Key Takeaways
- Your tax home is your regular place of business or where you regularly live
- A valid tax home allows travel expenses and per diem stipends to be tax-free
- The IRS uses a 3-factor test to determine if you have a tax home
- Florida makes an ideal tax home due to 0% state income tax
IRS Definition of Tax Home
According to the IRS, your tax home is the entire city or general area where your main place of business or work is located, regardless of where you maintain your family home. If you don't have a regular or main place of business because of the nature of your work, your tax home may be the place where you regularly live.
Why This Matters: Your tax home determines whether travel expenses—including housing stipends, meal allowances, and transportation costs—can be paid tax-free. Without a valid tax home, these amounts become taxable income.
The Three-Factor Test
The IRS uses three factors to determine whether you have a tax home. You must satisfy at least two of these three factors:
| Factor | Description | How to Meet It |
|---|---|---|
| Factor 1 | Perform part of your business in the area of your main home and use that home for lodging while doing business there | Work PRN shifts or pick up local assignments in Florida |
| Factor 2 | Have duplicate living expenses when traveling (pay for housing at your tax home AND temporary location) | Maintain your Florida residence while paying for assignment housing |
| Factor 3 | Haven't abandoned your claimed home; have family there, or use it frequently for lodging | Keep voter registration, driver's license, bank accounts in Florida |
For Travel Workers: Most travel nurses and mobile professionals automatically meet Factor 2 (duplicate expenses) and Factor 3 (established ties). This creates a valid tax home even without working in Florida.
Why Your Tax Home Matters
Tax-Free Stipends
With a valid tax home, employers can pay you tax-free allowances for:
- Housing: Up to GSA per diem rates for your assignment location
- Meals & Incidentals: Daily M&IE allowances
- Travel: Transportation to and from assignments
Without a Tax Home
If the IRS determines you don't have a tax home (you're an "itinerant"), all travel-related pay becomes taxable income. This can result in:
- Thousands of dollars in additional federal income tax
- Potential back taxes, penalties, and interest if audited
- Loss of the tax advantage that makes travel work financially attractive
$8,000 - $15,000+
Potential annual tax savings with a valid tax home
Why Florida is Ideal for Your Tax Home
Florida offers unique advantages as a tax home location:
- 0% state income tax: Your taxable wages are only subject to federal tax
- No minimum days requirement: You can travel full-time and maintain Florida domicile
- Strong legal framework: Florida Statutes §222.17 provides clear domicile establishment
- Year-round mail services: Maintain your Florida connection while traveling
Establishing Your Tax Home in Florida
- Get a Florida residential address: Not a PO Box—a physical residential address
- File a Declaration of Domicile: With your county clerk under Florida Statutes §222.17
- Obtain a Florida driver's license: Surrender your previous state license
- Register to vote: Establish your civic ties to Florida
- Update financial accounts: Banks, credit cards, and investments should show Florida address
- Maintain ongoing expenses: Regular payments demonstrating Florida residence
Documentation is Critical: Keep records of your Florida expenses, returns to Florida, and all residency documents. In an audit, you'll need to prove your tax home was legitimate.
Common Tax Home Mistakes
- Using a PO Box: The IRS doesn't consider a PO Box a tax home
- No actual expenses: You need real, ongoing costs at your tax home
- Never returning: Occasional returns strengthen your tax home claim
- Keeping ties elsewhere: Maintaining a driver's license or voter registration in another state undermines your claim
Next Steps
Ready to establish your tax home in Florida?