Tax Home for Itinerants

[Gretel]

This question is in the context of State taxation. My client, who works out of town quite a bit, divorced last year. His home was/is WA. His ex allows him to use her mailing address but he does not have a home and as far as I know does not have a tax home. For sure not for travel expenses but I am sure there is a State that want to claim he is a resident for taxes. I am aware that every State has different rules but do believe no State can claim one is a resident if the work performed is well under half a year. Can I assume that WA is still his residence state for that purpose since he never established another home? Maybe this is a moot issue since he will be paying non-resident taxes in any State he works? Any advise is appreciated.

[taxmom34]

can't your client tell you where he lived last year? even if it was in a car , the car was parked somewhere. does he have W2's or did he work?

[TAX4US]

Usually a w-2 is a reasonable indicator where the tax home might be.

[TAXNJ]

What does....

the client's government issued personal ID (e.g., state ID, Social Security Card, etc.) show as far as name, age and address? Is the client a US resident, etc.? Do you think it is a legitimate W-2?

Most important, do you feel comfortable having the individual as a client if the information stated in your post seem to be based on assumptions vs. facts and is a mystery to you?

[Gretel]

Long term client

Some clarification: This is a long term client who lived in Montana for a number of years (my State), worked some in Montana some temp job out of state. Then he moved with his family to WA our years ago, doing the same thing, working for some months on temp jobs. He never changed his driver's license to WA but has no connections to MT any longer, other then coming back to me for his tax return.

The income is 1099-Misc. from ND but it is temporary. One day after the divorce he started this job and this is were he is sleeping. As long as he lived with his family his tax home was MT, then WA, looking at facts and circumstances. For 2017 I don't have any doubt that his tax home is WA, even though he won't be able to deduct travel costs after divorce.

Maybe the real question is: Just because he does not have a family home any longer, does that make his place of work automatically his resident state? I don't think so. I know that I will have to see what he will be doing after this temp job is done. I also will have to check residency rules for each state he works long enough. But if none of the states considers him a resident, what is his resident state? Certainly not Montana just because he did not change his driver's license, right?

[Gene V]

Gretel,
My two cent worth, I would just use Washington state as his tax home for 2017, since Washington state doesn't have a income tax return to file, this should save him some money, not having to pay state tax.

[TAXNJ]

Agree with....

Gene V reply post. But whatever state the client selects, does the client meet the requirements of state residency?

[Rapid Robert]

Maybe the real question is: Just because he does not have a family home any longer, does that make his place of work automatically his resident state?

No.

This is a very confusing thread because some basic terms are being mis-used, perhaps due to ignorance. Before seeking an answer, it would help to understand what is actually being asked.

First, "tax home" and state of residence are two independent concepts, one does not directly determine the other. Per Pub 463, "Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home. It includes the entire city or general area in which your business or work is located."

As you can see, "tax home" is where work is done, not where one lives.

State residence is determined by the laws of each state. There is an implied mis-conception here that state residence is all or nothing for a given year, when in fact taxpayers can and do change state residence during the year (it would be pretty rare that state residence changed exactly on Dec 31-Jan 1 transition, but I suppose it could happen).

Your taxpayer may have been a resident of multiple states during any given year. It is also possible to be considered a resident of two states at the same time, again depending on the laws of each state. You need to research the state laws for residency and apply them to the facts. It is NOT a choice of the taxpayer or the tax preparer. TTB has chapters for each state, that would be a good place to start.

[Gretel]

No.

This is a very confusing thread because some basic terms are being mis-used, perhaps due to ignorance. Before seeking an answer, it would help to understand what is actually being asked.

First, "tax home" and state of residence are two independent concepts, one does not directly determine the other. Per Pub 463, "Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home. It includes the entire city or general area in which your business or work is located."

As you can see, "tax home" is where work is done, not where one lives.

State residence is determined by the laws of each state. There is an implied mis-conception here that state residence is all or nothing for a given year, when in fact taxpayers can and do change state residence during the year (it would be pretty rare that state residence changed exactly on Dec 31-Jan 1 transition, but I suppose it could happen).

Your taxpayer may have been a resident of multiple states during any given year. It is also possible to be considered a resident of two states at the same time, again depending on the laws of each state. You need to research the state laws for residency and apply them to the facts. It is NOT a choice of the taxpayer or the tax preparer. TTB has chapters for each state, that would be a good place to start.

Thanks, Rapid Robert, for taking the time to put in clear terms what the issue is. While I do understand all of these issues, I am not good with words.