What Travel Costs Can I Claim as a Business Expense When I Travel Full-Time?

“I’m a full-time RVer. Can I deduct my campground fees, gas, or mileage when I’m on a business trip in my RV?” “I’m a digital nomad. Can I claim my flights as a business expense when I travel for work?”

I get these questions all the time from digital nomads, full-time RVers, and full-time boaters who live and work on the road and are looking for tax deductions.

Since we’re already traveling full-time as a lifestyle with business trips mixed in, the IRS views us as nomads and it’s hard to claim travel costs as business deductions. However, there are certain situations where you can.  Below, we walk through how you can determine if you can claim your mileage, campground fees, lodging fees, and flights as a business deduction. Let’s get crackin!

Other tax deductions to know if you qualify for:

• Mortgage Interest Tax Deduction

• Home Office Tax Deduction

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Disclaimer: The information and materials we share are intended for reference only.  As the information is designed solely to provide guidance, it is not intended to be a substitute for someone seeking personalized professional advice based on specific factual situations. Therefore, we strongly encourage you to seek the advice of a professional to help you with your specific needs.

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WATCH MY EXPLANATION ON YOUTUBE

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Can You Claim Your Travel Expenses (Mileage, Campground Fees, Lodging, & Flights) as a Full-time Traveler?

First, before we get started, I’ll be introducing you to new vocabulary the IRS uses- tax home and itinerant- to set the stage for us to determine if we can deduct our travel expenses for our business trips. I’ll explain below.

1. Are You Leaving and Then Returning Back to Your Tax Home to Go on Your Business Trip?

The first term that’s important to know when answering this question is tax home. The big question is where is your tax home? A tax home isn’t where you live, your tax home is the area where you regularly work to produce your revenue.

The IRS says you can deduct travel expenses for business trips when you leave your tax home and you’re returning back to it. You’re incurring expenses like gas costs, mileage, lodging, and flight expenses to leave your tax home and come back to it to do work.

So, where is our tax home as nomads?

Typically for nomads like us our tax home where we do our work is our RV or on our laptop in our backpack. We normally take our RV or backpack from new place to new place and we never return back to our previous location after a business trip. We carry on exploring. The IRS views us as itinerants. The IRS says itinerants are nomads and itinerants don’t have a tax home that they left and came back to because their tax home is usually moving along with them.

To be able to claim travel expenses as a business deduction, it has to be expenses that you incur to leave your tax home and return back to it for business purposes.

We know, this sounds complicated. Keep reading. We’ll help you understand ways you can have travel deductions for some business trip situations.

2. Do You Satisfy 2 or 3 of these Factors for your situation?

To determine where your tax home is and if you can claim your travel expenses for a deduction (because you left your tax home and returned back to it), the IRS has a 3 factor test to determine where your tax home is.

Here are the three factors:

“If you don’t have a regular or main place of business or work, use the following three factors to determine where your tax home is.

Factor 1: You perform part of your business in the area of your main home and you use that home for lodging while doing your business in the area.

• This means you’re doing the work in the geographic area you typically call home— our RV or boat or Airbnb. We usually satisfy Factor 1.

Factor 2: You have living expenses at your main home that you duplicate because your business requires you to be away from that home.

• Typically we don’t satisfy this factor because we’re not duplicating expenses anywhere. We’re traveling from new place to new place.

Factor 3: You haven't abandoned the area that which both your historical place of lodging and your claimed main home are located, or you have member(s) of your family living at your main home, or you often use that home for lodging.

• Typically we don’t satisfy this factor because we’re normally abandoning the area we were just in to move along to a new location.

If you satisfy all 3 factors, your tax home is the home where you regularly live (and you can claim your travel expenses). If you satisfy only 2 factors, you may have a tax home depending on all the facts and circumstances. If you satisfy only 1 factor, you are an itinerant, your tax home is wherever you work, and you cannot deduct travel expenses." IRS Publication 463.

This all sounds complicated so we’ll dive into an example to help illustrate a real life situation where you can satisfy two factors from above to show you are leaving your tax home and returning back to it for your business trip to be able to deduct travel expenses.

For our normal travels, we generally can’t claim travel expenses because we typically are itinerants because we’re only satisfying Factor 1, we’re working in our regular area. We normally don’t satisfy Factor 2 (we’re not duplicating our expenses when we do a business trip) and for Factor 3 we don’t satisfy either because we normally abandoned our last area we were just in.

Example:

Let’s say you got a great deal to stay at an RV park or Airbnb in the perfect location for three months. Now, you’re in your second month in this location, but you need to leave for a few days to do a business trip. Can you claim your travel costs for the business trip as travel expenses for a deduction? Let’s walk through the IRS’s Three Factor Test to determine your tax home to see if you can claim your travel expenses.

“Factor 1: You perform part of your business in the area of your main home and you use that home for lodging while doing your business in the area.”

