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3 tax season tips for full time rvers, backpackers & travelers, a travelers insight into tax season.

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When it comes to tax season; travelers and full-time RVers can make it as simple or as challenging as they like.  Tax season for me personally, I like to make it as simple as possible.  By claiming residence in one of the 9 states that have no income tax.

Foreign Earned Income Exclusion Tax Loophole For Travelers

This is easier for me than your average citizen because I am constantly traveling, and can easily provide proof of residency anywhere I choose.  Another great advantage of being a full-time traveler is the FEIE (Foreign Earned Income Exclusion) which allows a full-time traveler or RVer to delete up to $100,000 of their taxable income.  As long as you meet the requirements.  Which is reside outside of the country for 335 days.

Considering there are so many ways to generate a stream of income in today’s “digital” world, and with the constant crossing of borders between states and countries, there’s a buffet of loopholes for full-time travelers that would allow you to take advantage of the Foreign Earned Income Exclusion. 

If your thinking of living and working abroad check out my popular 83 ways to pay for a life travel.

Plan For Tax Season

So today, I want to revisit that “desperate traveler’s” method to saving money fast in regards to claiming exempt from taxes on my paycheck, and what happened to me as a result of that filing status.

Last winter I grabbed a temp agency job in hopes of saving $20,000 for my big trip around the world .  When filling out my “new hire” paperwork I claimed exempt from all Federal and State taxes to be withdrawn from my paycheck.

Paycheck Deductions for Tax Season

I was still forced to pay medicare and social security financial obligations.  But those paycheck deductions were closer to 0.5% than the standard 25% of taxes being taken out of my paycheck.   So instead of trying to save $20,000 from 75% of my paycheck, I put myself in a position to hit my $20,000 goal using 99.95% of paycheck faster.

This set me up for future financial consequences come tax season.  Unknowing what my tax obligations would be in February I’ve been living off of a $1,500 budget for the last 8 months.  Not exactly penthouse living, but I haven’t had to report to a job in over 240 days.

Filing Your Taxes

So what happened?

Using H & R Block to file my taxes I reported $27,000 in income last year.  Before any credits, deductions or any other adjustments to my taxes, I owed the IRS a whopping $1,100.  After-tax credits, deductions, and adjustments I was awarded a $40 refund from the IRS.

Consult a Tax Expert

I am NOT an accountant, tax expert, certified CPA.  I don’t even have the credentials to offer tax filing guidance or suggestions.  Every person’s situation is unique.  What worked for me may not work for you.  Heck, what worked for me this year may not even work for me next year.

This year claiming exempt from Federal & State taxes on my paycheck allowed me to save $20,000 in 3 months, and pursue my travel dreams of full-time RV living without any of the stress of an employer.

Tax Season Tips

What can you do to lower your financial tax obligation as a full-time RVer and traveler?

Tax Tip #1 ~Claim residency in a state with no income tax.

9 states with no income tax.

• Alaska ~ *** PRO TIP*** RESIDENCY IN ALASKA ALSO MAKES YOU ELIGIBLE FOR OIL DIVIDENDS
• New Hampshire
• South Dakota

The other day when I did my taxes it reminded me of when I was backpacking through Thailand.  Where I forgot which state I had last worked in so I filled out a tax return for each state I might have worked in.  One state said I owed them.  Another state said I would be rewarded with a hefty return, and another state didn’t even require me to file a tax return.  Because of this discovery, I have been claiming residency in one of these 9 states to lower my financial obligation come tax season for over a decade.

Another option to look into is the saver’s tax credit.

Tax Tip #4 – Lower Your Financial Obligations With The Savers Tax Credit

What Is the Saver’s Credit?

The saver’s tax credit is a program from the IRS that allows individuals to lower their financial tax obligations by giving you credit for financial contributions to 401k, 403b SIMPLE, SEP, or governmental 457 plans. As well as traditional and/or Roth IRAs.  The saver’s tax credit is a wonderful IRS program that rewards individuals for investing in their retirement on their own. 

The saver’s tax credit is what turned my tax obligation this fiscal year into a refund for me personally.  Even if you can’t commit to the max allowed per year, which is currently set at $6,000.  Every little bit helps and the more credit you get the fewer tax obligations you will have come tax season.

Tax Tip #3 -Itemize Your State Sales Tax

So by claiming residency in a state that doesn’t require income tax you essentially get to deduct a percentage of your taxable income just for doing every day shopping as well.

A double whammy in your favor!  You can get the form  to deduct your sales tax directly from the IRS or following this link

I didn’t create this travel blog to give you tax tips, but I did create this website to share my experiences with you.  In hopes that my failures could turn into tips of what not to do, or that my successes could help make your travels easier and more adventurous.

If you want to read how even a seasoned globetrotter still makes rookie traveler mistakes.  Check out this comical RV road trip recap from last fall .

Future of Tax Season for Traveler’s

I’ve been living out of an RV full-time for over a decade now.  Backpacking and other longterm travel for over a decade before that.  Every year I file my taxes usually no later than the first week of February, and every year I get a return.

This is the first year the standard deduction has drastically increased.  The first-year contributions to either IRA have increased by 20%.  This is the first year that I’ve been rewarded by the IRS for being poor.

I’m not jumping on any politicians bandwagon because in my eye’s it’s still choosing the “Lesser of two evils,” but this tax season was much easier to navigate than any of the previous tax seasons I have participated in.

Was that because I claimed exempt with my employer?  NO!!!!!  Tax season for me as a full-time traveler was easier this year because the standard deductions were raised for everyone.  Contribution credits were also raised for everyone.

Easy & Free Tax Software

Tax software like H&R Block or Turbo Tax makes it idiot-proof to do your own taxes.  Because all you have to do is take the numbers from your W2 and input them into the corresponding box.  Then answer some multiple-choice questions.  The whole process takes less than an hour to file your taxes, and if you’re willing to spend a few more dollars you can do it even faster.

With the advancement of technology, you can take a picture of your W2 and it will fill in the boxes for you.  It’s like depositing a check with your phone.  Simple, quick and painless.

You can do your taxes from anywhere in the world there’s an internet connection.  Which is what I’ve been doing for at least 10 years.  I have never paid more than $35 to file my taxes, and that was only to file a state return.  Filing a federal return has been free for me while using H & R Block tax software for over a decade.

Leave your comments, complaints and recommendations in the comments below.  Check out more RV life articles, tips & guides here.

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What’s The Best State For Fulltime RVers When It Comes To Taxes?

Alaska , district of columbia , florida , forwarding mail , fulltime rving , furniture , montana , south dakota , taxes , texas , voting , washington , work and money , wyoming.

Full time RVers have many advantages over the house-bound population.  Not only do they get to travel and enjoy new vistas, meet interesting people, and relish new experiences, they can also choose exactly where they want to declare home!

However, our country’s legal system was established around the premise that people are stationary in their places of residence.

Next to your social security number and drivers license, the most required piece of information that all levels of authority and government officials want is your physical address.

Enter the full time RVer.

All you want is the freedom to go your own way, as financially prudent as possible. Of course, stretching your income is also important.  With today’s hard economic times, getting the biggest bang for your buck is mandatory.

To that end, it’s only common sense that you would try to find a state that has its taxation system set up to your advantage .

Must read: Tax Deductions For RV Owners

How RVers Select A Homebase

Since it’s required that you declare a state as your primary residence, the first consideration should be whether or not they have an income tax .

Right off the bat, you’ve eliminated all but 9 states:

• New Hampshire
• South Dakota

However… while Tennessee and New Hampshire don’t have state income tax, they do tax interest income and dividends , so we’ll leave them off our RV-friendly list.

And since you’ll have to at least pass through the state occasionally to renew your vehicle registration, drivers license, etc, we’ll take Alaska off the list, too.  As tax-friendly as they are, making an annual pilgrimage that far north is a bit extreme.

Now we’re down to 6 RV-friendly possibilities.  Let’s look at sales tax .

Must read: Montana Holding Company Helps RVers Bypass The Tax Man

There’s not much difference between the 6 remaining states:

• Florida (over 6%)
• Nevada (6.5% to 8.75%)
• South Dakota (over 4%)
• Texas (6.25% to 8.25%)
• Washington (6.5%)
• Wyoming (4% to 8%)

Property tax on houses and land is of no concern, but personal property tax will affect your RV, car, and even furniture & household possessions:

• Florida – Yes
• Nevada – No
• South Dakota – No
• Washington – Yes
• Wyoming – No

Drop 2 more (Florida and Washington) out of our list of full time RVer-friendly states.

So, the final 4 possibilities are:

Where Do Most Fulltime RVers Live?

#2  South Dakota

Florida was also mentioned , though I didn’t find anything about Wyoming or Nevada.

Texas came out on top mostly due to the Escapees RV Club which is headquartered in Livingston, TX.  They have better then 15,000 members who declare Texas as home, yet many spend little or no time in the state.  The Escapees even go so far as to have a Become a Texan Manual  on the Internet that gives you all the information you need to establish your domicile in Texas. They can even do your mail forwarding for you.

It’s The Little Things…

Taxes are the obvious issues when you choose a particular state as your primary residence .

But don’t forget such things as vehicle registration and drivers licenses .

Another issue is voting , Texas has the most liberal absentee voting I’ve seen.  You can mail in your vote a month in advance of the election.

My wife and I full-timed in Texas for 2 years, and we were house-bound there for another 6 years.  It’s a state with a lot to see and do, and lots of real friendly folks.  Overall, Texas is a darn good place to call home.

Here are some more tips for choosing a homebase when you’re RVing full time, plus a few additional things you’ll want to consider .

I’ve been involved in RVing for over 50 years — including camping, building, repairing, and even selling RVs and motorhomes. I’ve owned, used, and repaired almost every class and style of RV ever made. I do all of my own repair work. My other interests include cooking, living with an aging dog, and dealing with diabetic issues. If you can combine a grease monkey with a computer geek, throw in a touch of information nut and organization freak, combined with a little bit of storyteller… you’ve got a good idea of who I am. To date, I’ve shared my RV knowledge in over 300 articles here at The Fun Times Guide! Many of them have over 25K shares.

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RV Tax Information All Full Timers Should Have

by Gonzalesonthego | Feb 14, 2020 | Full-Time RV Living | 0 comments

Tax season is upon us, and that means it’s time to pull out the paperwork and start crunching numbers.

For some, this is a simple matter of entering the info on a W2. For others, things can get much more complex, especially if you, like so many RVers out there, run an online business . This is true whether you live in a sticks-and-bricks or an RV. However, there is RV tax deduction and credit information you should have, and there are some aspects of full-time RVing that could definitely complicate your taxes.

The following is a collection of potential RV deductions for taxes and other information we think it’s important for full-time RVers to have when filing their taxes.

That said, we aren’t RV tax professionals by any stretch, and don’t claim to know all the ins and outs of tax laws. Because of this, and because every situation is so unique, this article should be used as a starting point only.  Everything learned here should be run by a tax professional before it is put to use.

Domicile vs Residence vs Tax Home

Let’s begin by discussing domicile vs residence vs tax home for RV tax purposes. Knowing the difference between the three is super important in order to ensure you file your taxes correctly.

As a general rule, your domicile is the place where you hold a mailing address and where your ID is from. This is the address you include on your tax return, and is almost always where you will file your state tax return.

Often, there are benefits (including tax benefits) to changing your domicile for the duration of your travels. For instance, many people choose to domicile in Texas or Florida because neither state requires residents to pay state income taxes.

That said, your domicile does affect other things such as homeschool laws, insurance availability and costs, sales taxes on vehicles, etc. Therefore, you will want to research carefully when making a switch.

When it comes to residence, things get a bit more hairy. Your domicile is almost always considered your state of residency also, even while traveling. That said, there are some exceptions to this rule. If you spend about half the year or more in another state, you may need to claim some of your income in that state. This is something you will need to look into based on your specific situation.

Finally, there is the question of where your tax home is.

“Tax home” is generally used to determine mileage deductions for small businesses, and refers to the place you handle the majority of your business. Since for most RVers this is their home-on-wheels, their tax home almost always travels with them, meaning your  tax home is wherever your RV is parked.

In most cases, this removes the ability to take a mileage deduction. There are some exceptions however, which we will discuss later in this article.

Work Camping Benefits

Now we will move on to work camping tax specifics. In particular, people wonder whether they must claim fringe benefits offered through their work camping position as income on their tax return. The answer? It depends.

First, be sure to confirm whether you will receive a W2 before you begin work. The answer to this will change whether you file taxes as a small business or an employee. If you will be filing as a business, the fair market value of your taxable benefits will likely need to be claimed as “bartering”. Meanwhile, taxable benefits received by a W2 employee should be rolled into the W2 form received at the end of the year.

All that said, there are some non-taxable fringe benefits  out there. These include healthcare and educational reimbursement. Also, they should almost always include a campsite used for free during a work camping stint. This is because work campers are almost always required to stay onsite, and doing so is for the convenience of the employer.

Special Deductions and Credits

In this section we will talk about RV tax breaks. Believe it or not, these are available to any RVer, not just full-timers, but they can be a big help to those who travel full-time.

RV Interest

One question we hear a lot is, “Is interest on an RV loan tax deductible?”  The answer is, yes, it is! If you are full-time in your RV and itemize your deductions, you can claim your RV as your home, meaning all interest paid throughout the year is deductible.

Even if you only live in your RV sometimes, you may be able to claim it as a second home, so be sure to look into this before dismissing the write-off entirely.

RV Sales Tax

Another common question is, “Is sales tax on RV tax deductible?”  Again, the answer is yes. If you itemize your deductions, you can deduct any sales tax you paid toward the cost of a motorhome or RV.

Solar Panel Installation

A third RV tax break that many can take advantage of is the Residential Renewable Energy Tax Credit. For the 2019 tax year, this gives you back up to 30% of the cost of a complete solar package, or additions to your current solar power system. If you installed a solar package or anything to do with solar power this year, you will want to be sure to look into this.

All that said, this particular RV tax credit will be less in the 2020 tax year and will disappear completely by 2021.

Business Deductions

Many people who travel full-time run their own businesses . This means you’ll need to take business deductions into account as well. In general, these will be much the same as they would be if you lived in a traditional home.

Things like…

• Internet for work
• Equipment purchased specifically for work
• Office supplies

…are all deductible.

That said, there are some business expenses that are a bit different. Below are three more complicated deductions you’ll want to really research before claiming.

Travel Expenses

Business travel expenses are where the aforementioned “tax home” comes into play.

Because your tax home travels wherever you go, you likely will not be allowed to claim your day-to-day travel expenses. After all, traveling is merely the lifestyle you chose, and whether you prefer to work gigs as you travel or work full-time from home, it isn’t likely that anyone is requiring  you to travel for work.

However, there are a few exceptions to this rule:

• If you leave your tax home (your RV) behind to travel specifically for work via plane or car, and you do nothing else on that venture, it would likely be tax deductible.
• Likewise, if you take your RV on a trip that is purely for business and return to the same location you started in, it would also be tax deductible.
• Finally, if you do most of your work from one home base where you have a permanent residence and use your RV to travel for work only part of the time, those trips might be allowed as write-offs.

Home Office Deduction

Next up is the home office deduction. Like business mileage, this can be pretty complicated to figure out.

The first thing to know about this deduction is that the space claimed as an office space must be separated from the rest of the home in some way and must be used purely  for business. Because RVs are such small living spaces to begin with, most full-timers aren’t going to meet this criteria. If you do, you will also need to be able to show that your home office is your primary place of business.

As Shravan Gupta said ” If you are in the world of business, that means you are in the business of making money”

As long as you are certain you meet both of these criteria, you can take this deduction.

RV Rental Expenses

Finally, if you chose to rent your home-on-wheels out at all, you might be able to deduct any expenses incurred during the process.

Once again, there are some things to know  before doing so. For instance, because you are living in your RV, you will need to prorate any expenses deducted to account for the number of days you spent in the trailer or motorhome.

All income and expenses for renting your RV will need to be reported on a Schedule C form.

Hiring a Tax Professional

As you can see, there is a lot to know about RV tax breaks and filing as a transient individual. For this reason, we actually don’t recommend jumping in on your own. Instead, we highly recommend hiring a professional to help you with the complicated world of RV tax filing so you can rest easy, knowing it was done correctly.

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• January 20, 2020

As we usher in the new year, I thought I’d answer some of the most frequently asked questions related to taxes and full-time RVing. Here are the top 10 tax questions for full-time RVers.

10 tax questions for full-time RVers

1. what’s the best tax savings strategy for full-time rvers.

Don’t leave deductible business expenses on the table. This includes writing off cell phone and internet costs, mileage, and possibly some travel expenses. Travel expenses can only be taken if they directly relate to your business and you have kept a good written or electronic log. This can include attending conferences or traveling to meet with clients.

Also, remember that as a self-employed individual, you can possibly deduct health insurance costs, health savings account contributions, and even retirement contributions. To max out savings for your personal situation, I highly recommend meeting with a tax professional to go over your exact numbers and situation.

2.  What are some common tax deductions for RV owners?

RV owners with a loan can take the interest as part of itemized deductions. The loan must be secured by the RV in order to do this. The other requirement is your RV must have sleeping, cooking, and bathroom quarters.

For RV owners who also own a business, it’s important to track anything you buy which is used in the business. This can include a computer, software, internet, education, conferences, and other items that are necessary for your business.

The other tax deduction I see often is for solar. If you add solar to your RV, there is a residential energy credit available. For 2022 to 2032, this credit is 30% of the total costs of installation including equipment and labor. You take this credit the year the solar system starts working regardless of what year you bought the equipment.

