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August 06, 2008

A house doesn't make a home. Not in the tax law, anyway. The Tax Court reminded us of that yesterday in a decision regarding an airline pilot who flew out of New York and Miami but who maintained his residence in St. Martin in the Carribean, and later in France. He claimed that his foreign residence allowed his earnings to qualify for the foreign earned income exclusion. The court states the rule simply:

Because petitioner's place of employment was in the United States during the years at issue, his tax home was in the United States. Accordingly, he is not a qualified individual for purposes of the foreign earned income exclusion.

Your "tax home" is where you work, not where you live. This is the same rule that keeps an Iowa business owner who lives in Arizona from deducting as business expenses travel for his trips to Iowa. Only travel "away from home" qualifies as deductible business travel, and travel from your residence to your workplace is nondeductible "commuting," no matter how long the trip.

Cite: Brunet, T.C. Summ. Op. 2008-96

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