How Long Can I Stay in the Same Travel Assignment Area? When Can I Return?
The IRS can be notoriously vague with their terms. As a result, we have striven developed a few concrete suggestions for travelers. They are based on court cases (by citing records), IRS attorney recommendations to auditors, and audits (personal experience). If you follow the guidelines below, you will be in a more defendable position if audited. The thing you need to look at is 3-fold:
Spend 30 days a year at home. – According to Revenue Ruling 73-529 Situation #1, you need to return to your tax home economic area for 30 days per calendar year. Remember, you either need to maintain some sort of residence or come back to work fully taxed in your tax home every year.
Do not stay in any one area for more than 12 out of 24 months. – This does not use a calendar year but a 2 year window. ‘One area’ is defined as all places within a regional commuting/metro area (that means surrounding towns also). Switching facilities or companies does not reset the clock! In determining how far is far enough to restart the clock, the rule of thumb is: If it is common for people who live in Town A to commute daily to Town B to work, then those two towns are too close and considered the same tax or economic area.
Do not return to any one area a third year in a row. – You then create a pattern, and once you have a pattern, you have a tax home there, because it has become a primary/persistent place of income. Sometimes you can follow the simple formula = stay away as long as you were there. Breaking any of these “rules” puts your tax home at risk. It is #2 above that blows all of those “theories” about going home for 30 days to reset the clock. We would also like to point out that it is not the state, but the metropolitan area that you need to monitor. Example: If you have been in San Francisco for 11 months, you cannot even go to Walnut Creek (too close) for the next 12 months. But you can go to Modesto, or LA.
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