Additionally, RV owners with children may qualify for the child tax credit.

3. How many years can my RV business take a loss?

The IRS defines a business as being profitable three out of every five years. Consider if your business is profitable or losing money every year. While it is normal to have losses in the first couple of years in business but it’s not okay to continue to operate a business.

If you continue to show a loss after the first few years, you may be at risk of the IRS claiming your work is a hobby. This means the IRS will disallow taking the loss as a deduction against other income.

4. What’s the best new tax law for full-time RV owners?

The best tax law which almost every RV entrepreneur should benefit from is the qualified business income deduction. This is a 20% deduction for all income derived from a pass-through entity. Remember, sole proprietorships, partnerships, and S-Corps are all pass-through entities.

This means that if you earn $50,000 in net business income on the road, you could qualify for a deduction of up to $10,000. That’s a pretty substantial saving for small business owners. This is the simplified version. There are lots of exceptions and complications to this deduction but it is worth learning about and taking on your tax return as a full-time RV owner.

5. Should I register an LLC? How do I know if it should be an S-Corp?

It’s important to know the different types of business entities , so you can understand the best structure for your business. It’s also important to know that an LLC is not a tax structure; it’s a legal structure. The taxable business entities are sole proprietor, partnership, S corporation, and C corporation.

An LLC alone offers no tax benefits whatsoever. Instead, an LLC is treated as a sole proprietor unless elected otherwise.

The entity which offers the most tax savings is the S-Corp and I usually see savings to the taxpayer starting at about $50,000 of net business income. This can vary in each individual situation. If you think you could benefit, I highly recommend getting the opinion of a tax professional.

Keep in mind having an S-corp comes with more requirements and paperwork. However, the extra work may be very much worth the amount you’ll save on self-employment taxes. Talk with your tax professional to see if it’s the right move for you.

6. When do I owe quarterly taxes? How do I pay them?

Quarterly taxes are estimated tax payments paid 4 times throughout the year (April 15, June 15, September 15, and January 15 of the following year). These are payments that get applied to your federal self-employment and income taxes.

The IRS says you must either pay 100% of your income tax liability from last year or 90% of this year’s liability to avoid a penalty. If your tax liability is under $1,000, the IRS does not assess a penalty. The penalty is based on the underpayment of tax liability. It’s as simple as keeping up with your payments to avoid being assessed a penalty.

Should you need to make estimated payments, you can either mail in vouchers with a check or use the IRS website to pay online.

If you’re not sure if you need to be making estimated payments, I highly recommend talking with a tax professional.

7. Where should I register my business?

This is an important consideration and the answer I give most often is to register in the state in which you operate. This is typically your domicile state since that’s your legal address. I understand you may not always be in that state, but it is still the state from which you operate your business. I wrote a blog post on this very subject because there is a lot of misinformation around it.

Don’t be fooled into registering in a tax-free state to avoid income tax. You always pay taxes according to where you live. In fact, registering in a state other than your domicile state could cause more hassles. You should always register where you live and avoid the hassle of having to register in multiple states unless you are physically doing business in multiple states.

No matter where you form the business I suggest having a registered agent to receive documents on your behalf. The cost of this can vary from $50 to over $200 annually. I recommend Northwest Registered Agents for this service but there are plenty of other options to choose from.

Need a registered agent service? Hire Northwest Registered Agent! They are easy to work with and get great reviews.

8. How do I keep track of my business expenses and income?

I always recommend opening up bank accounts once you have formed your business whether it’s an LLC or an S-Corp. This will help separate you from your business and you won’t be mixing funds. This means having separate checking, savings, credit cards, and other financial accounts.

Accounts in the name of the business help to establish business credit and also keep legal separation should that ever become an issue. (I’m not a lawyer, so talk with a business lawyer to confirm the legal separation.)

I also recommend keeping track of expenses with some sort of accounting software. There are lots of options available to fit every budget. Quickbooks , Freshbooks , and Wave are all great options. Using software allows you to keep track of income and expenses, helps you understand the financial health of your company, and also allows for easier tax time.

If you are just getting started or overwhelmed by bookkeeping software, then a simple spreadsheet might do the trick.

9. How do I handle sales tax if I only sell digital products or services?

This is a difficult topic and one where I highly recommend first understanding the tax rules of your home state. Each state handles sales tax in a unique way. Some states tax digital products while others do not. I did write a whole post about sales tax issues . Plus, the laws around this are changing quickly and it may be soon that digital products are taxed in every state and not simply where you operate.

Generally speaking, if you are selling online and your total sales to each state are less than $50,000 then there is no need to worry about collecting sales tax in other states. This means focusing on sales tax in your state alone and collecting it if necessary.

I will tell you that Texas which is a popular state for full-time RVers does have a service tax. This means if your business is based in Texas you need to know if your service is taxed and what the tax rate is. You’ll also need to register for a tax license.

Lastly, there are software services that will help you determine, collect and remit tax in whichever municipalities you sell. But, you guessed it. These software services come with a price and as a small business, these can dig into the bottom line. If you’re interested in learning more about these services here are some examples,  TaxJar ,  TaxCloud ,  Taxify ,  Avalara , and more. Costs for these services range from $9/month to $47/month and higher and depend on your monthly transactions.

The one good thing about these tax services is that many will integrate directly with your sales platform and accounting software including Amazon, eBay, Shopify, Stripe, WooCommerce, Xero, PayPal, Etsy, etc.

10. What about the home office deduction for full-time RVers?

This is usually a big no. The IRS defines a home office as a completely separate space from your living area. It must be used 100% for business purposes. How many people can say that about their RV?

I have seen a few exceptions if you have a toy hauler with office space in the garage or possibly a bunkhouse used as office space.

I urge you to think about this though. An RV is a small space and honestly, I’m not sure how much savings the home office deduction would even offer in such a tiny living space. Did you want to save up to $50 and risk an audit? You decide if it’s worth it or not.

Hopefully, the answers to these 10 common tax questions for full-time RVers will help you navigate your tax situation.

What question do you still have? Ask me below!

Disclosure: This page contains affiliate links to products and/or services. This means I may receive a commission for purchases made through these links.

Still have questions about what counts as a business expense? Check out my tax write-off checklist!

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I’m a numbers person—but don’t let that scare you. I’ve been an enrolled agent (EA) since 2014 and a nomadic business owner since 2016. Because I’m a nomad myself, I know exactly how stressful life on the road can be.

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Full-Time RV Tax Deductions: What You Need To Know

RVing full-time does not exempt you from the tax season. In fact, hitting the road permanently may result in unique tax situations that require proper understanding based on IRS guidelines. Eligibility of travel expenses and the cost of your rig as deductions are two common concerns of full-time RVers. As an RV owner, it is your responsibility to know these things. Doing so will help you deal with your tax computation with a little ease.

Permanent home RVs have loan interests tied to the RV, sales tax upon purchase, and installed solar energy systems tax credit deductibles. RVs holding a business, only needs to add business-related expenses to the list of deductions. State and local taxes vary so make sure to consider the differences.

Knowledge of the tax implications in choosing a domicile is crucial to full-timers like us. This article will talk about the different tax deductions that you should be aware of when living on the road. It will also discuss the basic tax deductions you should know, and suggestions for tax savings that you can use.

Page Contents

Domicile And Your Tax Deductions

Establishing your state of domicile is vital when hitting the road full-time. The tax deductions you can take advantage of will depend substantially on your domicile. Domicile is the place where you intend to return after a period of absence and is your address for tax filing purposes. This means that no matter where you’re at, your domicile will determine the kinds of taxes you might be paying sooner or later.

Whatever tax regulations imposed in your state of domicile should not be taken too lightly. You eventually follow these rules come to the tax deadlines. It is necessary to be familiar with these rules in establishing your domicile. States without income taxes are popular as full-time RVers’ domicile. Florida, South Dakota, and Texas are the top three choices of full-timers because they do not collect personal income taxes.

In reality, tax laws are different in every state. You can still be liable for taxes in other states when camp hosting, workamping, or physically working outside your domicile. That is why a good background in tax rules in the different states you are traveling to will be indispensable in minimizing your tax liability.

Basis And Types Of RV Tax Deductions

Being a nomad is no different from life back in your stick-and-brick home when talking about taxes. The succeeding discussions will help you get acquainted with the different RV tax deductions that find their way into the usual computation. 

RV As Your Home On the Road

The cost of RV purchase can not be deducted for tax purposes. Relevant expenses, however, are allowed by the IRS to be deducted upon meeting certain criteria should you treat your vehicle as your primary home. It is important for the full-time RVers to know this since they will consider their RV as a home.

Your motorhome must be a livable place, with sleeping, cooking, and bathroom facilities, to qualify as either a main or second home. Full-time RVers can claim their RV as their main home given the permanent road life. Your RV must pass a safety inspection though. Remember that taxes can be deducted for only two homes – main and second homes, so maintain one or two locations to make sure expenses that qualify as deductions can be applied when computing for taxes.

Tax Deduction 1: Interest On Loans

Interest is deductible only under a home mortgage loan, which means your loan is explicitly tied to your RV and in case of default in payments, the lending bank may repossess your rig. Interest under personal loans is non-deductible – no collateral is required, hence, they come with higher interest rates. The key here is a loan where your RV or home becomes your collateral. 

Deductible interest has a limit set by regulations. A qualified residence loan is up to $750,000 only, which is for the principal amount. If you maintain two home locations both with mortgage loans, the total principal for deduction should not exceed $750,000. If each home mortgage loan exceeds $750,000 and you’re RVing full-time, it’s better to maintain only your RV home to avoid huge principal amounts that won’t qualify as deductions.

For a married taxpayer with separate filing, the deduction is equivalent to $375,000. Prior to 2018, the maximum allowed amount for loans is $1 million and for a married taxpayer as a separate filer is $500,000. Towing or towed vehicles are exempted from this classification so be careful not to include interests pertaining to them.

Tax Deduction 2: Sales Tax During Purchase

The sales tax upon purchase of your RV is deductible in your tax computation. This deduction applies even if your RV was purchased for cash. The sales tax deduction is done only once in your tax returns. 

There are five states that do not assess sales tax and they are Alaska, Montana, Oregon, Delaware, and New Hampshire. If you purchase from these locations, you won’t pay sales tax, hence, you have nothing to deduct from your computation. There is also a prevailing limit of $10,000 for state and sales taxes that you can deduct. 

Tax Deduction 3: Solar Panel Installation

As part of your 1040 as a non-refundable credit, the cost of solar panel installation can lower your taxes. It can also be carried forward if you don’t have enough or a zero tax liability. The only requirement to avail of this deduction is owning a residential or commercial solar energy system, so if you have one in your rig, you are indeed lucky!

Under the federal solar investment tax credit (ITC), you are allowed to deduct 26% of the solar installation cost from your taxes in the tax year 2020. This used to be 30% in 2019. In 2021, the deduction will go down to 22% and for 2022 and onwards, this becomes 10% and is applicable to commercial solar energy systems only. Installing a solar panel before tax year 2022 will be really handy for you.

Here’s a glance of the ITC over the years.

Tax Deduction 4: Portion Of Registration Fees

States that do not impose personal property taxes have annual vehicle registration fees. A portion of the said fees is assessed based on vehicle weight and another based on rig value. That portion based on your rig value is considered a tax-deductible expense.

RV As Business Location: When You Are A Business Owner

Using your RV as a strict business location is another story. The items enumerated above can still apply for deductions under an RV business setup, with additional expenses incurred for business operations. Home office deduction is not allowed as your RV must be 100% dedicated to your business and not for other purposes in order to qualify. 

A tax home is a place where you work, not where you live. The IRS enumerates the factors in identifying your tax home, especially if you don’t have a main or regular place of work or business. Two out of these three factors must be proven by facts and circumstances for you to legally deduct travel expenses. It pays to understand these factors so you’ll be consistently guided and prevent the IRS from disallowing your claimed travel deductions. 

The most common identifying factor is when a taxpayer does some work in the vicinity of his or her main home and lodges in that home while doing business there. This is the normal setup for almost all full-time RVers and won’t be hard to satisfy. 

The next factor is the incurrence of duplicate living expenses when you’re on business trips. For example, you need to fly somewhere to meet your client or attend a conference for work. You left your RV parked at a campground prior to your departure and stayed at a hotel during the duration of your meeting or work conference. You actually duplicate your living expenses by staying in a hotel. 

The last factor is when a taxpayer has not abandoned the area where the historical place of lodging and main residence is located.  By this, family members still reside in the said place or you frequently use the main home for lodging. For instance, consider your RV as your main home. When you went away from your RV for a business trip, you did not abandon your main home because you intend to return to it after your trip and resume traveling. You also use your main home often for lodging.

You need to satisfy two out of these three criteria so you can properly include all travel-related expenses in your deductions. 

Renting Out Your RV: What You Should Know

Expenses related to your RV can be deducted if you rent it out for more than 14 days in a tax year. To compute how much will be your deduction, you have to prorate the RV expenses by considering how many days it was rented out versus the number of days you lived in it. 

Among the expenses that can be deducted under an RV rental arrangement are RV insurance, fees for listing on a rental site, property taxes on your vehicle, and repairs directly related to the rental, like when a renter breaks something you paid for in order to be fixed.

Tax Deduction: Business Expenses

Business expenses have to be itemized in your tax returns. Your list of possible expenses mostly likely includes travel expenses, like the cost of tickets, meals, telephone and other related items. 

You have the option to deduct actual RV expenses or use the standard mileage set at 58 cents per mile. The standard mileage rate can be applied given that more than 50% of your trips are for business purposes and you have no more than 30 days of staying in your RV at any time. Sample actual expenses that you can deduct are depreciation, insurance, toll, gas, oil, garage rent, parking fees, and repairs.

Tax Deduction Process For RVers

Whichever state you’d be paying for your local taxes, a general tax deduction process is followed every time. State and local taxes differ among states so it’s best to know which ones have no specific tax types. The next paragraphs will emphasize these topics. 

Standard Deduction (SD)

The use of standard deduction means having a fixed amount of expenses to be deducted instead of listing them one by one. This is more of a straightforward option as you won’t care about receipts and bills anymore. 

The amount of standard deduction depends on taxpayer status. Singles, heads of households and married taxpayers can avail of different standard deduction amounts. The summary is shown below. 

If your itemized expenses are higher than the above figures, you can use the itemized deductions instead in computing your tax liability. 

Itemized Deduction

Simply put, your itemized deduction consists of the expenses you have listed one by one. Medical expenses,charitable contributions, and depreciation are part of the usual items. Sales tax, state and local taxes, as well as mortgage interest on your RV loan, are also included. Ordinary and necessary expenses in the course of trade or business are part of your itemized deductions.

Taxes In Different States

State, sales, and personal property taxes differ as you travel in various states. Vehicle registration fees also vary as those without personal property taxes on vehicles are the ones who normally impose this kind of fees. Here are lists of states and the kinds of RV taxes they do not collect. 

Suggestions For Tax Savings

There are other ways to save taxes on your vehicle, aside from availing the different deductions already discussed. The following tips will save both time and money so you’re sure to lessen tax liabilities in the future.

Maintain Proper Documentation 

Paperwork is the most important part of an individual’s tax life. You can’t simply claim deductions without proof because those documents are your basis for the figures presented. The IRS will look for those records, receipts and bills, so it is better to keep these electronically. Documents that are mailed to you should also be kept in storage boxes. 

There is a need to separate personal from business records because personal expenses don’t get deducted. To do this, have business debit and credit cards. Classify expenses too, like taking note of those directly related to revenue and those that are not. The more documents you have, the more details you can possibly add to your deductions. Spreadsheets can do wonders in your recording for both personal and business accounts.

It is also advisable to maintain travel logs when on trips. You ought to record details such as dates, reasons of travels, amount of expenses and locations because not all of your travel expenditures may qualify as valid deductions. Having a complete record will help you deal with taxes with more confidence. Use of a smartphone for digital copies of your receipts further helps avoid stacks of paper in your RV and save storage for other things. 

Use Of Accounting Software: Makes Life Easier

The use of software keeps you on track of expenses and facilitates a more convenient recording process compared to manual recording.  Delays in recording can mean penalties that is why you’re better off with an app or software use. Computation and filing of tax is easier too, whether you do it on your own or pay someone else for the dirty work. 

Open A Health Savings Account (HSA)

Contributions to an HSA can potentially reduce your income for taxation purposes and help plan your future medical costs. With an HSA, you are actually hitting two birds with one stone. There is a limit though, depending on taxpayer status. 

Singles can contribute up to $3,500 while couples and families can pay as much as $7,000. For those aged 55 and older, adding an extra $1,000 is allowed. A high-deductible health plan is needed for this strategy, one with lower premiums and higher deductibles in order to encourage a consumer-driven healthcare package. 

Dilemma is a sure thing when tax deadlines are just around the corner, but you do have available options to mitigate possible risks. Knowing your full-time RV tax deductions and which ones apply to your current situation can empower you and in turn, lighten the burden of IRS compliance. In the meantime, jot down the deductions you see as applicable. Your list will guide you in managing taxes ahead. You’ll never know how much time and money it will save you when due dates come. 

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Your guide to full-time RV living

Thinking about living full-time in an RV? Here’s everything you need to know before embarking on this journey

By Jesse & Rachael Lyons & Roadtrippers

We‘ve been full-time RV living, working, and traveling since 2018. Through this lifestyle, we’ve visited 23 states and 25 national parks. Touring the U.S. by RV has opened our eyes to new perspectives, uncovered new interests, and altered our lives. Four years into full-time RV living, we still enjoy living everywhere more than living anywhere.

