RV Mileage deduction-full time RV'ers

[Jay Lode, CPA]

My question is whether self employed full-time RV'ers whose home is their RV and who have no house or apartment can take the standard mileage expense deduction on the RV miles for the business related travel from one job location to another. For example, they may be on a job in Maine, then contract to do a job in Oregon and want to take a deduction for the miles in between. (business is contract management services)

I think they run into a "tax home" issue and cannot deduct the RV travel mileage nor actual vehicle operating costs. The only mileage deduction allowed appears to be for the business use of their towed car from RV-lot to job-site or for other business purposes, but not the RV itself.

Travel expense rules also appear to not allow deduction of the RV lot rental costs as a business expense because it is a housing expense of their "tax home." They are legal residents of TX, but travel fulltime.

If allowable the RV mileage deduction amounts to about $20,000.

Anyone ever deal with this issue? Any ideas how this can be planned differently?

[joanmcq]

I think you are right that tax home is where they are working, if they are itinerants. Even car mileage from the RV to a job wouldn't be deductible unless they have a dedicated home office in the RV, and that is unlikely no matter how large the RV is. And none of the space rental would be deductible unless they have a qualified home office. I can't think of a way to structure this to make any of it not personal.

[dsi]

My thinking is in line with Joanmcq. Tax home is where the job is. No mileage deduciton.

[BOB W]

You may want to also consider "How are you going to file the State(s') tax returns. ?????

That issue seems more complex to me.

[Jay Lode, CPA]

Good point about possible taxable income in each state in which they work. I had an issue like that a few years ago, except the client had a home base in MT. Had to look at whether income earned in each state exceeded the particluar state's minimum filing requirement. They left some money on the table through state withholdings they didn't want to file to have refunded. Cost vs benefit.


On the RV'ers, one idea I have is whether travel costs would be deductible to some extent if they secured an apartment and used as "home base" in their home state. The tax code around Travel deductions is very complex and when you open up a case like this, it easily turns one way or the other on the individual facts and circumstances of the case.

I recommended they consider the business side more heavily than the tax side, so they can build into their contract rate sufficient coverage for travel costs, especially in light of increase fuel costs. But I think like many proprietors they are happy with life the way it is and really aren't looking at their activities from a business-building viewpoint.

Thanks for the input.

Jay

[oceanlovin'ea]

State of residence?

They must have one state that they consider to be their home state. What state issued their drivers license, etc?

I would think that they might consider renting an apartment or RV space in that state, apply for an occupational license there, and working in that state for a portion of the year. Have a post office box there and solict work in that area.

If they want to travel to different localities at certain times during the year and do a short term assignment, they could do that but they would have to have a tax home that they go back to each year.
There are probably many more issues in this situation but if they just travel around and work whereever they are, they won't get any tax breaks. A good explanation might get them to reconsider how they manage their business.

Linda F

[Nashville]

Incorporate

Why don't they incorporate?

This does not totally justify the expense with all the factors you present, however, many deductions become valid as "ordinary and necessary expenses" to a corporation which are only in the "twilight zone" of deductibility if they are fuzzy business extensions of individuals.

For example, what would happen if the corporation OWNED the motor home and paid all expenses?

[BOB W]

Why don't they incorporate?

This does not totally justify the expense with all the factors you present, however, many deductions become valid as "ordinary and necessary expenses" to a corporation which are only in the "twilight zone" of deductibility if they are fuzzy business extensions of individuals.

For example, what would happen if the corporation OWNED the motor home and paid all expenses?

Nothing would change, legally. And it would complicate filing in each state where his sources of income were generated. Each state would probably be filed as a part-year resident as an individual. As a corporation he would have to register as a foriegn Corp in each state, not to mention filing the corp return AND personal return.

[MAMalody]

I was reading a tax book and the author said,

"A traveling evangelist or conference speaker with a permanent tax home will incur deductible travel expenses for lodging and meals while on the road and use parsonage allowance exclusion for his permanent home. If he lives in a motor home or travel trailer and does not have a permanent home, he is considered a transient or itinerant. His tax home for tax purposes is wherever he "hangs his hat." His lodging and meal expenses will not be deductible as business expenses. He may treat the motor home as his parsonage but his meals will not be deductible. The cost of transportation between engagements does qualify as business travel expense."

I wrote and asked about and their response was,

"The cost of transportation between engagements does qualify as business travel expense. It is considered a business expense even for a transient because it is a part of doing business."

It looks like they are saying this is an ordinary, usual and necessary cost of doing business and NOT homing in on the tax home and travel or transportation expense question because of the transient/itinerant question.

What say you?

[WhiteOleander]

Well, I think he is a little off. He seems to be saying that the existence of a "permanent" home creates a "tax" home. If that is the case, there are some pilots that would like to have him prepare their taxes. Pilots have been denied some of their expenses they took to get to the airport they were based out of. Those were classified as commuting expenses. Just because it was their permanent home, did not make it their tax home.

So, if the other qualification were not met for tax home, the evangelists are intinerent workers. In that case, none of the miles qualify for any deduction. Even the miles between engagements.

[BOB W]

Maybe it has something to do with the short duration of the meetings (say one or two days) as opposed to a month or two for our RVer in question?

[MAMalody]

I'm not trying to play two message boards against each other, however, I posted this same scenario on another board and the answer is different from this board. What is being said, is that transportation expenses are different from travel expenses and that what we simply have here is transportation expenses between two job points. Travel expenses are not deductible. I have looked quickly and an unable to find, at this point, to find any cites that are on point. Comments?

[Bees Knees]

I'm not trying to play two message boards against each other, however, I posted this same scenario on another board and the answer is different from this board. What is being said, is that transportation expenses are different from travel expenses and that what we simply have here is transportation expenses between two job points. Travel expenses are not deductible. I have looked quickly and an unable to find, at this point, to find any cites that are on point. Comments?

Travel and transportation expenses are identical if it is out of town.

Travel is disallowed if it is in town. Transportation expenses in town are allowed if it is job to job, including office in home to another job site.

You have to decide whether it is out of town or in town before you can apply the rules.

[dsi]

MAMalody, out of curiosity which other board did you post on?

[Zee]

I think you are right that tax home is where they are working, if they are itinerants. Even car mileage from the RV to a job wouldn't be deductible unless they have a dedicated home office in the RV, and that is unlikely no matter how large the RV is. And none of the space rental would be deductible unless they have a qualified home office. I can't think of a way to structure this to make any of it not personal.

I agree. Pub 463 seems pretty clear. "If you do not have a regular place of business or post of duty and there is no place where you regularly live, you are considered an itinerant (a transient) and your tax home is wherever you work. As an itinerant, you cannot claim a travel expense deduction because you are never considered to be traveling away from home".