How Does Working in a New Location Affect Your Tax Home?

How Does Working in a New Location Affect Your Tax Home? Image

A person’s “tax home” is where they choose to live in order to work. Married couples can have more than one tax home, depending on where their jobs are located. If a taxpayer has to travel away from their tax home in order to work, their expenses, to a degree, will be deductible. However, if a taxpayer chooses to live further away from their place of work, those commuting expenses to and from work are not allowed to be deductible.

There are instances where a taxpayer has already established a tax home in one location, but is offered a long-distance job. The ruling on this to allow travel expenses to be deductible is that the job must be temporary, meaning that “If employment at a work location is realistically expected to last…for 1 year or less, the employment is temporary.” This means that expenses could be deducted provided that the work is subject to end within a year’s time limit.

There is also a difference between the “temporary” job and the “uncertain” job. If a taxpayer accepts a job outside their current tax home with the knowledge that the job will only last a maximum of a year, that job can be considered temporary. However, if a taxpayer is only accepting work outside of their tax home on a “temporary” basis because they are uncertain of the job market and do not wish to commit to moving, that is not considered a temporary job, and the expenses will not be deductible.

Couples should consider this when purchasing homes, and accepting positions to cut down on their expected expenses.


The above information is of a general nature only and should not be relied upon for specific situations. Click here for additional tax services information.

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