Living on the road isn’t all adventure and fun though. We spend most of our time working in our RV as full-time remote marketers. We’ve also had our share of setbacks and breakdowns. RV life requires grit, flexibility, and strong problem-solving skills. Ultimately, overcoming the obstacles is worth it for the freedom and joy of RV travel.

Considerations for full-time RV living

Moving into an RV isn’t as simple as hopping behind the wheel and hitting the road. Some aspects of everyday life are different when your home has wheels. You’ll need a game plan for these considerations:

Related 10 mistakes beginner RVers should avoid

The ability to scale your cost of living is a massive benefit of RV life. You can live in an RV luxuriously or on a budget. The major expenses of full-time RV life are campsite fees, fuel, RV and vehicle payments, and activities as you travel. Don’t forget to account for maintenance, repairs, groceries, mobile phones, WiFi, insurance, and other daily costs like food and supplies. You can make decisions to control most of these costs by choosing the kind of RV lifestyle you want, planning, and  sticking to your budget .

Work and income

Unless you’re retired or saved to travel for some time, you’ll need an income to live full-time in an RV. Some RVers work online, while others find short-term jobs and work in one location before moving on to the next.

Sell or store

Downsizing and minimalism are part of the RV lifestyle. You can sell your home and belongings to fund the start-up costs or pay to store your belongings until you’re ready to return to a sticks-and-bricks home.

Domicile state

Even if you travel full-time, you still need a legal address. This determines where you pay taxes, vote, register vehicles, and get your mail. You can claim domicile at a property you own or ask a family member if you can legally “move in” to their residence. Alternatively, you can establish a domicile in a state through a service for RVers. Due to low income taxes and laws, the most popular domicile states for full-time RVers are Florida, South Dakota, and Texas.

If your address is with a family member, you can ask them to manage your mail. Alternatively, you can use a service to receive and forward your mail. Budget for about $100 per year for these services. 

Purchase good insurance policies for your vehicle and RV, and ensure your policy covers full-time RV travel. Joining a roadside assistance program specifically for RVs comes in handy too. Ensure continuation of health insurance through your employer or in your domicile state. If you’re traveling with a pet, make sure your insurance is established in your domicile state and carry updated vaccine records. 

If you’re roadschooling your children, make sure you’re familiar with and comply with the homeschool laws in your domicile state.

Full-time RVers rarely depend on campgrounds for WiFi access. If you require an internet connection for work or school, research cellular data hotspots or satellite internet options. Be aware that no mobile internet solution works everywhere, so you’ll likely need to plan your campsites accordingly or purchase multiple connection options.

Related What RVers and vanlifers need to know about Starlink

Maintenance

If you live full-time in your RV, it’s not a question of if something breaks, but when. There are excellent RV service centers and mobile mechanics, but the ability to diagnose and fix some issues on your own will make full-time RV living easier. So, bring a toolbox and travel with small replacement parts.

What to look for in a rig for full-timing

There’s no one right RV for full-time RVers. The right RV for you depends on your family size, travel style, budget, and work. Here are some factors for choosing the best RV to call home.

How much space do you need to accommodate your family? The more family members, the more beds and square footage you’ll require. Don’t forget, while bigger RVs are more comfortable, they’re more cumbersome for travel and finding campsites.

Choose an RV layout that fits your family’s daily life. Do you need an office with a closed door to focus? Are there enough workspaces for everyone’s work and school? Is there enough storage for everyone’s belongings? Are your kitchen and fridge big enough for your cooking requirements?

Related How to plan a safe and fun RV route with a big rig

The size of your fresh, gray, and black tanks can dictate your RV lifestyle. If you prefer boondocking and public campgrounds, you may want to purchase an RV with larger tanks, especially if you have a family. Tank size is not as crucial if you mainly stay in full-hookup RV parks.

Other features to consider

RVs don’t have as many appliances and comforts as a house. What other features do you need for daily life? Is an in-RV washer and dryer vital to you, or are you fine using campground and public laundromats? Do you want to invest in solar and battery upgrades for a more off-grid lifestyle? Do you require a full bathroom, or will a wet bath or campground showers suffice?

Booking campgrounds while full-time traveling

Parking your home around the country is fun but requires planning to book campgrounds. There is a vast campground style and pricing range, from nature and solitude to urban RV parks.

Types of campgrounds

There are three main types of campgrounds: private RV parks, public campgrounds, and public lands. Private RV parks usually offer more amenities and the option for extended stays but can be more expensive. Public campgrounds like national and state parks have fewer conveniences and require RVers to move frequently, but cost less and offer more rustic settings. Parking on public land is free but has shorter stay limits and no resources. Some full-time RVers stick to one type of campground, while others dabble in all three as they travel.

Stay length

How often do you want to move? Some full-time RVers enjoy going somewhere new every few days. Others stay at a campground for 1 to 2 weeks, while some settle into an RV park for one or several months. The longer you want to stay in one place, the further ahead you’ll need to book your campsite.

Related The ultimate guide to part-time RV travel

Plan and be flexible

Constantly booking campgrounds is part of full-time RV living. Consider the weather seasons, the sights you want to visit, the high tourist seasons for the destination, and local costs. Peak months in popular campgrounds, such as Florida in the winter or Colorado in the summer, will reach capacity months or even a year in advance. 

If you have your heart set on a specific campground, research when its reservation window opens and book immediately. However, be flexible enough to visit destinations in shoulder seasons or stay in less frequented campsites.

Traveling full-time in your RV

Full-time RVing can live up to the dream, but it’s not a full-time vacation. Long-term RV travel requires practice and management to sustain for months or years to come.

Visiting new places

Traveling to new destinations is the best part of RV travel. Make a bucket list of things you want to see and experience. Do you prefer outdoor activities and national parks, exploring the bustle of new cities, or a little of both? Keep an open mind to new interests and experiences too. Getting out of your comfort zone and getting to know people and places different from you can be the most enriching part of travel. Remember—you’ll never be able to see everything in one or even dozens of RV trips. Try to slow down and soak in the places you visit.

Travel days

Full-time RVers spend a lot of time on the road. Driving with an RV is slower and more unpredictable, so estimate an extra 25 percent for your drive time, and don’t push yourself (or your rig). Check maps carefully to ensure the roads and bridges accommodate your RV length and height. For drives longer than a day, reserve a campground or plan overnight RV parking in a retail location or rest stop that allows 1-night stays.

Maintaining relationships

If you’re traveling full-time, you might miss the sense of community that comes with staying in one place. Make travel plans that include visiting friends or family or invite them to meet up with you on the road. RVers are open to meeting new people, so don’t hesitate to use social media platforms and campground events as opportunities to make new friends. Take time to nurture your own traveling family too. The constant togetherness and small spaces shift dynamics, so practice open communication and plan focused time together.

Manage resources

RV life requires constant resource management. From conserving utilities to finding new grocery stores and juggling travel schedules, daily life isn’t as convenient as living in a house. There’s a learning curve for everyone, so embrace it as much as you can.

Common questions about full-time RVing

The costs of full-time RV living vary greatly depending on your RV lifestyle, but you can quickly scale your budget depending on the type of campgrounds you stay in and how often you travel to the next destination. 

You can live permanently in an RV as long as you’ve established and maintained a domicile address with the associated taxes and legal requirements.

Prepare for full-time RV living by researching and planning your RV setup, income, school, domicile address, travel plans, and campground reservations. Read and listen to others’ experiences on blogs, videos, and social media to learn what to expect from daily RV life.

The specifics of how taxes work when you live in an RV vary depending on your income sources, but generally, you pay taxes according to the state you establish a domicile in.

Most RVers move to warmer climates during the winter months, often referred to as “snowbirding.” However, if you live in your RV in cold weather, heat the interior with an electric or propane heater. Use insulation and heated lines to prevent your hookups and plumbing from freezing. Many considerations and decisions need to be made before you embark on full-time RV life. The more research and planning you do, the more prepared you will be. However, you’ll always learn new things as you go, so enjoy the adventure.

Meet the Authors

Jesse & Rachael Lyons

Jesse and Rachael are a married couple from Boston, Massachusetts. In 2018 they ditched their city apartment, became digital nomads, and hit the road to go on an adventure. Now, they travel full-time in their renovated Keystone Cougar fifth wheel, tasting local food and beer everywhere they go.

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Roadtrippers helps you find the most epic destinations and detours—from roadside attractions to natural wonders and beyond.

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RV Tax Deduction For 2022: What You Need To Know

Published on March 3rd, 2023 by Jennifer Jennings

The Most Common RV Tax Deductions

It’s 2023, and that means it’s time to file taxes for 2022. Doing your taxes is never fun, but it’s a little easier to swallow when you’re able to reduce your tax bill with deductions. If you’re an RV owner, you just might be able to take advantage of some RV tax deductions. 

Let’s take a look at all the different ways you can deduct RV-related expenses from your taxes. 

Most RV owners use their RV as either a primary or secondary home. If that’s the case for you, you can likely take advantage of some deductions.

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Let’s take a look at the most common RV tax deduction options: sales tax and loan interest. 

Deducting sales tax as an RV tax deduction

If you purchased an RV in 2022, good news: you (probably) qualify for a deduction.

In all but five states (Alaska, Delaware, Montana, New Hampshire, and Oregon), you’ll have to pay sales tax on the purchase of a new RV. Because you’ve already paid that tax, you can deduct it from your 2022 taxes. 

You’ll qualify for this RV tax deduction even if you paid outright in cash for your RV. In some states, such as Georgia, you’ll be required to pay an “Ad Valorem” tax based on the value of the vehicle. This can also be deducted from your taxes. 

Keep in mind that these deductions can only be used in the tax year you paid them. If you miss out on using these deductions, you’ll be out of luck in the future. 

Deducting interest on your RV loan

If you use your RV as a primary or secondary home, you’ll qualify for homeowner tax deductions. Many of these, such as property tax deductions or mortgage insurance deductions, won’t apply to RVs. But you’ll still be able to take advantage of one of the biggest deductions for homeowners: deducting interest on your RV loan.

As long as you meet certain qualifications, the IRS will treat your RV loan as essentially the same as a mortgage. That means any interest accrued on the loan can be deducted from your taxes (up to a limit of $750,000). 

To qualify for this RV tax deduction, you must:

• Have a collateralized loan (meaning the RV is collateral for the loan itself)
• Have an RV with sleeping, cooking, and toilet facilities
• Use the RV as your primary or secondary home

Most RVs will qualify, but owners of certain Class Bs might not due to a lack of toilet facilities.

If you rent your RV , you must be present in it for at least 10% of the days you rented it, or 14 days (whichever is longer).  

Deducting RV business expenses

If you use your RV for business in some way, either full or part-time, you likely qualify for a number of deductions. Examples of business use include renting your RV and using all or part of the RV as a mobile office.

Let’s take a closer look at how you can deduct RV business expenses.

Deductions for RVs used for business full-time

Most RV owners don’t use their rig exclusively for business. However, if you’re in this minority, you have access to an extensive number of deductions .

Examples of business expenses you can deduct include:

• Startup costs
• Business insurance
• Inventory-related costs (eg. the cost of any goods you sell)
• Office supplies and software
• Advertising and marketing
• Business taxes paid

These are just some of the available RV tax deductions. Probably the most valuable deduction, if you use an RV for business, is deducting mileage and other travel costs. You can do this by tracking miles and money spent, or using the standard IRS mileage rate of $0.585 per mile. 

Keep in mind that these deductions only apply if you use the RV 100% for your business. If you also use it for recreation or as a home, you won’t qualify for most of these expenses. However, that doesn’t mean you’re completely out of luck, as there are deductions available if you use the RV only partially for business. 

Deductions for RVs used for business part-time

There are a couple of different RV tax deductions you can take advantage of if you use your RV for business only part of the time. 

One common option is the home office deduction. To use this deduction , you must have a portion of the RV that is exclusively used for business.

Emphasis on exclusive . For example, if you use your dinette for work and for eating meals, you won’t qualify.

Because most RVs are fairly small, you may have trouble claiming any of it as an exclusive home office. And the IRS has gone after RVers who tried to do so . But if you have an especially large RV, such as a Class A, you may have space for an actual home office. 

If you rent your RV out part of the time, you likely qualify for certain deductions as well. Deductible expenses include listing costs, repairs, and other qualified business expenses. 

You’ll need to determine what percentage of the year you use the RV versus the percentage you rent it out. Use this percentage to help you determine what you can deduct from your taxes. Because this can get a bit complicated, you may want to get help from a tax professional.

How do you use RV tax deductions?

In order to take advantage of these RV tax savings, you’ll need to itemize your deductions . 

Itemized deductions are the alternative to the standard deduction, and you’ll have to pick one or the other.

For 2022, the standard deduction is $12,950 for single filers and those married but filing separately. It’s $25,900 for joint filers, and for heads of household, it’s $19,400. 

For an itemized deduction to save you money, you’ll need to have deductions greater than that amount. Otherwise, you’ll be wasting time and effort on itemizing without saving a penny. If you’re unsure which is best for you, it might be smart to meet with a tax professional. 

Save on your 2022 taxes with RV tax deductions

Whether you use your RV as a primary or secondary home, or use it fully or partially for business, there are a number of tax deductions available to you. Sales tax, loan interest, and more are all examples of things you can deduct.

Whatever deductions you use, you’re sure to love the money you save on taxes from RVing!

Get tips from other RVers

One of the best parts about RVing is engaging with the community of traveling enthusiasts. iRV2 forums allow folks to chat with other RVers online, and get other perspectives on everything RVing, including products, destinations, RV mods, and more.

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Jennifer lives with her husband in a 29′ trailer in Mexico. She is one half of DashboardDrifters.com and the founder of RVSpotDrop , a web service for full-time RVers. Jennifer Jennings has been RVing for 2+ years and writing about the RV and Van Life for 2+ years. Jennifer specializes in topics such as Lifestyle, van life, campgrounds features, destination features, and product lists.

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7 thoughts on “rv tax deduction for 2022: what you need to know”.

What if you use your RV to do volunteer work? We are area reps for CMA It is a not paid or reimbursed position all expenses come out of our pocket can we deduct any of those trips?

Yes, you can. Look up the current mileage rates for volunteer mileage. In the past you could write off expenses. Go to IRS.gov and search for volunteer deductions. There will be a publication for those.

solar panels, storage batteries, and all associated gear may qualify for a 30% tax credit. There are criteria to be met but it is not difficult

Can you expound on this?

FYI, Oregon does have a 0.5% vehicle tax for all new vehicles (I know because I just got done paying it). Not sure if the $150 I paid on my small TT is even worth itemizing, but for someone who lays down $100k+ on a new Class A monster, it could definitely count.

If RV purchased for business travel to customer locations the unit itself can be depreciated using standard or accelerated methods. I use my RV to travel to customers in multiple states. Saves me thousands in hotel and restaurant costs. Also have room for business supplies and files.

Are there any tax deductions for RVers who are also volunteers at local/state/federal facilities e.g. campgrounds and visitor centers? Thanks!

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RV Tax Benefits You Should Know

New and used RVs are both eligible for tax write-offs. Keep in mind that these deductions can only be claimed for a single tax year in which a corresponding event occurred. Here are a few examples:

• Sales tax paid on an RV purchase
• State or municipal property taxes
• Interest paid on an RV loan or mortgage
• Use of RV as a home office or for work-related travel
• Use of an RV for rental income

Claiming deductions will require receipts to verify relevant sales and purchases. You will also need to fill out additional tax forms to receive these RV tax benefits. It is also worthwhile to evaluate whether your itemized deductions exceed the standard deduction. 

If the standard deduction is larger than the sum total of your itemized deduction, you are probably best to stick with the standard deduction. So make sure to speak with a tax professional to determine all the applicable deductions for your recreational vehicle.

RV Tax Benefits Explained

Let’s go over those four main deductions and discuss whether or not your RV might qualify. 

Sales Tax Deduction

The sales tax deduction is a one-time opportunity that will be available to you in the tax year that you purchased your recreational vehicle. It can be claimed if you paid cash or secured a loan to purchase your RV and this is often a significant amount that can help your itemized deductions exceed the standard deduction. 

Please remember that you will be ineligible for this deduction if you live in a state that doesn’t charge sales tax. Otherwise, make sure you know how much you paid in sales tax on your RV purchase to take advantage of this important RV tax benefit. 

Local and State Property Tax Deductions

If you live in a state that charges property tax for vehicles, you may qualify for this deduction. This vehicle property tax is usually a percentage of the total value of your vehicle, according to your state or municipality. 

The property tax percentage will vary from state to state, but you may be able to deduct a maximum of $10,000 for combined state property tax and sales tax for your RV. 

Loan or Mortgage Interest Deduction

Depending on the size and features of your RV , you may be able to deduct interest paid on your RV loan or mortgage, whether you live in it full-time or part-time. According to IRS Publication 936 , “A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities.” 

That means your RV could likely qualify as a main home or a second home and you may be able to deduct the annual interest paid on a loan or mortgage as long as your motorhome contains a bed, bathroom, and kitchen.

You will also need to finance your RV using a secured loan if you want to claim this deduction. With this type of loan, the RV itself is considered collateral in case you default. You may not claim this deduction if you purchased your RV with cash, a credit card, or a personal loan.

Here are a few more things to consider about this RV tax benefit:

• You may still enjoy this deduction if your RV changes from your main home to your secondary residence.
• You can claim an interest deduction on a second home even if you don’t use it (i.e. your RV is in storage all year). 
• Interest on loans for vehicles used for towing , or being towed by , a recreational vehicle cannot be deducted. 