• You’ve been doing your work at your three month stay. For your business trip, you’ll be doing your work in another place. In this situation, you don’t satisfy Factor 1.

“Factor 2: You have living expenses at your main home that you duplicate because your business requires you to be away from that home.”

• You satisfy Factor 2. You’re duplicating your expenses by paying for your three month stay and also for lodging at your business trip location.

“Factor 3: You haven't abandoned the area that which both your historical place of lodging and your claimed main home are located, or you have member(s) of your family living at your main home, or you often use that home for lodging.”

• You satisfy Factor 3. You haven't abandoned the area that’s your historical place of lodging, you intend to return back to it to finish your three month stay.

With this example, you satisfy two out of three of the factors. This means your tax home is the location of your three month stay, because for this business trip you’ve left your tax home and returned back to it. So in this situation, you can claim your travel expenses as a business deduction.

Since every business trip situation is different, it’s important to walk through the IRS’ three factor test each time to determine your tax home to see if you’ve left and returned to it so you can claim your travel expenses. It’s also important to keep records showing proof of you leaving and returning to your tax home. We share how to do that below.

3. Maintain Records of Proof for Your Travels

1. Each year, keep a travel log showing the dates and locations of all of your travels. If you need an example to get yours started, use this one. This will help you remember where you were on what dates in case you need to look back.

2. Keep copies of all of your receipts during business trips to prove your travel expenses and that you’ve duplicated your expenses.

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Have a Question?

Heyo! I’m Adam Nubern, a digital nomad CPA. I hope this information is helpful for you. If you have any questions, please snag a time here and we can chat through your questions together.

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Too much to do now but you’ll get after it later? Download this information on our worksheet to remember how to determine if you can claim your travel expenses later.

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How to Claim the Home Office Tax Deduction as a Full-Time RVer or Digital Nomad

“Can I take the home office deduction with my RV office space?” or “Can I claim the home office deduction on my taxes with my Airbnb office spaces as I travel?” I get these questions all the time from digital nomads, full-time RVers, and full-time boaters who live and work on the road from their RV, boat, or rentals and are looking for ways to save money on their taxes.

This is an easy question to answer.  Below, we walk through how you can determine if you can claim the home office deduction as a full-time RVer or digital nomad and then we share the steps of how to take the deduction on your tax return.

Before we get into it, the IRS states a home is anywhere with a toilet, a bed, and a kitchen, so in this article we’ll be referring to a “home” office, but your home office could be the space you work from in your RV, boat, or Airbnb rental where you’re staying. Whether it’s a sticks and bricks home or your RV, in this article, we’ll refer to it as your “home” office.

Alright! Let’s go!

Other tax deductions you may qualify for:

• Mortgage Interest Tax Deduction

• Travel Expenses for Business Trips

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Disclaimer: The information and materials we share are intended for reference only.  As the information is designed solely to provide guidance, it is not intended to be a substitute for someone seeking personalized professional advice based on specific factual situations. Therefore, we strongly encourage you to seek the advice of a professional to help you with your specific needs.

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Watch my explanation on YouTube:

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How to Claim the Home Office Tax Deduction as a Full-Time RVer or Digital Nomad

1. Does Your Office Space Qualify for the Home Office Deduction?

Our first question for you is: Is your home office space exclusively used for work?

In order to take the home office deduction, the IRS states your office space must be exclusively used for work and nothing else.

As a personal example, we live in our Casita Travel Trailer with 96 square feet of living space. We have a dinette table we work from during the day but we can’t claim that space as exclusive office space because we also use it for personal reasons like having meals at the table or doing personal work at the table. So for our office situation, we don’t take the home office deduction with our travel trailer’s work space.

If you were to claim a space that isn’t solely used for work, there could be consequences. You can see this with an RV couple in their case with the IRS, the Dunford case. The case hammers home that your home office must exclusively be used for work and nothing else. The Dunford’s lived and worked from their class C motorhome and claimed the home office deduction and were audited by the IRS. When the IRS agent investigated their RV, they stated that the desk they claimed to be their “home office” could not solely be used for work in their small living and working space and rejected their home office deduction claim on their taxes.  

However, it is possible to have a home office exclusively used for work in your RV or boat or a room in your Airbnb as you travel to different countries. It’s also possible to claim the deduction for multiple home offices you work from during the year. If this is you and you decide to take the Home Office Deduction, it’s important to document and keep a record of proof of your office space with pictures or video and save these files with your tax return records just in case you need to defend your deduction in the future.

2. How to Document Your Work Space

It’s really important to always have detailed records as good reference and proof of your home office being exclusively used for work for your tax return. You may not have access to this same space if you’re questioned several years down the road.

To record your office space, here are things to capture in case you’re questioned about your deduction.

