Personal Home? Tax Home? What’s the Difference?

Did you know that your personal home is not your tax home? 

“Your tax deductions, tax strategies, and tax records hinge on the following federal income tax defined terms: Personal Home, Tax Home, Business Travel, Business Transportation.”¹

Do you know the definition and differences?  

  • Personal Home – where you live.
  • Tax Home – where you maintain your principal place of work.
  • Business Travel – You are in high-deductible travel status when you travel away from your tax home overnight or long enough to require sleep.
  • Business Transportation – You deduct business transportation as a cost of going to and from tax-deductible business destinations, whether in town or out-of-town on overnight business travel.

Five things you need to know

  1. Have your home within 50 miles radius of your tax home.
  2. When you have your personal home within 50 miles radius of your tax home, you can claim the home-office deduction under the administrative office rules so you can eliminate commuting to your outside-the-home office.
  3. Deduct overnight business travel when you are on business outside of your tax home radius.
  4. If you have more than one business, the principal business is the one you spend the most time at, do the most work from, and make the most money.  It is your tax home.  Any overnight travel to a secondary business that is outside the tax home radius – is deductible.
  5. If you have one business that has multiple office, in different cities, the office where you do the most work, spend the most time, do the most important things, and make the most money is your tax home.  When you travel away from this office, overnight, to a secondary office, you are in business travel status.

¹Bradford Tax Institute Tax Reduction Letter, July 2013