If you claim your RV as your main home and you decide to sell , you may still claim interest paid up to, but not including, the date of the sale. There may be some exceptions for unique or homebuilt RVs, so you should consult a qualified tax professional before making any assumptions that your RV fits the criteria.

We also encourage you to learn more about IRS Form 1098 , as to whether or not you receive this form from your lender will determine where and how you claim this dedication on your tax return.

Business Tax Deductions

Do you use your RV for business purposes , such as renting it out when you’re not using it? If so, you may write off some of the expenses associated with your business venture. The exact deductions you’ll qualify for will depend on whether you use your RV solely for business, for a combination of full-time living and work, or for a mixture of personal and business use. 

Before we go over the general outlines for these scenarios, we want to encourage you to talk with your tax professional to find out what qualifies as an RV business tax deduction for your specific situation.

RVs Used Solely for Business

If you use your RV solely for business purposes, you will be able to write off most, if not all, of the expenses related to operating and maintaining the RV for that business. In fact, the whole RV may qualify as a business deduction.

The kicker here is that you won’t be able to use your RV for personal use. Even using it a few times a year for personal trips can disqualify it from being a full business deduction.

Full-Time Living and Work

If you live in your RV full-time and work inside it too, then you may be able to deduct certain business-related expenses, depending on what they are and if they are used solely for business purposes. 

Mixed Personal and Business Use

If you rent your RV , you can write off expenses accrued through that venture. This applies whether you have your RV parked on your property as a rentable accessory dwelling unit (ADU) or you utilize a service like Good Sam RV Rentals to find renters.

Renting is an attractive way to recoup your initial RV investment more quickly. You may be able to claim deductions for things like depreciation of assets, advertising fees, rental insurance, maintenance costs, and commissions taken by a rental management service. 

Keeping meticulous records is the key to qualifying for business deductions when using your RV for business and personal use. You should know exactly how many nights you rented your RV out versus how many nights you personally spent in it. 

This is very important when considering whether you can claim business deductions in conjunction with a home mortgage deduction. You will only be able to claim that home mortgage deduction if you use your RV as a home for a minimum of 14 days or more than 10% of the total days it was rented. The greater of these two numbers will determine your personal threshold for qualifying for the home mortgage deduction.

Final Note on RV Tax Benefits

You should never make assumptions when dealing with taxes. When preparing your taxes, we highly suggest working with a certified public accountant or tax professional to ensure that you understand the laws both federally and locally. 

Recent changes to tax laws may impact whether or not you qualify for certain deductions, which is why it’s smart to work with a professional who knows and understands tax law.

What questions do you have about RV tax benefits? Let us know in the comments below.

• Comment (21)

I have a couple of businesses located in different states (CA, AZ, and NY) These are income producing, profitable businesses. I thought buying an RV would be great to travel between offices and eliminate the need for costly hotels. I live in CA but would likely leave at my NY business half of the year.

The only time I would actually use it would be going between and staying at the different office locations.

Would this qualify as a business expense?

I’m planning on using my RV as a “get off the grid“ coaching get away for my clients. Even when I actively don’t have a client, I would either be working out of it waiting for the next client doing marketing etc, changing locations in anticipation of the next client, or scouting locations for potential use. In my mind, that’s a full time working RV, and would fall under those IRS rules. Is there anything you would add for me to consider?

Hey Sue, I am a coach, and I am also working full-time out of my RV. I’m curious if you got this figured out?

Can you deduct the cost of parking your RV in a campground or other park along with the interest paid on the loan? It will be our main home.

Handicap special things need in rv are these a tax credit? Where can you safely camp without crowds now? And why can’t motorhomes be a mortgage an tax deductible item? How can hud mortgages be used in motor coach rv to live in? I’m a fire victim insurance settlements take yrs to settle how can I convert to a motor coach rv to live in till settlement or just go o. The rd looking for place to live? Any idea?

Purchased my fifth wheel for cash I’ve remodeled it to fit my business what kind of tax write off can I take for 2020.

Hi Wade, In KY we get a sizeable Homestead Exemption on our regular home, could we get something like this on our RV. Our tax for just this year is almost $1800.00 and this is just a 34 foot Gas, class A. Thanks so much. Everything helps.

Do you do appraisals on research. I am wanting to refinance my 2016 coachman freelancer but the bank is requesting an appraisal for the motor home. I still owe 62,000.00 on it so it must appraise for more than that . I bought it used and it still has under 10,000 miles on it

Can you take a deduction for the costs of repair for accidents and costs of adding and / or replacing equipment in your Rv, in Oregon state?

If you have your RV paid off can you use it maintance like new a. C and new setciut board

Can “closing costs” on an RV be deducted? I’m thinking of the broker fee and a professional inspection.

Dose tax is it applicable to Canadian also?

Typically, travel expressly for the purpose of work can qualify as a business expense. For individual cases like this, we always recommend seeking the advice of a tax expert (which we are not) to understand what about your RV lifestyle can, and cannot, qualify as a business expense. Hope that helps!

You seem to have the right considerations in mind, but our best advice is to consult a tax professional when it comes to specific cases. They have the most up-to-date knowledge on how your RV (and how you use it) may help you save some money come tax time. Good luck!

If you claim your RV as your primary residence and also work from that location, you may be able to claim some campground fees as business expenses. However, we highly recommend consulting a tax professional before filing, as all situations are slightly different and it’s best to seek professional expertise when considering tax write-offs for RVs!

A lot of these tax questions are specific to your situation. We recommend consulting a tax professional for advice on the deductions and credits you can claim.

In terms of camping without crowds or finding places to live on the road, you might find this article on ways to find boondocking spots useful. Hope that helps!

Hi Jacquie, if the RV is used strictly for business use, then I’d imagine you should be able to write off at least a portion of it as a business expense. However, before you do anything you should talk with a tax specialist. They will be able to tell you what exactly qualifies in this case.

Hi Mary, I’m not totally sure about the Homestead Exemption in KY. Definitely talk with an accountant or tax specialist. It sounds like something you might be able to take advantage of.

Thomas, give your local Camping World a call and someone will be happy to assist you. https://rv.campingworld.com/locations

Hi Marcel, I’m not sure about that. Talk with a tax professional to find out.

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Working from Your RV in Multiple States May Affect How Many State Income Tax Returns You Need to File

• Escapees RV Club
• May 12, 2017

Taxes and Accounting for Full-Time RVers Working on the Road

By Adam and Lindsey Nubern

DISCLAIMER: The information and materials we share in this article are intended for reference only.  As the information is designed solely to provide guidance to the readers, 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.

As full-time travelers, we’re living the dream!  We’ve chosen a life of endless road trips fueled by the freedom to work as we go.  One of the best perks of our lifestyle? We can change our office view at any time from the east coast to the west coast and all that’s in between.

However, come tax season, our travels and working in many states may create more tax returns to file.

Why? When we make income while working in states other than where we’re domiciled, we may be required to file additional tax returns such as a nonresident tax return. Each state we work in may have rules taxing nonresident’s income earned within their state borders.

So, which states do you need to complete a nonresident state income tax return? It depends.

It depends on your unique facts and circumstances and it depends on each state’s tax rules. Every state handles taxing nonresident income differently.

In this article, we’ll show you how to do the research so that you can determine which states you may need to complete a nonresident income tax return for.

How States Tax Nonresident Income Differently

Since each state approaches taxing nonresident income differently, it’s important to individually research each state you’ve traveled through and did work within.

Also, be prepared for rules to change from year-to-year. Currently, states are working to figure out how to tax people that perform services using the internet.

Here are keywords to use when searching online to help you find nonresident income tax rules for each state:

• State Name , e.g. “Georgia” or “California”
• Not all states name their tax organization the Department of Revenue. It may be different like California’s Franchise Tax Board or New Jersey’s Division of Taxation.
• Nonresident return
• Source income
• Physically present

Once you find the tax rules for nonresidents, take your time and read them carefully.

As a forewarning, these rules can be confusing and difficult to understand. When in doubt, call the state’s tax department and ask about your specific situation to gain clarity and peace of mind.

The state may provide great news relieving you from completing an income tax return like Georgia did for Nubern. Or, they may affirm you must pay income taxes for performing services while in their state like California.

Nubern finds Georgia’s nonresident income tax return rules on the Georgia Department of Revenue’s (GDR) website here.  https://dor.georgia.gov/filing-residents-nonresidents-part-year-residents-and-military-personnel

GDR's website states:

Nubern reads the rules. The guidance states that those “who work in Georgia… and are required to file a Federal income tax return, are required to file a Georgia income tax return.”

Nubern feels he satisfies both statements, because he physically worked within Georgia and he is required to file a Federal income tax return.

But, he’s still uncertain, so Nubern calls the GDR directly to get clarity.

The GDR representative on the phone clarifies the state of Georgia’s definition of source income.

If you are not domiciled in Georgia, Georgia will want an income tax return if you have some form of source income from Georgia. Source income from Georgia includes wages, Georgia lottery winnings, income from flow through entities, rents, etc.

The GDR representative states that performing services through the internet while being physically present in Georgia is not defined as Georgia source income by the State of Georgia.

In conclusion, the GDR confirmed Nubern does not need to complete a Georgia nonresident income tax return.

Whew! What a relief!

However, Nubern would have never been able to determine this without making the phone call.

Whenever you are uncertain, call and talk to a state representative explaining your specific situation so they can give you an accurate answer.

Now onto California. 

California:

Next, Nubern researches California’s tax rules. He searches online with the keywords “California nonresident income tax return.”

He finds the California Franchise Tax Board (CFTB) details their rules on taxing nonresidents  here .

Researching California’s rules on their website is a step-by-step process. Together, we’ll walk through what the website explains below.

First, the CFTB defines who is a California resident. Then, they affirm Nubern’s tax status as a nonresident by stating, “A nonresident is any individual who is not a California resident.” You can see this below.

Second, you can see below that the CFTB defines how California taxes nonresidents “only on income from California sources.”

From this, Nubern’s new question is: What are California sources?

The CTFB website answers this question as we work down the page. We’re given clarity on what California defines as source income when referring to compensation and business income situations.

For folks receiving compensation through wages and salaries, California states source income is dictated by where the services are performed.

They explain the source of income doesn’t matter where your employer is located, when your payment is issued or your location when the payment is received.

In other words, California determines source income to be where you physically are while you are doing your income generating activity.

Nubern continues reading down the website’s page and finds the CFTB states how they will tax him as a self-employed individual with Business Income.

In this section, the CTFB states that any profession carried on within California borders is considered taxable California source income.

In conclusion,  Nubern needs to complete   a California nonresident income tax return.

The return will report the income he received while he was physically present in California and doing work that would result in any income for his business; even though he may have billed and received the income when he was outside California.

Lessons on Source Income

First, this example shows how states define source income in very unique ways.

Georgia and California use the same terminology of “source income”, but have different interpretations of the definition. The different interpretations show how Nubern’s same accounting services can be taxed differently by each state.

Second, it’s important to know that being physically present within a state, for even one day, while doing business could have an impact on your requirement to file a nonresident income tax return.

The other 48 states have their own nonresident tax rules and definitions to abide by.

Next, we’ll show you how you can research each state’s rules yourself.

How To Do the Research Yourself

Tips to prepare for tax season.

Since each state handles taxing nonresidents differently, we have tips to help you be prepared for tax season. 

To determine if you need to complete a state income tax return, you may need to provide your facts of how many days you were physically present in a state and/or how much income you made while in a state.

To do this, maintain up-to-date records that include:

• Include the dates and locations of your travels.
• Find an example travel log here . 
• Income reports that detail how much income you made in each state.

Keeping an accurate travel log and detailed income reports will save you time and stress of trying to remember a full-year’s worth of travels and income during tax season.

What are the Best States to Travel and Work In?

To avoid the complications of having to complete nonresident state income tax returns, you could strategically travel and work in states that don’t tax income.

Now, that’s a unique way to plan a road trip!

According to Bankrate.com , seven U.S. states currently do not tax income:

• South Dakota

Also, Tennessee and New Hampshire do not tax wages or business income, but they do tax dividend and interest income.

Work with a Professional CPA

Every full-time RVer’s situation is different and tax law can be confusing. Consult your professional CPA with your unique situation to get more clarity on which states you need to complete nonresident tax returns.

Need a CPA?

Xscapers works with CPA Adam Nubern of  Nuventure CPA . Connect with Adam  here .

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LICENSE AGREEMENT

This Agreement is effective on the date the Intellectual Property is downloaded by the Licensee.

A. Licensor is in the business of providing a total support network for all recreational vehicle enthusiasts (“RVers”/ “RVing Community.”) and owns the Intellectual Property, the form of which, is set forth at escapees.com hereby incorporated by reference.

B. Licensee wishes to use the Intellectual Property, for one of the following uses: personal blogs, personal YouTube channels or similar web-based channels, and/or personal websites. The use shall be selected at the time the Licensee downloads the Intellectual Property; and, the use shall hereby be incorporated by reference into this Agreement. The use of the Intellectual Property shall not be commercial in nature.

C. Licensor is willing to grant the Licensee a license to use the Intellectual Property on the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements set forth below, the parties hereto covenant and agree as follows:

Article II: License

A. The Licensor hereby grants to the Licensee, and the Licensee hereby accepts, a nonexclusive, nontransferable license (the “License”) to use the Intellectual Property.

B. No other right or license is granted by Licensor to Licensee or by Licensee to Licensor, either express or implied, with respect to any other trademark, trade name, service mark, or other intellectual property right owned, possessed, or licensed by or to Licensor. Licensee shall not use the Intellectual Property in any manner not specifically authorized by this Agreement.

Article III: Operation under License

A. The Licensee must obtain all governmental permits, licenses, registrations, and approvals needed to produce and market the Product or provide the Service and must operate under the License in compliance with all applicable laws and regulations. Specifically, but without limitation, when using any of the Intellectual Property, the Licensee must comply with all laws relating to intellectual property in force, including marking requirements. At the request of Licensor, and without compensation to Licensee, Licensee shall promptly do such acts and execute, acknowledge, and deliver all such papers as may be necessary or desirable, in the sole discretion of Licensor, to obtain, maintain, protect, and/or vest in Licensor the entire right, title, and interest in and to any Intellectual Property; including rendering such assistance as Licensor may request in any litigation, Patent and Trademark Office proceeding, or other proceeding. All use of any Intellectual Property by Licensee on any good shall inure to the benefit and be the property of Licensor.

B. The Licensee may use the Intellectual Property only in connection with goods manufactured, distributed, and sold by or for, and/or services provided by or for, the Licensee in accordance with the specifications, directions, and processes furnished to the Licensor by the Licensee or its representatives and agents from time to time; and, the quality of all goods sold under the Intellectual Property must be satisfactory to the Licensor or as specified by the Licensor. The Licensee must furnish to the Licensor, upon request, with samples of goods sold or distributed, and/or examples of how Licensee provides services, using one or more of the Intellectual Property. In addition, in order to assure that the development, manufacture, appearance, quality, and distribution of the Product and/or Service are consonant with the Intellectual Property used to identify it or them, Licensor retains the right to participate at each stage of development of any Product or any other Material Requiring Approval and to approve or disapprove of any development, manufacture, appearance, quality, and/or distribution.

C. Whenever the Licensee uses any of the Intellectual Property, in advertising or in connection with goods that it sells or distributes, the Intellectual Property must be displayed in accordance with specifications and directions furnished by the Licensor to the Licensee, from time to time. Licensee shall use upon or in connection with the Product, and/or Service, where a United States Federal Trademark Registration has been obtained, the symbol ®. Licensee shall not otherwise affix or use such in connection with nor use any other trademark or trade name in connection with the Product without Licensor’s prior written approval. The Licensee must also clearly indicate the Licensor’s ownership of the Intellectual Property whenever one of the Intellectual Property is used. Licensee agrees to use such copyright notice as may be prescribed by legal counsel for Licensor, from time-to-time.

Article IV: Assignment and Subleasing

A. This Agreement and the License are personal to the Licensee, and the Licensee may not assign or sublicense any of the rights granted to the Licensee under this Agreement without the advance written consent of the Licensor, which consent may be withheld for any reason whatsoever. Any purported assignment or sublicense by the Licensee (or by operation of law) that is not approved in writing by the Licensor will be null and void and of no legal effect whatsoever.

B. This Agreement may be assigned by the Licensor to any person or entity whatsoever.

Article V: Licensorship and Protection of Intellectual Property

The Licensee acknowledges the Licensor’s exclusive right, title, and interest in the Intellectual Property and will not at any time do or cause to be done any act or thing contesting or in any way impairing or tending to impair any part of such right, title, and interest. Specifically, but without limitation, the Licensee will at no time adopt or use any word or mark that is likely to be similar to or confusing with the Intellectual Property. In connection with use of the Intellectual Property, the Licensee will not in any manner represent that it has ownership of the Intellectual Property or any registration thereof, and the Licensee acknowledges that use of the Intellectual Property will not create in the Licensee’s favor any right, title, or interest in or to the Intellectual Property, but all uses of the Intellectual Property by the Licensee, including any goodwill generated by such use, will inure to the benefit of the Licensor. The Licensor will be responsible for trademark registrations and must use commercially reasonable efforts to file, prosecute, and maintain all trademark and related registrations and registration applications for the Intellectual Property.

Article VI: Infringement

Only the Licensor shall have the right, but not the obligation, to prosecute any infringement of the Intellectual Property. The Licensee must promptly inform the Licensor of any infringement that comes to the Licensee’s attention, regardless of whether the Licensee elects to prosecute the infringement.