1. Take pictures or video of the area and how you only use the space for work.

2. A good idea is to take pictures or video of the door or partition (like a curtain) that shows the separation of your work space and your living spaces. This is helpful to show proof of the separation of spaces so the IRS agent can see that when you open the door or partition you’re entering your work space and you’re going to work. By closing the door or curtain, this shows that when you leave your office space, you leave work.

3. Make sure to save these photos or video with the rest of your tax return files for proof of your home office deduction later if you need it.

3. How do you make the Home Office deduction on your tax return?

There are two methods to calculate your home office deduction. You can either use The Simplified Method or The Actual Expenses Method. We walk through how to do each of these below.

Option 1: The Simplified Method

The simplified method is simple. The deduction is equivalent to the square footage of your home office multiplied by $5.

Here are the steps to do the Simplified Method:

1. Measure the total square footage of your office space.

2. Multiply the total square footage of your office space by $5.

3. If you’re a sole proprietor, put this number as your deduction amount on Schedule C, Line 30 of your tax return (expenses of business use for your home). Congrats! You’ve taken the home office deduction.

As an example, if your home office is 40 square feet, you’ll multiply 40 square feet x $5= $200. You’ll put $200 on the form Schedule C, Line 30 to claim the home office deduction.

A quick reminder: Make sure to add proof of your home office with pictures or video and your calculations of square footage to your personal tax return documentation. You may need to prove your deduction in the future.

Option 2: The Actual Expenses Method

The Actual Expenses Method is more complicated and more work than the Simplified Method, but may be more tax advantageous for you. This method requires more detailed documentation for all the of the expenses you incurred during the year for your RV, boat, or Airbnb spaces. However, you may be able to record a bigger deduction for your home office if you take the time and detail to do the Actual Expenses Method because you’re recording more expenses during the year.

How does the deduction work?

With the Actual Expenses Method, you can deduct a percentage of your home expenses for the year based on the percentage of space your home office takes up in your home.  But it’s not that simple. You have to categorize your home expenses based on their relationship to work.

Here are the steps to do the Actual Expenses Method:

1.     Measure the total square footage of your home.

2.     Measure the total square footage of your home office.

3.     Determine the percentage of your home that’s taken up by your home office.

An example is you live in an RV that’s 500 square feet. Your office in the RV is 50 square feet. This means your home office takes up 10% of your home’s square footage.

4. Now, for all of your office expenses and home expenses for the year, categorize each into one of three categories: Direct Office Expenses, Indirect Office Expenses, or Not Related Expenses. Here's more details on each category.

• Direct Office Expenses: These are any expenses directly related to work. For example, your office chair, your computer stand, or your mouse. For direct office expenses, you can claim 100% of these expenses in the home office deduction.

• Indirect Office Expenses: These are any expenses for your home or RV that are indirectly related to your home office but help run your home and in suite, help you maintain your home office. Examples include expenses for utilities, paint, repairs on the home, or RV tires. For indirect office expenses, you can claim a percentage of these expenses. In our example above since the home office is 10% of the RV, you can claim 10% of these expenses with the home office deduction.

• Not Related Expenses: These are any expenses not related to work at all. Examples include, bedding for the bed or an outdoor rug. These items aren’t related to work at all and cannot be claimed as part of the deduction.

5. If you’re a sole proprietor, to take the deduction on your tax return, you’ll complete Form 8829. On this form, you’ll include all the square footage measurements you did in Steps 1, 2, and 3. You’ll also input all the categories of expenses from Step 4.

6. Then, you’ll take Form 8829’s information and insert it on Form Schedule C, Line 30 (expenses of business use for your home).

Congratulations! You’ve claimed the home office deduction with the Actual Expenses Method.

As a reminder, keep a record of all of your expenses and their receipts and how you categorized each one with your tax return files. Also, add your proof for your home office of pictures or video, too.

For reference, here’s what Schedule C and Form 8829 look like.

Schedule C:

Form 8829:

Using Multiple Home Offices in a Year?

If you’re traveling around a lot throughout the year and working from several home offices on your travels, you can claim multiple home offices as long as each home office is exclusively used for work like we shared earlier.

For example, maybe you live in your RV and work out of your home office and then decide to go to Europe for several months and you rent spaces with two rooms so you can use one room exclusively for an office. If the spaces are exclusively used for work, you can claim multiple home offices.

However, claiming multiple home offices is more complicated. Essentially, you associate a percentage of your net income from your business to each home office. Also, the home office deduction can’t make a net loss, so you have to look out for this, too. If you have questions on this, please connect with me here and we can walk through it together.

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 Save this for later!

Doing your taxes later? Download this information on our worksheet to remember how to make this deduction later when you’re doing your tax return.

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Have a Question?

Heyo! I’m Adam Nubern, a digital nomad CPA. I hope this information is helpful for you. If you have any questions, please snag a time here and we can chat through your questions together.

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