A question For Those of you that work from your rv.

[coachmac9]

If you work full time from your RV...say you do on-line teaching or any other work that requires you to work IN the rv or use part of  it as your office, can you claim part or all of your RV payment (if you have one) as your office on your income tax or is it not worth the risk? Thanks!

[Twotoes]

I am a attorney but do not specialize in tax law. The laws regarding deducting for a in home office are very strict. For a sticks and bricks house the area must be used exclusively as an office and your business must not have another Office location. For an RV it may be difficult to argue that an area is exclusively used as an office. I have seen some 5th wheel toy haulers that use the garage exclusively but that may be an exception in the RV world. Depending on the amount of tax saved I think it may not be worth taking the deduction. Also the under the new tax laws the standard deduction has been doubled so you may not even itemize. I highly recommend that you consult a tax lawyer. 

[coachmac9]

Thanks, that's kinda what I was thinking too.

[Kirk W]

3 hours ago, Twotoes said:

I highly recommend that you consult a tax lawyer. 

Sound advice and the same applies to your travel expenses. My IRS investigator friend tells me that business expense and travel expense are the most closely watched items on individual income tax returns. 

[coachmac9]

Thanks Kirk and Twotoes, and yes, that is sound advice! I really didn't think it would be a viable option but figured I would ask, just in case it might be. I had my once in a lifetime (I hope) run in with the IRS and it wasn't fun!!! Definitely don't want to go there again!!

[Kirk W]

36 minutes ago, coachmac9 said:

Definitely don't want to go there again!!

Years ago we had a neighbor who was an IRS investigator. He used to say that anyone can claim any deduction you wish. The issue is whether or not the IRS will allow. As long as they don't think it is fraud your worst case will be paying the extra tax and possibly a late penalty. But doing such things does tend to attract the attention of the auditors and computer reviews.

[coachmac9]

Yea, we got in to a bad real estate deal that I thought we could write off as a loss and they jumped all over it. I ended up owing around 10K along with penalties that took me a long time to pay off. That was in the early 80's and 10K was a lot of money for someone just starting a career and had two kids to feed!!! Taught me a lot of hard lessons though!!! 

[jblo]

I have read on another forum (IRV2) that if you full-time, your RV  IS your home, thus 'away from home on business' is not applicable. As mentioned above, try whatever you want to, but trying to take 8x8 space in an 8x40 ft space as exclusive 'business-related' does not sound like it is a viable approach to writing off expenses.  On the other hand, if you can do it correctly, a 20% space use writeoff would be a nice deal?  Myself, would not try it, too many risks for not enough reward...

[Kirk W]

7 hours ago, jblo said:

I have read on another forum (IRV2) that if you full-time, your RV  IS your home, thus 'away from home on business' is not applicable.

That is absolutely correct. It has been tried before. If you want to know about business travel, read IRS publication 463.

[Solo18]

You would also have to have a separate phone line and Internet access data line that you use ONLY for your business.  No surfing the internet or checking your private email with your business lines!! 

I teach online and used to claim business expenses about 20 years ago when I lived in a house, but they have made the laws a lot stricter since then and it is just not worth it   You would be hanging a red flag onto your at-home work for the IRS to start reviewing you.  And living in an RV make it a LOT harder to claim you use a specific part of the rig only for business. 

[Carlos]

We truly do run a home business with no office, and our tax guy said that will be easy to prove.  We asked about doing deductions for the days when we take clients on our boat, and buy everything, even some overnight trips.

"It's certainly legal.  You can probably do it for years.  But that one audit because they don't believe you are making deals on a boat, even if you are, will cost more than you saved for years.  Don't do it."

 

[GlennWest]

An RV is too small to have a diacated area for a office. A house could have an office room. So, don't believe that would fly with the IRS. Also with new tax laws lots have changed. I am hearing, but have not verified, that I can't write off my exspensise any more. That will hurt if true. We have thousands to write off normally. 

[Kirk W]

1 hour ago, GlennWest said:

I am hearing, but have not verified, that I can't write off my exspensise any more.

While the tax regulations change constantly, income tax laws don't make major changes that fast. I used to subscribe to the IRS code changes but stopped years ago as it is too much dry reading now that I have such simple income and expense lifestyle. A good friend who was an IRS investigator used to say, "You can claim any deduction you wish as claiming isn't illegal. But the claims may trigger an audit and then the issue becomes what the IRS will allow." Travel expenses are a hot button for most people and while personal audits are few, computer analysis is part of every filing. As long as you do not have anything that falls outside of the "normal" parameters for those of similar profile to yours, you probably won't get more than that but with each item that seems unusual the computer will dig more and if enough it sends your return for human examination. Even obvious violations are not generally brought in if the numbers are small, but a few of those do get selected for examination. 

The other thing to keep in mind is that if you do get sent to audit, they usually look back for 3 years and can go back 7 years. 

[docj]

Several years ago the US Tax Court decided against a couple who tried to claim a portion of the MH in which they lived as a business expense.  That case was discussed on this and other RV forums.

It turns out that the couple appealed that decision to the 9th Circuit Court of Appeals and their appeal was denied two years ago.  I'm not an attorney, but it's my understanding that an Appeals Court decision does set precedent even though Tax Court decisions do not.

Here's a link to an article on the appeal: https://www.forbes.com/sites/peterjreilly/2017/01/18/ninth-circuit-upholds-tax-court-in-disallowing-rv-business-deductions/#4fc5fc8a99b2

[Twotoes]

docj is correct Tax Court rulings do not set precedent, they follow precedent. Appeals Courts can affirm or overrule a Tax Courts ruling. The Supreme Court can affirm or overrule an Appeals Courts ruling. For tax law you can also ask for a private ruling given by the IRS and not a Court that is just applicable to an individual case and is not precedent.