Article VII: Licensor’s Warranties and Representations

The Licensor is the sole Licensor of the Intellectual Property and has a good right to license the rights in the Intellectual Property to the Licensee in accordance with the terms of this Agreement.

Article VIII: Indemnity

A. Licensee represents and warrants that it has the right to enter into this Agreement and to agree to the terms and conditions of this Agreement. The Licensee agrees that it will indemnify and hold harmless the Licensor , and its directors, officers, employees, shareholders, partners, agents, and affiliates, against all controversies, disputes, claims, liability, and expenses (including legal fees) relating to this Agreement, whether sounding in contract, tort or otherwise, brought by a third party.

B. Licensee shall promptly notify the Licensor of any claim, in writing; and, Licensee shall cooperate with the Licensor in the defense of any claim.

Article IX: Term and Termination

A. The term of the License will commence on the date of this Agreement and will continue in effect for a period of one (1) year. At the expiration of the initial one-year term of the License, or any renewal thereof, the License will be renewed for a period of one year beginning on the date of the expiration of the prior term, unless either the Licensor or the Licensee gives written notice of termination to the other not later than thirty (30) days before the expiration of the prior term. If notice of termination is given, the License will terminate on the expiration of the existing term.

B. The Licensor may, at its option, terminate the License prior to the end of its term by written notice to the Licensee if Licensee violates any of the terms of this Agreement.

C. Termination or expiration of the License will not in any way operate to impair or destroy any of the Licensor’s or the Licensee’s preexisting rights or remedies, either at law or in equity.

D. Immediately following the termination or expiration of the License, all rights granted to Licensee hereunder shall automatically revert to Licensor and Licensee shall execute any and all documents evidencing such automatic reversion; and, the Licensee must cease and desist from all use of the Intellectual Property in any way and deliver to the Licensor all material and papers on which the Intellectual Property appear that are in the Licensee’s possession.

E. Licensee shall, within three (3) months after such expiration or termination, deliver to Licensor a complete and accurate statement indicating that all existing inventories of Product have been destroyed and all references to Intellectual Property have been removed from Licensee’s properties.

Article X: Relationship

A. The relationship between the Licensor and the Licensee is that of licensor and licensee, and it is not the purpose or intention of this agreement or of the parties to create a partnership, joint venture, principal-agent, or other relationship for any purpose whatsoever. Neither the Licensor nor the Licensee is authorized to or has the power to obligate or bind the other party in any manner whatsoever except as may be expressly provided in this Agreement.

Article XI: Binding Effect

A. The provisions of this Agreement will be binding on and inure to the benefit of the heirs, personal representatives, successors, and assigns (where applicable) of the parties.

Article XII: Notice

A. All notices and other communications between the parties must be in writing. B. Notices must be given by (i) personal delivery, (ii) a nationally-recognized, next-day courier service, (iii) first-class registered or certified mail, postage prepaid to the party’s address specified in this agreement, or to the address that a party has notified to be that party’s address for the purposes of this section, (iv) or via email. C. A Notice given in accordance with this Agreement will be effective upon receipt by the party to which it is given or, if mailed, upon the earlier of receipt and the fifth Business Day following mailing.

Licensor: Teresa Moore, COO Escapees, Inc. 100 Rainbow Drive Livingston, Texas 77351

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Article XIII: Attorney’s Fees

In the event of any controversies, disputes, and/or claims arising out of or relating to this Agreement, whether sounding in contract, tort, or otherwise, each party shall bear its own costs and expenses, including reasonable attorneys’ fees, incurred in connection with such action. Article XIV: Confidentiality

Licensee shall maintain the confidentiality of all trade and proprietary secrets that may be disclosed in the course of providing the services under this agreement. Licensor shall identify to Licensee in advance and in writing any information or data deemed a trade or proprietary secret. ARTICLE XV: CHOICE OF LAW The parties agree that the laws of Texas shall govern this Agreement and all controversies, disputes and claims relating to, in connection with or arising out of this Agreement or breach of this Agreement, whether sounding in contract, tort, or otherwise, and whether settled by binding arbitration or by a court of competent jurisdiction. Article XVI: Waiver A party’s failure or neglect to enforce any of its rights under this agreement will not be deemed to be a waiver of that rights or any other of its rights. Article XVII: Headings and Construction The section headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. Article XVIII: Counterparts The parties to this Agreement may sign this Agreement in any number of counterparts, each of which is an original and all of which taken together form one single document. Moreover, this Agreement shall become effective when each of the parties to this Agreement sign one or more counterparts and delivered the signed counterpart to each of the other parties to this Agreement, in accordance with ARTICLE II: NOTICE of this Agreement. Article XIX: Severability If any term or provision of this Agreement shall be deemed to be invalid, illegal, or unenforceable, the remainder of this Agreement shall remain in full force and effect, and, that illegal, invalid, or unenforceable term or provision shall be modified to the extent necessary to render such term or provision enforceable. The rights and obligations of the parties shall be construed and enforced accordingly, preserving to the fullest permissible extent the intent and agreements of the parties, without frustrating the purpose of the Agreement. Article XX: Entire Agreement, Modification and Integration A. This Agreement constitutes the entire agreement between the parties. Each party acknowledges that in entering into this Agreement it does not rely on, and shall have no remedies in respect of, any representation or warranty (whether made expressly or impliedly) that is not set out in this agreement. B. This Agreement may not be modified other than in a writing, dated, executed by an authorized representative of both parties, stating its intent to modify or supersede this Agreement and delivered in accordance with the Notice clause of this Agreement. IN WITNESS WHEREOF, Licensor has caused this Agreement to be executed by offering the Intellectual Property for download on escapees.com; and, Licensee has caused this Agreement to be executed personally or, as appropriate, by its duly authorized officers by downloading the Intellectual Property.

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Top Tax Deductions for RV Owners You Need To Know Of

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While talking about RVing may be one of your favorite things to do, talking about taxes probably isn’t. However, it’s a necessary evil, and the two overlap, believe it or not, so you’ll want to read on to find out how you can maximize your deductions at tax time.

If you have an RV that you use for traveling, you may not already know that you can take some deductions on it. Whether you live in a house and you only use your RV and house trailer part-time or you live in an RV full-time like a regular nomad, you can take advantage of some of these deductions to get the most out of your RV lifestyle.

For RV owners who live in an RV full-time, our tax deductions are limited when it comes to the traditional brick-and-mortar homeowner. However, there’s an overlap you’ll want to know about because you can still take some of these deductions and you may not even know it.

1. Deduct the interest on your RV loan

If you own an RV, you likely financed the cost. RVs are expensive. Even the cheapest RVs cost tens of thousands of dollars so it’s important to be ahead of your RV financing . If you do have a loan on your RV, you can deduct the interest, much like you can deduct the interest on your home loan.

This RV tax deduction (as well as the sales tax, personal property tax deductions, homeowner tax deductions, and home mortgage interest deduction) is only available to those who have enough deductions to itemize using Schedule A. Because full-time RVers no longer have a brick and mortar home, this typically eliminates them.

Without a mortgage and real estate taxes, it can be tough to qualify for a business tax deduction on this one, but there are exceptions, so seek help from a accountant or tax specialist to find out more. In fact, don’t be discouraged, because when you add in medical expenses, charitable giving, and state and local taxes, you can use this form.

Look into what the standard allowed deduction is for you, whether that’s single or married because it changes every year. If your deductions add up to more than that, your RV qualifies as a first home (or second home, if you have a mortgage interest deduction), and you can deduct the interest. Yay!

There are a couple of other caveats to keep in mind here. You cannot deduct the interest on your RV loan if your loan is not secured by the RV and if you are already taking deductions on two other homes.

2. Take the home office deduction if you work from your RV

Let’s take a moment to remind ourselves that you can always deduct business expenses. If you are traveling for business, you can deduct your expenses. That means a portion of your gas, mileage, food, and lodging. Now, as for whether RVers qualify for the home office deduction or not is a different story. You can qualify, but it’s pretty difficult to do. Let’s go over how the deduction works.

The IRS requires that in order to take a deduction for a home office, you must use that space exclusively for business purposes. Because RVs are so small, it’s tough to dedicate a space 100% to business and it’s very difficult to prove this exclusive use.

Even if you did dedicate a space for business use only, it would be so small that it’s hardly worth keeping the documentation and making the calculations. It’s usually not worth the hassle to take this deduction. In many RVers’ experiences, even a small amount of recreational use doesn’t sit well with the IRS and it could result in your deduction being denied, or worse.

With that, you may consider that in recent years, the IRS has allowed for a more simplified home office deduction, making it easier to compute. While the space must still be used exclusively for business, you can calculate $5 per square foot up to 300 square feet.

You also have to keep accurate records, and RVs with this deduction tend to raise a red flag. There are better ways to make use of your small living space and get the most out of your RV tax deduction.

3. Rental deductions

Here’s a totally different spin on a business deduction. Your RV is the business. That’s right. If you use your RV as, say, an Airbnb more than 50% of the time, you can deduct your rental income on your taxes.

Pretty cool, huh? You have to be diligent about how you record business vs. pleasure and document your rental income diligently. Depreciation is also another easy write off if you’re using your RV as a business. It’s a great way to recoup some of your costs.

The details can get hairy, as far as how many days it has to be rented, how many days you can use and live in it, etc., so consult a tax attorney for more information on how it works.

4. Deduct your phone and internet

Let’s say you work on the road. You need your phone and internet, right? This business tax deduction is available to you if you operate your business on the road. The tricky part is calculating the percentage of business usage for each. You can’t deduct personal cell phone and internet use.

A good way to estimate your business use is to track it for a couple of months and then average it over the rest of the year. Try not to claim more than 50% business use unless you can prove it.

Remember that you’re using your data for personal emails and texts, streaming, researching travel, and phone calls. But certainly don’t leave this deduction off. It can really help you with tax savings, especially when you’re trying to stay connected on the road.

5. Deduct mileage for your travel

If you have a motorhome rather than just an RV you tow, you can deduct the mileage you drive for business. Just like you would in your car, you’ll want to keep detailed records of these miles. It doesn’t matter whether you are running errands for your business or meeting a client for coffee. You need to keep a note of the date, the round-trip miles, the purpose of the trip, and who you were meeting or the store you went to.

Not only does this make it easy at tax time to record your deductions, but it will help you prove your deductions to the IRS if needed.

This can get tricky, because let’s say you need to travel to another city to meet a client, and you and your family decide to hop in the RV and do some sight-seeing while you’re there. Is the purpose of the trip business or recreation? Can you deduct the miles you travel or not?

You can, in fact. If your primary reason for traveling in business, you can deduct the miles from Point A to Point B as a business expense. However, there’s still a bit of gray area here, so be careful. Point A has to be your place of business more than 50% of the time, whether that’s your home or your office. And in some cases, more than 50% of your trip has to be for the business before you can deduct that mileage.

Just remember, deducting thousands of miles begins to look suspicious to the IRS, so it doesn’t mean you can’t travel for business in your RV and deduct the mileage, it just means you need to be careful what you designate as business vs. pleasure.

6. Claim the mileage on your car

Here’s a pro tip. If you don’t feel comfortable claiming the mileage on your RV, especially if you’re a full-timer, claim the mileage on your car instead. If you have a toad (that’s a towed vehicle) that you use while you’re at your destination, you can take deductions on that mileage.

You likely split your time in this vehicle between business and personal use, so you’ll have to divide your expenses and keep detailed records, but you can keep track of your mileage and claim it as a deduction, even if you decide to skip out on the RV mileage deduction.

Deducting the mileage of a towed vehicle is usually a lot easier and doesn’t raise as many red flags. There are two ways you can calculate your mileage. The first is the standard mileage rate (which changes every year) x the number of business miles you drove.

The other is a calculation of the average expenses for business use, including RV insurance , maintenance , and gas. The standard mileage is usually easier to figure out and will result in a larger deduction, but every situation is different.

7. Sales tax and income tax deductions

If you paid rv sales tax deduction on your RV, you can deduct it. There are several states that don’t charge sales tax, and obviously, if you didn’t pay it, you can’t deduct it. The IRS also places a limit of $10,000 on the amount of sales tax you can deduct.

However, you still have to have enough deductions to itemize on a Schedule A. If you’re itemizing your deductions on your Schedule A, you can claim either your state and local income taxes or your state and local sales taxes. It’s in your best interest to do the math to figure out which gives you the most RV tax benefits.

When you make a large purchase like an RV or a vehicle, it’s typically better to take the sales tax deduction, but it can depend on your tax rate and your personal income. For instance, if you live in a domicile state without income tax, you’ll want to take the sales tax deduction.

8. Personal property tax

If you’re domiciled in a state with personal property tax, you’ll want to take that deduction, too. You can take this deduction on any personal property, like a car, truck, SUV, or RV. It’s just one more thing you can itemize on your Schedule A to help put you over the threshold.

However, many full-timers are domiciled in states that don’t have personal property tax, which is a great thing because you don’t have to pay it, but simply means you can take fewer deductions at tax time.

9. Domicile

I’ve thrown this term around a few times already, so we need to clear the air. Your domicile state is where you’ve set up your permanent address and where you file your taxes. Some states have an income tax, sales tax, and personal property tax. Others don’t.

Some states don’t require you to show up in person to renew your driver’s license while others have a renewal period of every 10 years. You can see why any combination of these things would be great for full-time RVers.

The most popular domicile states are South Dakota, Florida, and Texas. However, Oregon doesn’t have sales tax and Tennessee doesn’t have an income tax. Some people prefer to keep their domicile state in their home state, even though they don’t reap any of these tax benefits.

Take these things into consideration when deciding whether or not you want to RV full time and how you might want to file your taxes in the years when you’re on the road.

10. Install solar panels for solar credit

The government will give you a bonus deduction if you install solar panels on your home, but did you know they’ll also do the same if you install them on your RV? That’s right. Anyone who installs solar panels on a personal residence , including an RV, will get a deduction.

It’s a non-refundable credit on your 1040 that you can carry forward if you don’t have enough tax liability to take it right away.

11. Health insurance premiums for the self-insured

Many full-time RVers are self-employed and, therefore, self-insured. That means you can deduct your health insurance premiums. If you get your health insurance from the marketplace or any other private insurance company, you qualify to take this deduction.

It goes on your 1040 and helps to bring your income down, which is helpful when determining your premiums for the next year.

Keep in mind that health share ministries do not count toward these health insurance premiums, so you cannot deduct these. This deduction is also limited by your business income.

12. The 20% pass-through deduction

This deduction started in 2018. It’s part of the Tax Cut and Jobs Act. It gives a 20% deduction to people with self-employment income, including partnerships, sole proprietors, and S-Corp owners.

While the deduction is complicated and may be limited by your income, you can qualify with a taxable income of less than $315,000 if married and filing jointly or $157,500 if filing singly. You must also have a net profit from a small business.

This is a good one for those who are self-employed, which includes many RVers.

13. Ad valorem tax or ‘use tax’ deduction

Some states, like Massachusetts and Georgia, apply a use tax to cars, boats, and RVs. You pay it upfront when you get your tags, but it’s deductible on your Schedule A. It has to fit into the same $10,000 limit as your sales tax, but if it does, you’ll want to take it.

14. Taking a standard deduction

The last decision you have to make is whether you want to take any deduction at all. It takes a lot of itemization to make deductions worthwhile.

For some people, itemizing deductions simply isn’t worth the hassle. While you may get quite a deduction for your itemizations, the standard deduction is also quite significant, and itemizing your deductions is a lot of work.

Itemized deductions include medical expenses, charitable contributions, state taxes, local taxes, sales tax, mortgage interest (or RV loan interest), and a few other things we’ve already mentioned here.

If you don’t have enough to make an itemized deduction, you can take the standard deduction. You may also choose to take the standard deduction if you simply don’t want to keep a record of your itemized deductions throughout the year.

Can you use an RV as a tax write off?

There are many ways you can take deductions on your RV, from the sales tax and personal property tax to mileage or for use as a home office. It just depends on how you use the RV. Make sure you do what works best for you and research the ins and outs of the particular deduction you want to take.

As an RV owner, there will be some deductions you don’t qualify for, especially if you’re a full-timer, but there are plenty of opportunities to try.

If you’re living in your RV, the IRS may consider it a home, which means you can deduct the interest if you currently have a loan. It’s definitely worth looking into because if you don’t have a home, you won’t have this itemized deduction, which clears up some room on your tax return.

Can you write off an RV as a business expense?

This is a tricky question because there are a lot of different business deductions you can take. There’s a home office business deduction, mileage deductions, and internet and phone deductions, just to name a few.

You can technically use them all if you’re living in an RV, but some are harder to claim than others, and it depends on your circumstances. For instance, for the home office deduction, you have to be able to prove that you use that space exclusively for business.

In something as small as an RV, that can be tough to do, though not impossible. The mileage and phone and internet deductions are easier to take, as long as you keep detailed records of each expenditure.

Does my RV qualify for section 179?  

If you use your RV for business use only (as in you rent it out on Airbnb) and you do not use it for personal travel at all, you may qualify for a Section 179 deduction. If you don’t live in it or travel for recreational purposes, and every overnight stay is for business, this qualifies as transient lodging.

Both transient lodging and overnight stays for business qualify for Section 179 deductions, which give you big benefits on your personal taxes. Just make sure you understand the law, and seek help before you file if you need it.

Final Thoughts

Taxes can be confusing, and if you have any questions at all, you should consult a tax attorney or professional to help. We’ve just brushed the surface of tax deductions for RVers and how they work.

