It is that time of year again – tax season.
Understanding taxes can be hard enough, but when you add in the tax advantages of travel healthcare — along with the many stipulations that go with them — it can become even more confusing at times.
At Cariant, we are not tax experts, nor do we intend to be. However, we have a responsibility to educate our travelers whenever possible. There are tax professionals who specialize in taxes for travelers, and we recommend following their advice.
How can you determine the tax status of the income earned from your travel assignments? Below are a few questions you can ask to help determine this. (Please note: there may always be exceptions, so please consult an expert if you have questions.)
- Do you have a legitimate tax home? Think of your tax home as your permanent home or your primary place of residence. Any housing expenses incurred from working away from your tax home can be paid with the tax-free diem.
- What qualifies as working away from your tax home? A good rule of thumb to use is whether you can reasonably commute daily between your travel assignment and your tax home. If you are unable to commute daily, then you will have to find other living arrangements while on assignment and pay duplicative living expenses at both places. The key here is that you cannot rent out your tax home while you are gone on assignment.
- What length of time are you staying at any one assignment away from your tax home? You will want to avoid staying in any one metropolitan area for more than 12 out of 24 rolling months.
There are often many grey areas with regard to tax-free income. Make sure your documents are in order and seek out a tax professional if you need help.
At the end of the day, everyone must pay taxes. Please make sure the person you are trusting your money with is a professional. For more information, check out Travel Tax and IRS Publication 463 which can be accessed here.