Here are some best practices to comply with the Tax Home Test:
- Establish a principal place of employment: This could be a physical location, such as an office or factory, or it could be a mobile location, such as a truck or boat. If you do not have a principal place of employment, you may still meet the tax home test if you have a temporary employment assignment.
- Maintain a permanent home: This could be a house, apartment, or condo. It is important to keep your permanent home in the same location as your principal place of employment, or in the location with which you have a closer connection.
- Spend most of your time in the location of your tax home: This means living, working, and engaging in social and recreational activities in the location of your tax home.
- Maintain your family and social ties in the location of your tax home: This could mean staying in touch with family and friends, joining clubs or organizations, or participating in religious or community activities.
- Keep good records: This could include records of your travel, employment, and expenses. It is important to keep good records in case you are ever audited by the IRS.
If you follow these best practices, you will be more likely to meet the Tax Home Test and be considered a resident of the state or territory where you work.
Here are some additional tips:
- If you are unsure whether you meet the Tax Home Test, you should consult with a tax advisor.
- Be aware of the exceptions to the Tax Home Test. For example, if you are a traveling salesperson, you may not have a tax home.
- Keep good records of your travel and activities. This will help you to prove that you meet the Tax Home Test if you are ever audited by the IRS.
If you are considering relocating to Puerto Rico, Act 60 can be a great way to lower your taxes. Talk to us, we are accountants and tax advisor to see if you qualify and help you with the application process.
I hope this article was helpful. Is there anything else I can help you with? Feel free to reach out at [email protected] or 787-473-8985.
Disclaimer: The information provided on this website is for informational purposes only and is not legal or tax advice. You should consult with a qualified attorney or tax advisor to discuss your specific situation.