Look into the ones that work for your specific situation to make the most out of your deductions. Because the IRS regularly changes these deductions and how they can be taken, it’s important to keep updated or work with someone who knows.

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Hitting the open road and going on wonderful adventures with your RV is a great way to explore the country but what happens when something goes wrong?

You no doubt have home insurance to cover unforeseen circumstances in the future so does it not make sense to insure your RV as well?

We’re going to look at whether you actually need RV insurance, the types of insurance available and also review Liberty Mutual RV insurance to find out if it is a worthwhile policy and provider to choose.

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Roadside assistance is one of those things that we buy and then hope we never need. Yet we all know that breakdowns can happen when we least expect them. When they do, having the right roadside assistance can mean the difference between being back on the road quickly and an expensive, time-consuming disaster. 

There are many roadside assistance companies to choose from, and they all make a lot of promises to try to attract your business.

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How Much We Really Spend RVing Full-Time Each Month

• RV Lifestyle

Is Full-Time RVing More Affordable Than You Think?

“Can we afford to RV full-time?”

Anyone considering RVing full-time will invariably ask this important question. It’s usually among the first considerations for new RVers.

The primary concern isn’t necessarily about knowing one’s income. Most individuals are aware of the money they can access monthly as full-time RVers. The real uncertainty is about the costs of the new adventure. This is where many potential full-timers fall short, often severely underestimating the costs of full-time RVing.

How much does full time RV really cost?

Naturally, people might underestimate RVing costs. After all, transitioning to full-time RVing means eliminating costs such as house payments, property taxes, homeowner’s insurance, HOA dues, and gym memberships. Many believe that after selling their house, they can clear debts. So, what expenses could remain?

Though full-time RVing entails higher fuel and camping fees, most expenses like food, car insurance, medical supplies, and pet food remain constant. Some then assume the additional costs of RVing couldn’t possibly surpass household and HOA payments. This assumption often leads to a harsh reality check.

Consider this example: We met a couple who sold their home and business to travel in a motorhome. Despite planning to sustain their lifestyle from the proceeds of the business sale and savings, they soon found that full-time RVing was pricier than anticipated. A few months in, they had to resort to daily labor jobs for sustenance. Ultimately, they returned to their former business as employees.

Stranded due to a lack of funds

Another couple’s experience was more heart-wrenching. While traveling, their Airstream trailer broke down in a small Washington town. Lacking funds for repairs, their financial situation spiraled. They sold their tow vehicle and became camp hosts at the local fairgrounds, relying on a modest job for basic necessities. This situation left them stranded, with a damaged trailer and limited prospects.

A great budgeting strategy

When we first ventured into full-time RVing in 2017, we met Nikki and Richard, seasoned RVers since 2014. Like many, we wondered about the affordability of this lifestyle. While we had a budget, we were unsure of its accuracy. Stories of others running into financial hardships lingered in our minds. Nikki and Richard shared their experiences and budgeting strategy with us.

Sticking to a $100 daily budget

Nikki mentioned that they tried to limit their daily expenses to $100, encompassing everything from food to healthcare. Calculated monthly, this amounted to about $3,000. The daily limit helped them stay on track, making adjustments when necessary.

Being new to the lifestyle, we initially thought $3,000 monthly seemed excessive. However, five years down the line, managing to spend just $3,000 in a month feels like a significant achievement.

Some manage on less than $1,000 a month

Every RVer’s experience is unique. We’ve come across individuals who consistently spend less than $1,000 monthly. Adapting to a budget, some full time RVers cut down on travel, while others opt for dispersed camping to minimize costs. There’s no one-size-fits-all approach.

Making choices on discretionary spending

Areas where RVers have control over spending include camping fees and dining. Campground fees can range from free to $200 per night. Many places offer discounted weekly or monthly rates.

Opting for free parking while in transit

Some RVers find solace in parking lots like Walmart or Cabela’s when traveling. In certain regions, RVers can also halt for the night in rest areas or truck stops. While these options lack amenities and can be noisy, they’re free and can offset costs.

Embracing dispersed camping

Dispersed camping, or boondocking, is free camping on public lands. While not everyone’s cup of tea, it can significantly reduce expenses. Some RVers frequently boondock for weeks at a time, incurring zero camp fees.

Considering campground memberships

While some might find parking in lots, gas stations, rest stops, or even boondocking in secluded areas unnerving, others thrive in these environments. Remember, everyone’s comfort level varies. If you prefer fully-equipped campsites with comprehensive amenities, then exploring campground memberships might help cut down on camping expenses.

With numerous options available, RVers should research to find a membership that matches their preferences and budget. While there’s an upfront enrollment cost and annual dues, the potential savings can be considerable. Some great options include Thousand Trails , Escapees , Harvest Hosts , and Boondockers Welcome .

Becoming a camp host

Another way to minimize campground fees is by taking on the role of a camp host. This involves staying at the campground for free in return for assisting with its operations.

Monitoring other discretionary expenditures

While campground fees might take up a significant chunk of your budget, other discretionary expenses can also impact your financials. For instance, dining out during travel days can quickly add up. Those occasional $70 dinners can increase your monthly expenses substantially. If you aim to spend just $100 per day, splurging on a single dinner leaves minimal room for other outlays.

Personal choices affecting the budget

Several expenses play into the RVing budget including gas, insurance, maintenance, food, pet care, medical insurance, and technology, among others. Personal preferences can greatly influence these costs. For example, our consistent high expenses stem from pet care and quality dog food. We made a conscious decision to prioritize our pets’ needs over other non-essential expenses like alcohol or soda. It’s crucial for RVers to tailor their budgets based on their values and resources.

How much we spend (on average)

For a clearer picture of our own spending, our average full-time RV expenses amount to about $4,500 a month, surpassing our $3,000 target. In fact, since 2017, we’ve consistently missed this mark.

Furthermore, we’ve been fortunate to not have any RV or car payments, freeing up a portion of our budget. Some of our significant expenses have included:

• Over $8,000 on pet care
• Around $4,000 on technology (internet access, gadgets, etc.)
• Our grocery bills were even lesser than our pet food expenses

Key budget categories to consider

If you’re planning your own full-time RV budget, it’s crucial to account for a range of categories:

• Food and groceries
• Medical bills
• Campsite charges
• Child-related expenses
• Recreation and entertainment
• Household supplies
• Vehicle-related costs (maintenance, payments, etc.)
• RV-specific costs and payments

Establishing a savings account for significant repairs

It’s wise to allocate funds for substantial maintenance tasks like battery replacements, brake repairs, and tire changes. For instance, we spent $2,000 on a brake job for our previous RV, and six new tires set us back over $3,000. Setting up a dedicated savings account for such costs can prove invaluable in the long run.

RV expenses add up

Every expenditure counts when you’re RVing full-time. Staying mindful of costs, whether it’s a dinner outing, a vet appointment, or a monthly internet bill, is essential to maintain your budget.

Recognizing your financial boundaries

Determining if you can afford full-time RVing boils down to your financial discipline and dedication. Those with vast resources might not need to ponder these details, but for many with limited incomes, budget management is vital. Reflecting on Nikki and Richard’s discipline with their $100 daily limit often makes us wonder about our own financial choices.

Get tips from other RVers

One of the best parts about RVing is engaging with the community of traveling enthusiasts. iRV2 forums allow folks to chat with other RVers online, and get other perspectives on everything RVing, including products, destinations, RV mods, and more.

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• Working From The Road

How Traveling Full-Time & Working from your RV Affects Travel Expense Tax Deductions

Taxes and Accounting for Full-Time RVers Working on the Road

Working from Your RV in Multiple States May Affect How Many State Income Tax Returns You Need to File

By Adam and Lindsey Nubern

DISCLAIMER: The information and materials we share in this article are intended for reference only.  As the information is designed solely to provide guidance to the readers, 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.

Most of us proudly identify ourselves as full-time RVers, digital nomads, or van lifers, because we’re living the dream. We get to travel full-time and work remotely on the road.  

Our lives aren’t normal. We don’t live in a sticks and bricks lifestyle like most people. We have the freedom to roam and be in any state we want at any time.

For some of us, this expands our work opportunities and we use our RV to travel the country for work trips.

In a normal sticks and bricks lifestyle, we could claim these business travel expenses as deductions on our taxes.

However, since our lifestyle isn’t normal and we’re always on the move, our taxes and travel deductions aren’t normal either.

So, can we deduct our travel expenses on the road?

The answer is complicated and depends on each RVers particular situation. Here’s why.

Who We Are: We’re Nomads

It’s all because of our nomadic lifestyle. Officially, the IRS calls us “itinerants.”

What is an itinerant?

Here’s what the IRS says about itinerants:  Source

What is a tax home?

Your tax home isn’t the place you live. It’s the place you work.

For us living and working from our RVs, we have to take extra steps and keep track of our current tax home. Due to changing travel plans and situations, our tax home may change often.

The IRS gives us instructions on how to determine where your tax home is. It’s based on meeting a certain number of factors.

A Better Understanding of Each Factor

Factor 1: Most of the time, we satisfy Factor 1 because our main home is our RV and we use it for lodging while working from our computers doing business.

Most of the time, this is the only factor we satisfy as we travel around the country doing work from our RV. When we only satisfy this factor, we cannot deduct our travel expenses.

Factor 2: Factor 2 comes into play when there’s a situation causing you to duplicate your living expenses when you’re away for a business trip.  

Duplicating expenses for a business trip could look like this: This month you are paying for a month’s rate at an RV park. During the same month you fly to another state for work. While you’re in the other state you pay to stay at a hotel.

With this example, you are duplicating living expenses by paying for your stay at the RV park and at the hotel.

However, most of the time when we are away duplicating our expenses for a business trip, we don’t satisfy Factor 1 any more. This is because we have left our RV (our main home). While we are away, we are no longer using our RV for work or lodging. 

So, with this situation we still only satisfy one factor, Factor 2, and we cannot deduct our travel expenses.

Now, let’s look at Factor 3. It’s a game changer.

Factor 3: When you’re away from your main home (your RV) for a business trip, you haven’t abandoned your main home because you intend to return to it after your trip and continue traveling. Also, you often use your main home (your RV) for lodging.

So, when we’re away on business trips like the example above, we may satisfy two factors, Factor 2 (duplicating our expenses) and Factor 3 (not abandoning our RV), to be able to deduct our travel expenses.

As you can see, the number of factors you satisfy may change often with your changing situations.

To get a better understanding of how we may apply these factors in different situations, here are two examples.

Kasey is a wedding photographer. She lives full-time in her RV and she works full-time out of her RV. She’s currently in Vermont’s Green Mountains at Hapgood Pond Campground.

Kasey has a wedding booked in Oregon in a few weeks to take professional pictures for the bride and groom. She’ll be driving her RV over to Oregon for the wedding. Kasey plans to stay on the west coast for a while since she’s in the area.

Can Kasey deduct her travel expenses from Vermont to Oregon?

Looking back at the three factors used to determine tax home , Kasey only satisfies one factor, Factor 1.

Factor 1: Satisfied

She is working and lodging in her main home (her RV).

Factor 2: Not Satisfied

Kasey’s business trip situation doesn’t match Factor 2. She’s not duplicating any expenses for her trip.

Factor 3: Not Satisfied

Kasey hasn’t abandoned her RV (her main home) at any time.

Kasey’s situation only satisfies one factor. Therefore, she is considered an itinerant and she cannot deduct travel expenses.

Kasey is a wedding photographer. She lives and works full-time out of her RV. She’s currently in Vermont’s Green Mountains at Hapgood Pond Campground for the summer. She’s been there for a month and she is planning on staying for another two months.

Kasey has a wedding booked in Oregon in a few weeks to take professional pictures. She’s decided to fly cross-country for the business trip instead of drive her RV.

Kasey adds all of these facts and intentions to her travel log to record her justification that this is a business trip.

Yes. Looking back at the three factors used to determine tax home , Kasey satisfies two factors, Factors 2 and 3.

Factor 1: Not Satisfied

Kasey regularly works from her main home which is her RV. She vacates her RV for work in this example, so she does not satisfy Factor 1.

Factor 2: Satisfied

However, Kasey duplicates her expenses for the trip by paying for her RV to stay in Vermont at the campground and for her living expenses in Oregon while she’s shooting the wedding. So, Kasey satisfies Factor 2.

Factor 3: Satisfied

Factor 3 is satisfied, because Kasey is not abandoning her RV in Vermont during her trip to Oregon. She intends to return to her RV after the wedding event is over.

Conclusion:

Since Kasey’s situation satisfies two factors, she has a tax home (her RV) in Vermont while she travels to Oregon for the business trip. Kasey can deduct these business travel expenses.

As you can see, throughout the year you may be able to deduct travel expenses for some trips, but not others.

Since our tax home status can change from day- to-day, week-to-week, or month-to-month, it’s important to keep very detailed records of your travels.

Here are some ways to keep record of your travel situations to justify your circumstances and intentions if you were to be audited.

How to Keep Records of Expenses

1. keep a travel log.

Keep an up-to-date travel log using dates, locations, and your intent for your trips.

Here’s an example:  2017 Travel Log

2. Track & Keep Records of Your Expenses

It’s very important to keep records of your expenses. Especially, if you are deducting travel expenses because you are duplicating living expenses. You need to prove with paperwork you are duplicating your expenses where your RV is and where you are on your trip.

Remember To:

• Keep an up to date travel log (seen above)
• Record all expenses accurately in your accounting records
• Keep all receipts

Tip: Use Accounting Apps to Help You Track Your Expenses

• QuickBooks has a phone application allowing you to attach pictures of receipts to you expenses. This saves you from keeping stacks of receipts.
• Mile IQ has a phone application to make tracking and recording your mileage easier.

Need a CPA?

Xscapers works with CPA Adam Nubern of Nuventure CPA . Connect with Adam here .

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The Military Wallet

How to Deduct Mileage and Travel Expenses for National Guard and Reserve Drill

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Deducting Mileage and Travel Expenses for Guard/Reserve Duty

Current irs mileage rates, allowable travel expenses, how to track your travel expenses, tracking mileage, lodging and other expenses, what if you didn’t track your expenses, how to claim travel expenses on your taxes, how reserve travel deductions impact your taxes, exceptions to travel deductions, 2018 tax year changes.

In a perfect world, all Guard and reserve members would receive travel reimbursements when they report to drill . Unfortunately, that is not the case. While some members are reimbursed for their travel expenses, not all branches of the military and not all units authorize travel reimbursements for attending regularly scheduled drills.

Thankfully, members of the National Guard and military reserves (including Reserve Corps of the Public Health Service) may be eligible to deduct travel-related expenses when they file their tax returns. If you live more than 100 miles from your duty location and stay overnight, you may be able to deduct travel-related expenses including mileage, hotel and lodging, parking fees, tolls and half the cost of your meals, up to the federal per diem limits.

Prior to the most recent tax system overhaul, the Tax Cuts and Jobs Act of 2017, it was also possible for members of the reserve component to claim expenses if they lived less than 100 miles away from their drill location. However, recent changes to the tax laws have made some changes to these rules. (We’ll cover this in more detail below.)

These deductions can be worth hundreds or even thousands of dollars per year. Let’s take a deeper look at these deductions to see how to qualify and claim them on your taxes.

• Eligibility: To be eligible to claim these expenses, you must be a member of a reserve component of the Armed Forces of the United States, including the Army, Navy, Marine Corps, Air Force or Coast Guard Reserve; the Army National Guard of the United States; the Air National Guard of the United States or the Reserve Corps of the Public Health Service. These deductions for travel-related expenses are not available for active-duty service members.
• Only duty-related travel: All related travel expenses must be incurred for the sole purpose of serving on official duty in the Guard or reserves. If your travel is not for the sole purpose of official duty, then you cannot claim it as an expense on your tax return.
• You must travel at least 100 miles to your duty location: If you traveled more than 100 miles to your duty location, you can deduct your travel expenses to include mileage, lodging, parking, tolls and half the cost of meals. According to the IRS:

This deduction is limited to the regular federal per diem rate (for lodging, meals and incidental expenses) and the standard mileage rate (for car expenses) plus any parking fees, ferry fees and tolls. Claim these expenses on Form 2106 or Form 2106-EZ and carry them to the appropriate line on Form 1040. Expenses in excess of the limit can be claimed only as an itemized deduction on Form 1040, Schedule A. Source .

• 2021 Mileage Rate: 56 cents per mile.
• 2022 IRS Mileage Rate: 58.5 cents per mile

According to the IRS , deductible travel expenses while away from home include, but are not limited to, the costs of:

• Travel by airplane, train, bus or car between your home and your business destination. If you are provided with a ticket or you are riding free as a result of a frequent traveler or similar program, your cost is zero.
• Using your car while at your business destination. You can deduct actual expenses or the standard mileage rate, as well as business-related tolls and parking fees. If you rent a car, you can deduct only the business-use portion for the expenses.
• Fares for taxis or other types of transportation between the airport or train station and your hotel, the hotel and the work location, and from one customer to another, or from one place of business to another.
• Meals and lodging.
• Tips you pay for services related to any of these expenses.
• Dry cleaning and laundry.
• Business calls while on your business trip. (This includes business communications by fax machine or other communication devices.)
• Other similar ordinary and necessary expenses related to your business travel. (These expenses might include transportation to and from a business meal, public stenographer’s fees, computer rental fees and operating and maintaining a house trailer.)
• Shipping of baggage, sample or display material between your regular and temporary work locations.

