--The average traveler gets 20-50K of tax free benefits a year, not paying taxes on that income easily adds up to 6-10K in savings.
--You have a place to return home to between assignments.
--If you keep a PRN or agency job, you will have the option to return home while looking for the next assignment.
--Costs you money to maintain a residence, it could exceed the tax savings.
--Requires you to return home on a regular basis.
--Requires long distance maintenance of a dwelling.
--Requires long distance dealing with local DMV's.
--Requires detailed record keeping and less spontaneity. The next assignment or vacation has to coordinate with a trip home.
--Freedom to take an assignment without the hassles of moving a residence.
--If you own a home, you are unable to rent it out completely, but must keep a portion for personal use.
Advantages to being an Itinerant Worker
If you do not have a tax home, the IRS considers you an “itinerant” and your tax home is wherever you are working. In other words “wherever you go, there you are.” Money is not everything in life and living around a tax deduction can defeat the advantages of traveling: Freedom, Professional Experience, and Exploration. However, freedom comes with a price and you must do the math to see if that price is worth it.
In the end, you may find that after your subtract the costs of 1) maintaining your tax home, 2) the costs of traveling home every so often, and 3) losing pay for the weeks you take off to spend at home, your tax savings may have dwindles down to $3K-5K. You may find yourself deciding that it is a small price to pay the rare opportunity to travel and experience new areas.
1) No need to return home between assignments or coordinate a lengthy stay at home.
2) No rents to pay, house to worry about.
3) May rent your house out if you have one.
4) Can freely go to new assignments without the burden of returning home.
5) If you like it, you can stay as long as you want.
Things to keep in mind if you choose to be an Itinerant Worker:
1) Make sure your travel company understands that you “do not have a tax home” and are an “itinerant worker”. Some recruiters and companies are so determined to save on payroll taxes that they will encourage you to break the law and misrepresent your tax home information. – Let us know if that happens. We may have some political clout in that area. - -Sometimes we feel like the JACHO of Tax!
2) You will hear all sorts of criticism from fellow travelers and plenty of “schemes” that they use to fake a tax home. Many will brag about the fact that they have never been caught. Ignore them!
3) A tax home and a permanent residence are separate items. Continue to keep your driver’s license, registration, bank accounts, insurance and mail in one place. You may be able to find a place to move all of your legal ties to take advantage of lower fees.
4) Enjoy your life.
(Our son, David ... odd child... but we love him anyway)