', just not frequently. Got to work where the building is happening! There is a lot of farmland between the 2 areas.

[BHoffman]

My client is a drywall installer. His home is in one town, where his wife and son live. It is where he grew up and he does not plan to move. He does about 25% of his work in that area. The bulk of his work is in another area about 4 hours away. After a few years of this, he bought a house in the work area, just to avoid motel bills.

At what point does his tax home shift? Or isn't that a consideration here? Can he deduct the house payment...or depreciate it...or just deduct the interest? His employees & subs stay there too.

Thanks for your input on this.

Hi Linda - From your description, it sure sounds like there's no conflict about his tax home - it's where he lives with the wife and son.

Does he file a Sch C for his business, or a corp return?

[ChEAr$]

Those questions

Hi Linda - From your description, it sure sounds like there's no conflict about his tax home - it's where he lives with the wife and son.

Does he file a Sch C for his business, or a corp return?

are the ones I was ABOUT to ask. (grin)

However, where is it written that a person must have only one tax home? Mutually exclusive?

"Home is where I hang my hat."

[AJsTax]

disagree

I will disagree with due respect to all who have replied. His tax home is the metro area where the majority of his income is earned. That would be the area 4 hours away from his family home. Obviously it is not a temporary job location since he bought a house there. the expenses of the house are on Sch A as residence. meal expenses must be on the job and for the convenience of the employer. None of the milage from the work home to the family home are deductible and the only milage in the work area is the milage from one job site to another or to get supplies etc. To the first site every day is commuting miles unless he has and office/shop that he goes to first.

[dyne]

AJStax is correct!

[RLymanC]

Tax Home

Pub 17 Page 182,,,
Your principal place of business.

If you have more than job, you must determine which one is your regular or main job. Consider the time you spend at each, the activity you have at each, and the income you earn at each.

Reading the first post his tax home is 4 hours away from his family home.

[LindaK]

Hi Linda - From your description, it sure sounds like there's no conflict about his tax home - it's where he lives with the wife and son.

Does he file a Sch C for his business, or a corp return?

He files a Sch C. The work is not all for the same client - he gets 15-20 1099-M's each year from various contractors.

[Jesse]

I also conclude his new home to be his tax home. If he qualifies for a home office he can take the qualifying home office expenses, I'm sure he is storing tools and equipment at his residence/garage/shop, remaining interest and property taxes to schedule A.

>> His employees & subs stay there too.<<

I reread your original post and my mind is quite fuzzy but maybe someone else will jump in as to how to allocate expenses if he is providing housing for the employees and subs.

[ChEAr$]

Y'all missed something

in the OP, who said this is a schedule c operation. As such, his tax home is the headquarters of the business, which is probably an office in home in "city a", his
main residence.

[Gretel]

If he has an OIH I agree, but if not wouldn't be his biz also where most of his work is?

[MAW TAX]

Base of operations

The tax home is where he has established his family abode. He only bought the 2nd home as a place to stay when he is working in the area instead of paying hotel expenses, and doesn't intend to move his family there.

Based on the information provided. And a little reasearch in TTB p. 8-11 "Tax Home" where it says, "If there is no regular or main place of business because of the nature of work, then consider the following to determine the tax home" ....(refer to the 3 factors)... he only needs to meet two of the 3).
My knee jerk reaction was confirmed.

Hope it helps. Open to debate!
MAW

[dyne]

On the SAME page (8-11) of THETAXBOOK, third line under the heading of
Tax Home, it says:'The tax home is the regular place of business or post of duty,
regardless of where he maintains his or her family home." His TAX home is the
location 40 miles distant where he has his second house. Mileage away from
this second house is deductible ONLY, not the mileage to his residence
where his wife and children are located. During my 30 years with IRS I
disallowed the other mileage routinely.-- Sorry, I was interrupted by a client who
came in. I had a client who I would NOT allow this mileage and he said that ALL
of his friends are deducting it. He went away and apparently SOME preparer
allowed all of his mileage so they could charge him a fee.

[ChEAr$]

If no office in home

If he has an OIH I agree, but if not wouldn't be his biz also where most of his work is?

then we look to "focal point of activity."

Now then, maybe he SHOULD have an office in home?