If you plan to track your mileage and other expenses for tax purposes, then you need to keep clean tax records . Here are some tips:

A good way to track your mileage is to keep a mileage logbook in your vehicle. Record the mileage on your vehicle when you start and stop your trip, and write the total number of miles you drove. Record this for each trip you take over the course of the year. 

You can record mileage with a standard notebook, mileage logbook, smartphone app or with software such as Quicken. Be sure to include the journey to and from your home, as well as all related travel to and from your hotel and the base, if it is for official duty.

It’s always a good practice to keep all related receipts if you are taking a tax deduction, particularly if you will be adding up multiple months’ worth of expenses. The amount of expenses you can deduct on Form 1040 is limited to the regular federal per diem rate (for lodging, meals and incidental expenses) and the standard mileage rate (for car expenses), plus any parking fees, ferry fees and tolls.

In some cases, you may not get receipts for all expenses, such as parking and tolls. In these cases, be sure to document the expenses in your travel notebook or by other means. For example, you could print a receipt for your tolls if you have a toll pass that tracks each toll you pass.

If you found out about this deduction partway through the year, you can still deduct your travel, even if you don’t have excellent records. However, you need to be careful – it is up to you to prove your expenses if you are audited. A good way to get a reasonable estimate of your travel is to use Google Maps, MapQuest or another online map service to determine the distance from your home to your unit.

Be sure to document the days you traveled and the number of trips, and you should have a fairly accurate estimate of your miles traveled. It would be more difficult to determine how much you may have paid for food, tolls and other expenses if you don’t have good records. It may be a good idea to forget about the other expenses if you can’t come up with a reasonably accurate list of expenses. Just work on keeping records from this point forward.

At the end of the year, add your related travel expenses. You will use this information to fill out Form 2106, Employee Business Expenses ( PDF ), or Form 2016-EZ, Unreimbursed Employee Business Expenses (PDF) – Form 2106 instructions . You will use this information when you fill out tax Form 1040.

If you use a software program to file your taxes , then your program will likely ask you if you have any related travel expenses for your duty with the Guard or reserves. If you use a professional tax service, then be sure to give this information to your tax preparer – he or she will take care of it for you.

You can find related information in IRS Publication 3, the Armed Forces Tax Guide , and in our article covering military tax tips .

The deduction for travel-related expenses is a top-of-the-line tax deduction to your gross income, meaning it directly reduces your income before your taxes are calculated. As an example, if your income for the year was $50,000 and you had $2,500 in travel-related expenses, you would subtract the $2,500 from your $50,000 income, leaving your taxable income at $47,500. Of course, this does not include other tax deductions you may be eligible to receive. So you may be taxed on a lower percentage of your income after accounting for all eligible tax deductions.

You cannot claim mileage or other expenses that are reimbursed . For example, some Guard or reserve units pay for lodging when their members travel from out of town for drill weekends. If your unit puts you up in a hotel for your drill weekend or reimburses your expense, you cannot also claim that as a tax deduction. That would be double-dipping, and fraudulent. You cannot also claim mileage expenses if your unit reimburses you for the miles you drove. This goes for all related expenses and possible reimbursements.

The Tax Cuts and Jobs Act of 2017 brought many changes to the U.S. tax system. The standard deduction was increased starting in tax year 2018. The rates almost doubled from 2017 to 2018, increasing from $6,350-$12,000 for single taxpayers and from $12,700-$24,000 for couples.

Other changes included changing the income tax brackets, lowering tax rates and reducing or eliminating certain itemized deductions. Many miscellaneous itemized deductions were eliminated, including the ability to deduct unreimbursed employee expenses on Schedule A of their taxes.

Guard and reserve members who travel less than 100 miles from their home to perform their military duties are no longer eligible to deduct their mileage on their taxes. Prior to these changes, they were able to claim travel expenses as a miscellaneous itemized deduction, which was subject to a 2% limit (travel expenses must be at least 2% of your adjusted gross income before you can claim the deduction on your taxes).

Members may be authorized reimbursement for these expenses if offered by their branch of service or unit. Otherwise, the expense is now completely out of pocket.

Net impact of change: The increased standard deduction likely makes up for the inability to deduct travel expenses as a miscellaneous itemized deduction.

The changes to the 2018 tax year mean you only need to track your mileage if you travel over 100 miles each way to your unit. That said, this is a very valuable deduction and is absolutely worth taking if you are eligible.

For example, a 100-mile journey each way turns into a 200-mile round trip. At $0.535 per mile, that adds up to a $107 deduction for each drill weekend. Twelve of those would equal a $1,284 deduction. This is the bare minimum situation and doesn’t include other expenses such as food or tolls.

My unit is approximately 210 miles from my residence. That puts my annual mileage around 5,040. At the 2018 rate of $0.535 per mile, that comes out to an above-the-line tax deduction of $2,696.40. That has a big impact when I file my taxes each year. Bottom line: Be sure to document your travel mileage and other expenses. They will add up quickly and could potentially put hundreds of dollars or more back in your pocket.

About Post Author

Ryan Guina is The Military Wallet’s founder. He is a writer, small business owner, and entrepreneur. He served over six years on active duty in the USAF and is a current member of the Tennessee Air National Guard.

Ryan started The Military Wallet in 2007 after separating from active duty military service and has been writing about financial, small business, and military benefits topics since then.

Featured In: Ryan’s writing has been featured in the following publications: Forbes, Military.com, US News & World Report, Yahoo Finance, Reserve & National Guard Magazine (print and online editions), Military Influencer Magazine, Cash Money Life, The Military Guide, USAA, Go Banking Rates, and many other publications.

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These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.

June 12, 2023 at 4:35 pm

In addition to uniform dry cleaning, can sewing new rank emblems be deducted as well? In addition is there any other items that are deductible?

Thomas G says

February 14, 2023 at 7:17 am

How do you deduct the air travel if you fly? I only saw an option for mileage reimbursement.

Ryan Guina says

September 27, 2023 at 9:58 am

Thomas, you can deduct the cost of the airline tickets. Keep your receipts in case you are ever audited.

Shannan says

April 14, 2019 at 6:37 pm

Do I deduct reservists mileage under vehicle expenses or travel expenses? The one way commute is over 100 miles

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Biden-Harris Administration Announces Final Rule Requiring Automatic Refunds of Airline Tickets and Ancillary Service Fees

Rule makes it easy to get money back for cancelled or significantly changed flights, significantly delayed checked bags, and additional services not provided  

WASHINGTON – The Biden-Harris Administration today announced that the U.S. Department of Transportation (DOT) has issued a final rule that requires airlines to promptly provide passengers with automatic cash refunds when owed. The new rule makes it easy for passengers to obtain refunds when airlines cancel or significantly change their flights, significantly delay their checked bags, or fail to provide the extra services they purchased.

“Passengers deserve to get their money back when an airline owes them - without headaches or haggling,” said U.S. Transportation Secretary Pete Buttigieg . “Our new rule sets a new standard to require airlines to promptly provide cash refunds to their passengers.”  

The final rule creates certainty for consumers by defining the specific circumstances in which airlines must provide refunds. Prior to this rule, airlines were permitted to set their own standards for what kind of flight changes warranted a refund. As a result, refund policies differed from airline to airline, which made it difficult for passengers to know or assert their refund rights. DOT also received complaints of some airlines revising and applying less consumer-friendly refund policies during spikes in flight cancellations and changes. 

Under the rule, passengers are entitled to a refund for:

• Canceled or significantly changed flights: Passengers will be entitled to a refund if their flight is canceled or significantly changed, and they do not accept alternative transportation or travel credits offered. For the first time, the rule defines “significant change.” Significant changes to a flight include departure or arrival times that are more than 3 hours domestically and 6 hours internationally; departures or arrivals from a different airport; increases in the number of connections; instances where passengers are downgraded to a lower class of service; or connections at different airports or flights on different planes that are less accessible or accommodating to a person with a disability.  
• Significantly delayed baggage return: Passengers who file a mishandled baggage report will be entitled to a refund of their checked bag fee if it is not delivered within 12 hours of their domestic flight arriving at the gate, or 15-30 hours of their international flight arriving at the gate, depending on the length of the flight.  
• Extra services not provided: Passengers will be entitled to a refund for the fee they paid for an extra service — such as Wi-Fi, seat selection, or inflight entertainment — if an airline fails to provide this service.

DOT’s final rule also makes it simple and straightforward for passengers to receive the money they are owed. Without this rule, consumers have to navigate a patchwork of cumbersome processes to request and receive a refund — searching through airline websites to figure out how make the request, filling out extra “digital paperwork,” or at times waiting for hours on the phone. In addition, passengers would receive a travel credit or voucher by default from some airlines instead of getting their money back, so they could not use their refund to rebook on another airline when their flight was changed or cancelled without navigating a cumbersome request process.  

The final rule improves the passenger experience by requiring refunds to be:

• Automatic: Airlines must automatically issue refunds without passengers having to explicitly request them or jump through hoops.   
• Prompt: Airlines and ticket agents must issue refunds within seven business days of refunds becoming due for credit card purchases and 20 calendar days for other payment methods.  
• Cash or original form of payment: Airlines and ticket agents must provide refunds in cash or whatever original payment method the individual used to make the purchase, such as credit card or airline miles. Airlines may not substitute vouchers, travel credits, or other forms of compensation unless the passenger affirmatively chooses to accept alternative compensation.    
• Full amount: Airlines and ticket agents must provide full refunds of the ticket purchase price, minus the value of any portion of transportation already used. The refunds must include all government-imposed taxes and fees and airline-imposed fees, regardless of whether the taxes or fees are refundable to airlines.

The final rule also requires airlines to provide prompt notifications to consumers affected by a cancelled or significantly changed flight of their right to a refund of the ticket and extra service fees, as well as any related policies.

In addition, in instances where consumers are restricted by a government or advised by a medical professional not to travel to, from, or within the United States due to a serious communicable disease, the final rule requires that airlines must provide travel credits or vouchers. Consumers may be required to provide documentary evidence to support their request. Travel vouchers or credits provided by airlines must be transferrable and valid for at least five years from the date of issuance.

The Department received a significant number of complaints against airlines and ticket agents for refusing to provide a refund or for delaying processing of refunds during and after the COVID-19 pandemic. At the height of the pandemic in 2020, refund complaints peaked at 87 percent of all air travel service complaints received by DOT. Refund problems continue to make up a substantial share of the complaints that DOT receives.

DOT’s Historic Record of Consumer Protection Under the Biden-Harris Administration

Under the Biden-Harris Administration and Secretary Buttigieg, DOT has advanced the largest expansion of airline passenger rights, issued the biggest fines against airlines for failing consumers, and returned more money to passengers in refunds and reimbursements than ever before in the Department’s history.

• Thanks to pressure from Secretary Buttigieg and DOT’s flightrights.gov dashboard, all 10 major U.S. airlines guarantee free rebooking and meals, and nine guarantee hotel accommodations when an airline issue causes a significant delay or cancellation. These are new commitments the airlines added to their customer service plans that DOT can legally ensure they adhere to and are displayed on flightrights.gov .  
• Since President Biden took office, DOT has helped return more than $3 billion in refunds and reimbursements owed to airline passengers – including over $600 million to passengers affected by the Southwest Airlines holiday meltdown in 2022.   
• Under Secretary Buttigieg, DOT has issued over $164 million in penalties against airlines for consumer protection violations. Between 1996 and 2020, DOT collectively issued less than $71 million in penalties against airlines for consumer protection violations.  
• DOT recently launched a new partnership with a bipartisan group of state attorneys general to fast-track the review of consumer complaints, hold airlines accountable, and protect the rights of the traveling public.  
• In 2023, the flight cancellation rate in the U.S. was a record low at under 1.2% — the lowest rate of flight cancellations in over 10 years despite a record amount of air travel.  
• DOT is undertaking its first ever industry-wide review of airline privacy practices and its first review of airline loyalty programs.

In addition to finalizing the rules to require automatic refunds and protect against surprise fees, DOT is also pursuing rulemakings that would:

• Propose to ban family seating junk fees and guarantee that parents can sit with their children for no extra charge when they fly. Before President Biden and Secretary Buttigieg pressed airlines last year, no airline committed to guaranteeing fee-free family seating. Now, four airlines guarantee fee-free family seating, and the Department is working on its family seating junk fee ban proposal.  
• Propose to make passenger compensation and amenities mandatory so that travelers are taken care of when airlines cause flight delays or cancellations.   
• Expand the rights for passengers who use wheelchairs and ensure that they can travel safely and with dignity . The comment period on this proposed rule closes on May 13, 2024.

The final rule on refunds can be found at https://www.transportation.gov/airconsumer/latest-news and at regulations.gov , docket number DOT-OST-2022-0089. There are different implementation periods in this final rule ranging from six months for airlines to provide automatic refunds when owed to 12 months for airlines to provide transferable travel vouchers or credits when consumers are unable to travel for reasons related to a serious communicable disease. 

Information about airline passenger rights, as well as DOT’s rules, guidance and orders, can be found at   https://www.transportation.gov/airconsumer .

Can You Deduct Your Trip From Your Taxes? Experts Weigh In

P eople are traveling like crazy these days. The Sunday after Thanksgiving 2023 was the biggest single travel day in U.S. aviation history, with TSA screening more than 2.9 million passengers on November 26.

If you're one of those travelers racking up frequent flier miles as quickly as you can fasten your seat belt, you may be looking for ways to recoup some of the cost. Can you legally write off your trip? If you're self-employed (for example, if you're an entrepreneur, freelancer, or consultant, or have an online business) and you did some work while on the road, there's a good chance you can.

Here's what it takes to get two thumbs up from the IRS.

Pass these four tests

For starters, your trip must have a business purpose, meaning it must include activities such as client meetings, attending a conference, being a guest speaker at a conference, doing research and development for the business, or holding a board meeting or annual shareholders' meeting. The activity should have the potential to generate revenue.

"Don't think you can take a personal trip, talk business for an hour and then try and deduct the whole amount of your trip. The intent of the trip needs to be business," says Caitlynn Eldridge, founder and CEO of Eldridge CPA .

The second and third requirements deem that the trip must be both "ordinary and necessary," according to IRS guidelines on business travel expenses . "An ordinary expense means it's typical in your business, both [in terms of] amount [as well as in] frequency and purpose. Necessary means it actually helps you increase your profits or expand your business," explains Tom Wheelwright, a certified public accountant and author of the book Tax-Free Wealth (BZK Press, 2018).

Lastly, every expense must be properly documented. To get a deduction for travel, Wheelwright said that you must spend more than half your time during the business day doing business and have everything documented. "So, if you spend four and a half hours a day doing business, it becomes deductible. You also must have documentation, which includes receipts, of what you did, and a log of your expenses," says Wheelwright.

On receipts, write the name of the client who you had the meal with for further proof. "Save the emailed confirmation and receipt from the hotel reservation or conference ticket payment that show the dates, times, and name of the events as well as the receipts from the travel it took to get there and back [such as for gas or flights]," says Ben Watson, founder of Fiscal Fluency , a personal finance and business coaching company.

Note that for 2024, the IRS mileage reimbursement rate is 67 cents for employees or a self-employed individual traveling for work, up from 65.5 cents in 2023.

Know, too, that you must be away from home overnight-the IRS requires an overnight stay for the trip to qualify as business travel, Wheelwright says.

Domestic travel versus travel abroad

There's a big difference between how you calculate deductions if the work trip was taken in the United States versus abroad. According to Wheelwright, "It's an all-or-nothing test in the U.S., so either you spent more than 50 percent of your time on business, and it's all deductible, or you spent 50 percent or less and none of it's deductible."

For international business travel, the deductions work differently. He explained that when you travel to another country, the deduction is proportionate. "For example, if you spent 40 percent of your time doing business in Italy, then 40 percent is deductible," says Wheelwright.

Stick to the rules

It has to be a legitimate business trip. "You can't simply do some work while on the beach and call it a business trip," says Watson. But if you make it a "bleisure trip" by adding a couple days at the beach onto your preplanned business trip to the coast, you could still write off at least some of your lodging fees, he explained. If you do extend your trip for vacation, you can only deduct the expenses that were directly related to work and took place on the days that you conducted business. If you are traveling to multiple cities, keep in mind that each must have a business purpose.

You do have to work. If you are at a conference, make sure you fully participate, which means not just attending one or two sessions. If you only attend a small number of the business-related events, the entire purpose of the trip would be considered a personal trip with "incidental" business activities, Watson points out. Remember you need a log of what you did, and if it's thin on details, it could prove problematic. "You don't want to lose the ability to deduct transportation, lodging, meals, and other expenses," says Watson.

If it's a business trip of your own making, be sure it includes meetings with clients or participating in some work-related activity. "To demonstrate evidence of these events, it's wise to put calendar appointments down in your phone in advance and hold onto receipts when the time comes to file your tax return and claim your deductions. Remember, the primary purpose of this trip is [supposed to be] for work," says Riley Adams, a CPA and CEO and founder of WealthUp , a financial literacy website.

Don't try to bend what "ordinary and necessary" means. "If you have the ability to accomplish the same business tasks while staying at a modest hotel as you would at the Four Seasons, you'll have a hard time justifying the extra cost if you're ever audited," Watson cautions.

Stay at a place that is similar to places you normally stay on a business trip, so your expenses are considered "ordinary." Wheelwright explains that if you usually stay at five-star hotels for your business trips, then the Four Seasons would fall into the same category. However, if you usually stay at hotels like the Comfort Inn, and suddenly switch to a luxury hotel, the high-end venue could raise red flags with the IRS. He says that it doesn't matter whether you stay at a hotel or a vacation rental, the quality level and price tag should be similar to what is typical for your business trips.

