Tax Home

A person’s tax home is the location the IRS uses as their base for travel and work-related tax rules. Per Publication 463, “Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home.” It is not the same thing as the home where the family lives. The IRS relies on the tax home to decide whether travel expenses away from it are deductible, and, for people working outside the country, whether they qualify for the foreign earned income exclusion. For a contractor working with a US company, the tax home matters to the contractor’s own return, not to the payer’s withholding.

How the IRS Defines a Tax Home

The starting rule is the regular place of business. The IRS states that “If you have more than one regular place of business, your tax home is your main place of business.” Where the nature of the work means there is no regular base, the rule shifts to where the person lives: “If you don’t have a regular or a main place of business because of the nature of your work, then your tax home may be the place where you regularly live.” A person with neither a regular place of business nor a permanent residence is an itinerant whose tax home moves with each job, which means they cannot deduct travel costs because they are never away from home.

Tax Home and Working Abroad

The tax home does extra work for people earning income outside the US. To claim the foreign earned income exclusion, an individual generally must have a tax home in a foreign country. The IRS uses a slightly broader phrasing for this purpose, defining the tax home as “the general area of your main place of business, employment, or post of duty, regardless of where you maintain your family home,” and notes on its foreign earned income exclusion tax home guidance that having a tax home in a location does not by itself make that location your residence or domicile. The work location, not the family home, controls.

Why It Matters for a Contractor

For a contractor engaged by a US company, the tax home is a fact about the contractor, not about the payer. It can affect the contractor’s ability to claim travel deductions and, when the contractor is a US person living overseas, eligibility for the foreign earned income exclusion.

It does not drive US withholding. Withholding by a US payer turns on where the services are performed. Compensation for personal services is sourced to the place the work is physically done, so a nonresident alien doing all the work outside the US generally earns foreign-source income whatever their tax home is. The day-count question of whether a foreign individual has become a US resident is answered by the separate substantial presence test, again independent of the tax home label.

Common Pitfalls

• Treating the family home as the tax home. The IRS rule is the opposite. The tax home follows the regular place of business, not the residence.
• Assuming a contractor’s tax home changes US withholding. It does not. Sourcing depends on where the services are performed.
• Confusing tax home with residency. A tax home in a place does not make that place a residence or domicile, and it does not by itself decide US tax residency.

Related Terms

• Nonresident Alien: the status whose US tax depends on source of income, not on tax home.
• Substantial Presence Test: the day-count rule that decides US residency, separate from the tax home concept.

Omnivoo Contract Management sources each contractor payment by where the work is performed and collects the right W-8 or W-9 documentation, so the payer’s reporting is correct regardless of where a contractor’s tax home sits.