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"Tax Home" Clarification

Question:

A missionary to a foreign country has received some contradictory advice: "When we started our deputation, I was told by Tax Preparer 1 that since we did not have a 'tax home' we could not claim travel expenses as deductions." Tax Preparer 2 advised the missionary "that since s/he was self employed, s/he did not need a tax home for travel deductions." Could you please clarify this confusion or provide a list of resources where an answer could be obtained?

Answer:

First, let me suggest a couple of helpful resources: 1) IRS Publication 463, and, perhaps less so, 2) type "Tax home" in the search window of this blog.

While a minister is self-employed for purposes of self-employment (SE) tax, this status has no relevance to the determination of deductibility of travel expenses. Tax Preparer 2 is incorrect. Publication 463: "Travel expenses defined. For tax purposes travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job" (emphasis added). Whether traveling for a "business" as a self-employed individual or for a "job" as an employee s/he must be traveling "away from home."

Whether Tax Preparer 1 is correct depends on the facts and circumstances of a missionary's deputation situation. (Once a missionary is "on the field" his tax home is most likely his personal foreign residence or his "mission station," if he has one.)

Once again, Publication 463 is helpful: "As an itinerant, you cannot claim a travel expense deduction because you are never considered to be traveling away from home." I run into this concern most often with my itinerant evangelist clients. They tend to own no permanent residence. Rather, they purchase a travel trailer and move from location to location. Their meals, for example, cooked in their own travel trailer are not considered travel expenses since they are not "away from home." A missionary on deputation using the same accommodations as an itinerant evangelist will not be able to deduct his travel expenses (the Publication provides a list of these expenses).

However, as is the experience of all of my missionary clients, during deputation they establish a home base from which they conducted their "business" of raising support. It may be in a church "missionary house" or in a home they own or rent. But they return there between trips. This becomes their "tax home" and travel costs while out-of-town, overnight are deductible. Generally, trips they take within a day (and return home at night) offer only car expense write-offs.

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