In order to have deductible business Travel Expenses, you must travel away from your tax home. For many taxpayers, this is a nonissue. But if you're on the road all the time, your travel expense deductions could be in danger.
The IRS follows these rules to determine your tax home:1
Your tax home is your regular place of business or, if you have more than one place of business, your main place of business; or
If you do not have a regular place of business, your tax home is the place where you regularly live “in a real and substantial sense;” or
If you don't fit into either of the above categories, the IRS says you are an “itinerant” whose tax home is wherever you are working.
If you end up in the third category, the tax itinerant, you cannot have deductible travel expenses because you never travel away from your tax home.
Tip. Regardless of how much you travel for business, make sure you maintain a “home base” to protect your travel expense deductions.
1 Rev. Rul. 93-86, 1993-2 C.B. 86; Rev. Rul. 73-529, 1973-2 C.B. 37 (listing the three factors the IRS uses to determine whether a taxpayer has a regular place of abode in a “real and substantial sense”).