Travel Speech Therapist

[rozmz]

I'm a travel speech therapist from MI and live with my sister and parents there when not traveling for work. This is my first travel job, and I am in CA during the school year. I'm getting a tax-free stipend for housing, meals, living expenses, etc. I pay $300 to my sister every month as a shared cost/room rental for her house.  I also pay my car insurance in MI, outside of the $300/month. Everything in my name is based out of MI - like bank accounts, car loan, credit cards, etc. Is keeping everything in my name with a MI address and the $300 enough to make the MI home my "tax home"? I wasn't sure if the $300 should be more or not. 

Also, would it make sense to have a room rental agreement with my sister for the $300 to make it more official? And would my sister have to claim the $300 as income if we do that?   

[ThomasM125]

No, your tax home would be the general area where you work most of the time. It wouldn't have anything to do with where your bank is located or the address where you get your mail. The significance of that is you cannot deduct travel expenses unless you are away from your tax home.

It sounds like you are sharing home expenses with your sister, so your payments to her would not be rent income.

You can read this TurboTax article to learn more about a tax home.

[rozmz]

Thank you for the response, my main concern is if what I'm doing is enough for the stipend not to be taxed as long as I can show that my permanent residence is in MI.

[IsabellaG]

It depends. Please see  IRS Publication 463. If you have more than one regular place of business, your main place of business is considered your tax home. But if you don't have a main place of business, your tax home could be your actual home, your place of abode. 

These are the factors used to determine if your place of abode is your tax home:

1.  You perform work in the general area of your main home, and live there while doing business in the area.
2. You have duplicated living expenses, because you have to pay for lodging etc., while you are away from home.
3. You are living in the area that historically has been your home, a family member lives with you there, or you use that home for lodging  regularly.

If you meet all three of these tests, your regular place of abode is considered your tax home.  From what you describe, you seem to have met the last two tests, and the home where you live with your family could be considered your tax home.  If you only meet one test, you are considered an itinerant, with no tax home.

The weakest factor looks to me to be the duplication of expenses, as you wonder yourself. Is $300/month for shared expenses sufficient to be considered actual duplication of expenses? It's possible, considering what your share of the home expenses would reasonably be. If the IRS examined your return, they would consider all the facts and circumstances of your situation.