The one-year rule and your tax home
Travel deductions only work if you have a tax home to travel away from and the assignment is temporary. Here is how the IRS decides both.
Short answer
What is the IRS one-year rule?
Travel costs at a work location are deductible only while the work there is temporary. The IRS treats work in one location as temporary when it is realistically expected to last, and does last, one year or less; if it is expected to last more than a year, it is indefinite and travel there isn't deductible. The rule only helps if you have a tax home to be away from.
Do you have a tax home?
Your tax home is generally your regular place of business, wherever your family lives. Locums often have no single regular place of work, so the IRS uses three factors to decide whether your main home is your tax home:
- You do part of your work in the area of your main home and stay there while you do.
- You have living costs at your main home that you duplicate because work takes you away from it.
- You haven't abandoned the area of your main home: family live there, or you often stay there.
Meet all three and your main home is your tax home. Meet two and it depends on all the facts. Meet one or none and the IRS treats you as itinerant: your tax home is wherever you work, so you can't deduct travel away from home.
Do I have a tax home as a traveling physician?
You do if you have a regular place of work, or if your main home meets the IRS three-factor test: you work near it and stay there, you keep paying for it while you travel, and you haven't abandoned its area. With one factor or none, the IRS treats you as itinerant, and you can't deduct travel away from home.
Extensions and repeat assignments
What counts is what you realistically expect. If an assignment was expected to last a year or less and is then extended past a year, it stays temporary until the date the expectation changed, and becomes indefinite from then on. An assignment expected from the start to last more than a year is indefinite from day one, even if it ends early.
For breaks between stays at the same location, Shyft takes the cautious reading and adds together stays less than a year apart. Ask a tax professional how your own breaks count.
What to keep
If your tax home is ever questioned, records of your main home help: a mortgage statement or lease, utility bills in your name, voter registration at that address, and a driver's license from that state. Keep your assignment dates and locations too, since they show how long each stay lasted.
In the app
How Shyft helps
Shyft keeps the dates and documents the one-year rule and the tax home test depend on.
- Time at each work location across your assignments, with hospitals at the same location counted together.
- Warnings at 9, 11 and 12 months at a location, and as soon as scheduled dates or an extension would take a stay past a year.
- A tax-home questionnaire built on the three IRS factors, with a status of Strong, At risk or Itinerant.
- An evidence checklist with photos of your lease, bills, voter registration and license, and a tax-home report in the accountant package.
Shyft is in beta for Android phones.
More questions
What happens if my locum assignment is extended past a year?
If you expected the assignment to last a year or less, it is temporary until the date you realistically expect it to go past a year. From that date it is indefinite, and travel costs there are no longer deductible.
What does itinerant mean for taxes?
An itinerant worker has no tax home, because there is no regular place of work and the main home meets at most one of the three IRS factors. The tax home is then wherever you work, so you are never away from home for tax purposes and can't deduct travel expenses.
Sources
- Publication 463, chapter 1: Tax home and temporary assignmentsIRS: the definition of tax home, the three factors, itinerant workers and the one-year rule.
This guide is general information about US federal tax rules, not tax advice. Rules change and depend on your situation; confirm with a tax professional before you file. Shyft's tax summary is an estimate for record-keeping only.