When traveling with non–business companions, such as a spouse or family members, you may only deduct the cost of the lodging you would have paid if you were traveling alone-for example, if a single room costs $150 per night, and you paid $200 for a double room, you could only deduct at the $150 rate.

What can you deduct?

Personal meals are not deductible, but half the cost of food expenses related to business can be deducted. Expenses for your family's meals and entertainment cannot be deducted unless they are actively engaged in the business and you can show that their expense is both ordinary and necessary.

Travel expenses are only deductible on the days in which the work-related event occurs. "For example, a taxi ride to the meeting, train to a conference, or plane ride to the event [are deductible]," says Adams. "Lodging, much like travel expenses, is deductible on the days in which business is set to occur."

Understand too, that if you're provided with a plane ticket paid for by your company, or you're riding free because you're redeeming frequent flier miles, your cost is zero, so you can't deduct it.

But there are a couple of things you may not be aware of. For example, if you have to ship your baggage, you can deduct that cost; you also can deduct for tips for services, such as a tip to the waiter during a meal with a client.

Be strategic

It's best to put your "vacation" days in the middle of the business days, advises CPA Greg O'Brien. "For example, if [a] business owner took a seven-day trip to Florida and spent five days meeting with clients or prospects and two days relaxing on the beach, this would still qualify as a deductible business trip. The trick is to stick the ‘vacation' days in the middle of the business days," he says.

By placing the vacation days in the middle, the travel days to and from are still considered business related, rather than personal.

Watson offers another tip: "Laundry, dry-cleaning and shoe-shine expenses are perfectly acceptable expenses if incurred shortly after returning home."

U.S. tourist faces 12 years in prison after taking ammunition to Turks and Caicos

An Oklahoma man faces up to 12 years in prison on a Caribbean island after customs officials found ammunition in his luggage.

Ryan Watson traveled to Turks and Caicos with his wife, Valerie, to celebrate his 40th birthday on April 7. They went with two friends who had also turned 40.

The vacation came to an abrupt end when airport staff members found a zip-close bag containing bullets in the couple's carry-on luggage. Watson said it was hunting ammunition he had accidentally brought with him — but under a strict law in Turks and Caicos, a court may still impose a mandatory 12-year sentence.

"They were hunting ammunition rounds that I use for whitetail deer," Watson told NBC Boston in an interview conducted last week that aired after their first court appearance Tuesday.

"I recognized them, and I thought, 'Oh, man, what a bonehead mistake that I had no idea that those were in there,'" he said.

The couple were arrested and charged with possession of ammunition. Authorities seized their passports and explained the penalties they faced.

Valerie Watson said in the interview: "When I heard that, I immediately was terrified, because I was like we can't both be in prison for 12 years. We have kids at home, and this is such an innocent mistake."

The charges against her were dropped, and she returned home to Oklahoma City on Tuesday after the court hearing to be reunited with her two young children.

"Our goal is to get Ryan home, because we can’t be a family without Dad," she said.

The couple also spoke about the financial burden of a much longer-than-planned trip. "This is something that we may never recover from," Ryan Watson said.

The U.S. Embassy in the Bahamas issued a warning to travelers in September about a law that strongly prohibits possession of firearms or ammunition in Turks and Caicos, an overseas British territory southeast of the Bahamas that is a popular vacation spot.

It said: "We wish to remind all travelers that declaring a weapon in your luggage with an airline carrier does not grant permission to bring the weapon into TCI [Turks and Caicos Islands] and will result in your arrest."

The embassy added: "If you bring a firearm or ammunition into TCI, we will not be able to secure your release from custody."

The embassy and the government in Turks and Caicos did not immediately respond to requests for comment.

The same thing happened to another American, Bryan Hagerich, of Pennsylvania, who was arrested after ammunition was found in his luggage before he tried to board a flight out of Turks and Caicos in February. He said he accidentally left it in his bag.

Hagerich was on a family vacation with his wife and two young children but has now been in the country for 70 days. He spent eight days in prison before he posted bail.

"It’s incredibly scary. You know, you just don’t know what the next day may bring — you know, what path this may take," Hagerich told NBC Boston.

"You know, it’s certainly a lot different than packing your bags and going away with your family for a few days. It’s been the worst 70 days of my life," he said.

Hagerich, once a professional baseball player, was drafted by the Florida Marlins in the MLB 2007 June amateur draft from the University of Delaware.

His case goes to trial May 3.

Patrick Smith is a London-based editor and reporter for NBC News Digital.

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Vacationing at these destinations? You will pay tourist taxes, fees

There are a slew of places with tourist taxes or fees.

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Travelers may encounter a tourist tax or fee depending on their destination.

That additional travel cost could come up if a person visits one of the slew of places around the world that have such charges. Factors that spurred the taxes can vary, ranging from climate change to overtourism, according to reports.

CLICK HERE TO READ MORE ON FOX BUSINESS

Five locales with tourist taxes or fees include:

Venice, Italy

Piazza San Marco square view from the Giudecca Canal, Venice, Veneto, Italy. (Photo by: Mauro Flamini/REDA&CO/Universal Images Group via Getty Images) (Mauro Flamini/REDA&CO/Universal Images Group via Getty Images / Getty Images)

The roughly $5.35 daily tourist access fee for Venice, home to the Rialto Bridge, Doge’s Palace and St. Mark’s Basilica, launched as a pilot on Thursday after it received the go-ahead from city officials in mid-September. It targets day-trippers coming into the city between 8:30 a.m. to 4 p.m. and is required on specific dates in April, May, June and July during the test period.

Mount Fuji and the Shinjuku skyline seen from an observation deck in Tokyo, Japan, on Tuesday, Dec. 26, 2023. Japan's industrial output in November is scheduled to be released by the Ministry of Economy, Trade and Industry on Dec. 28. Photographer: A (Akio Kon/Bloomberg via Getty Images / Getty Images)

International tourists can face an "International Tourist Tax" while exiting Japan, per the Japanese National Tax Agency . It amounts to about $6.30 per departure and must be paid by those taking planes or boats to do so.

Barcelona, Spain

BARCELONA, SPAIN - 2023/12/11: View of the Sagrada Familia, the largest unfinished Catholic church in the world which has been under construction for 144 years, and part of a UNESCO World Heritage Site. Its completion is estimated to be in 2026. (Pho (Xavi Lopez/SOPA Images/LightRocket via Getty Images / Getty Images)

While the city’s nightly tax for travelers staying at tourist accommodations has existed for quite some time, it went up at the beginning of the month, becoming about $3.47. It is capped at seven nights. Catalonia, the region where Barcelona is located, also has a graduated tourist tax that’s size is determined by one’s accommodation, according to The Points Guy.

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This photograph taken on January 10, 2024, shows a a residential area (L) on the banks of the Wang Chuu River also known as Raidak River flowing through Bhutan's capital Thimphu. (Photo by Money SHARMA / AFP) (Photo by MONEY SHARMA/AFP via Getty Imag (MONEY SHARMA/AFP via Getty Images / Getty Images)

Bhutan, nestled in the Himalayas in Asia, asks most tourists to hand over nightly Sustainable Development Fees of $100 for adults and $50 for ages 6-12. It charges a differently-priced fee from those coming from India. The money goes toward "various projects that create long-term, sustainable opportunities for the Bhutanese people," the country’s department of tourism website said. 

New Zealand

Buildings in Auckland, New Zealand, on Tuesday, Sept. 13, 2022. New Zealand is scheduled gross domestic product (GDP) figures on Sept. 15. Photographer: Fiona Goodall/Bloomberg via Getty Images (Fiona Goodall/Bloomberg via Getty Images / Getty Images)

New Zealand’s tourist tax, called the International Visitor Conservation and Tourism Levy, costs $35. Tourists encounter it during the visa application process. The country requires it for "most people entering New Zealand on a temporary basis" such as vacation and certain student and short-term work visas, according to the government. 

Tourism a boon for economy

Travel and tourism provides major benefits to local economies and the global economy alike.

Countries around the world will see travel and tourism produce $11.1 trillion in 2024, according to a report recently released by the World Travel & Tourism Council.

TRAVEL AND TOURISM TO BREAK RECORDS, BRING OVER $11 TRILLION IN 2024: REPORT

Part of that will include spending by international travelers. They will reportedly contribute $1.89 trillion, according to the WTTC.

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Here’s what taxpayers need to know about business related travel deductions

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IRS Tax Tip 2022-104, July 11, 2022

Business travel can be costly. Hotel bills, airfare or train tickets, cab fare, public transportation – it can all add up fast. The good news is business travelers may be able to off-set some of those costs by claiming business travel deductions when they file their taxes.

Here are some details about these valuable deductions that all business travelers should know.

Business travel deductions are available when employees must travel away from their tax home or main place of work for business reasons. The travel period must be substantially longer than an ordinary day's work and a need for sleep or rest to meet the demands the work while away.

Travel expenses must be ordinary and necessary. They can't be lavish, extravagant or for personal purposes.

Employers can deduct travel expenses paid or incurred during a temporary work assignment if the assignment length does not exceed one year.

Travel expenses for conventions are deductible if attendance benefits the business and there are special rules for conventions held outside North America .

Deductible travel expenses while away from home include the costs of:

• Travel by airplane, train, bus or car between your home and your business destination.
• Fares for taxis or other types of transportation between an airport or train station to a hotel, from a hotel to a work location.
• Shipping of baggage and sample or display material between regular and temporary work locations.
• Using a personally owned car for business which can include an increase in mileage rates .
• Lodging and non-entertainment-related meals .
• Dry cleaning and laundry.
• Business calls and communication.
• Tips paid for services related to any of these expenses.
• Other similar ordinary and necessary expenses related to the business travel.

Self-employed or farmers with travel deductions

• Those who are self-employed can deduct travel expenses on  Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship) .
• Farmers can use  Schedule F (Form 1040), Profit or Loss From Farming .

Travel deductions for the National Guard or military reserves

National Guard or military reserve servicemembers can claim a deduction for unreimbursed travel expenses paid during the performance of their duty .

Recordkeeping

Well-organized records make it easier to prepare a tax return. Keep records, such as receipts, canceled checks, and other documents that support a deduction.

More information:

• Publication 463, Travel, Gift, and Car Expenses
• IRS updates per diem guidance for business travelers and their employers

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140,000 people did their taxes with the free IRS direct file pilot. But program's future is unclear

The IRS says more than 140,000 taxpayers filed their taxes through its new direct file pilot program

WASHINGTON -- The IRS said Friday that more than 140,000 taxpayers filed their taxes through its new direct file pilot program and participants saved roughly $5.6 million in fees they would have otherwise spent with commercial tax preparation companies.

The government pilot program, rolled out this tax season in 12 states, allows people with very simple W-2s to calculate and submit their returns directly to the IRS for free. Those using the program claimed more than $90 million in refunds, the IRS said.

But despite what IRS and Treasury Department officials said was a successful rollout, they aren't saying yet whether the program will be available next year for more taxpayers. They say they need to evaluate the data on whether building out the program is feasible.

“We will take time to analyze the data and collect feedback from a wide variety of stakeholders before making a decision about direct file's future,” IRS Commissioner Daniel Werfel said on a call with reporters.

The program, which became available to the public on March 8, cost roughly $10.5 million for technology and product development and another $2.4 million for customer service, cloud computing and user authentication.

While the Treasury set a goal of reaching 100,000 users for the pilot, 140,803 completed their taxes using the program. More than 3 million people used the IRS' eligibility tracker to see if they could use the program, and 423,450 people logged into the program.

“Regardless of where it goes from here, I am proud of the success of the direct file pilot," Werfel said.

Commercial tax prep companies that have lobbied against development of the free file program say free file options already exist.

Intuit spokesman Rick Heineman said “the reality remains the same today as it did the day Direct File launched; 100% of Americans can already file their taxes completely free of charge, free to the government and actually free to taxpayers.”

Several organizations, including private tax firms, offer free online tax preparation assistance to taxpayers under certain income limits and fillable forms are available online on the IRS website, but the forms are complicated and taxpayers still have to calculate their tax liability.

The tax season began on Jan. 29, and the filing deadline for most people was April 15.

The program was available to certain taxpayers in Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming. Four other states that have a state income tax also were part of the pilot program — Arizona, Massachusetts, California and New York. In those four, state tax agencies helped people directly file their state taxes as well.

According to the latest IRS data, this tax season the agency has received 119.5 million returns, compared with 117.3 million received in the same timeframe last year. Refunds this tax season add up to $220 billion, compared with $215 billion last year.

Follow the AP's coverage of the IRS at https://apnews.com/hub/internal-revenue-service.

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Business | Terry Savage: Where’s my tax refund? How to…

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Business | Terry Savage: Where’s my tax refund? How to check your federal or state refund status

What do you do if your IRS tax refund still hasn’t arrived? Now that the IRS has received most 2023 tax filings, and should have sent your refund, it’s worth investigating.

How to proceed depends on how you filed, who filed for you (such as an accounting firm, online tax prep service or tax preparer) and how you expected your refund to arrive.

First, if you’re expecting an online refund deposit, carefully check your tax return to make sure you listed your banking information correctly. And check your bank statement online, which you’ve probably been doing regularly.

If you used a tax preparation service, contact them first. Many services designate your refund to come back to THEIR account — and you might not have noticed that. Often, they say they will take their tax prep fees out of your refund — and this is their way of making sure they have access to the money! You might need to contact them to get your remaining refund.

Check your return to see if the person who prepared it gave instructions that your anticipated refund instead be applied to next year’s taxes! Perhaps you missed that in the discussions.

If, at this point, you’re still frustrated and have tried to call the IRS but can’t get through, here are some suggestions. Do them in this order:

— Where’s my refund? Go to www.IRS.gov and in the search box put the term “where’s my refund.” That will take you to a page that explains that your refund information should be posted 24 hours after you e-file a current-year return, three or four days after you e-file a prior-year return, or four weeks after you file a paper return.

Or go directly to www.IRS.gov/refunds . Click on the “search” button and you’ll be asked to input your Social Security number, tax year, filing status and the exact whole dollar refund amount shown on your tax return.

When you click “submit,” you’ll get the latest status on your refund.

If the refund is for the current (2023) filing, you can also call their specific toll-free number: 800-829-1954. For previous years, you must check online.

If you see that your refund has been issued, but you haven’t received it, you can start a “trace” to track it down.

— Office of Taxpayer Assistance. If you’ve followed the above steps and still can’t find your refund, it’s time to turn to the Office of Taxpayer Assistance. Go to www.IRS.gov and in the search box put in “taxpayer assistance.” That will lead you to the appropriately named Form 911. It’s a short form, and the way to get the process started.

The form comes in both English and Spanish, so scroll down to get the correct form you need.

— Taxpayer Advocate Service. The Taxpayer Advocate Service is a separate, independent organization within the IRS. They offer free help to guide you through the process of resolving tax problems that you haven’t been able to solve on your own. To reach the closest office (each state has at least one), go to www.IRS.gov and enter “taxpayer advocate” in the search box. That leads you to a page explaining how the Taxpayer Advocate Service works, and on that page there is a search box that will give you the closest office. You can also call the Taxpayer Advocate Service toll-free at 877-777-4778.

— Create an IRS.gov account. This little-known process allows you to see exactly what’s going on in your “account” with the IRS! It’s what the IRS telephone reps turn to when answering your questions. To create your own IRS.gov account, go to www.IRS.gov/Account .

The first thing you’ll see is a “Sign-In” box, which will be confusing since you don’t already have an account. Click anyway, and the next page will allow you the option to create an ID.me account via a secure service provider to the IRS. To create that account, you’ll need your Social Security number as well as a government-issued picture ID, such as your driver’s license. It’s worth the time to go through this process.

The IRS may seem impenetrable. But if you use the technology correctly, you can get answers and help. And that’s The Savage Truth.

(Terry Savage is a registered investment adviser and the author of four best-selling books, including “The Savage Truth on Money.” Terry responds to questions on her blog at TerrySavage.com .)

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Who Can Be Trusted for Retirement Advice? New Rules Strengthen Protections.

More investment professionals will be required to act in their customers’ best interest when providing advice about their retirement money.

By Tara Siegel Bernard

When you walk into a financial adviser’s office, you expect them to put your best interests above all else — in the same way a doctor would, rather than, say, a car salesman. But many people don’t realize that the rules financial professionals must follow vary, depending on where they work and what products they’re selling.

One of those federal regulations, which governs retirement plans, was just tightened: The Biden administration announced new rules on Tuesday that will require more financial professionals to adhere to a higher standard when providing financial advice about your retirement money.

Starting Sept. 23, investment professionals who hold themselves out as trusted advisers will be required to act as fiduciaries — that is, they can’t place their interests ahead of the investor — when customers pay them for advice on individual retirement accounts, 401(k)s and similar buckets of tax-advantaged dollars. The goal is to minimize conflicts of interest, or at least ensure that they aren’t influencing investment professionals’ advice that lines their pockets at the customers’ expense. The rule, which will be published in the Federal Register on Thursday, will be fully effective in September 2025.

The changes, issued by the Department of Labor, which oversees retirement plans, close loopholes that made it easier for many investment professionals to avoid fiduciary status — including, for example, when workers roll over their savings from a 401(k) plan to an individual retirement account. Those transactions, which totaled nearly $800 billion in 2022, weren’t always covered by these investor protections, even though these sums often amount to a person’s life savings.

“If you’re a retirement investor looking for help with how to manage your retirement investments, it’s only reasonable that you get advice that is prudent, loyal and doesn’t involve misleading you,” said Tim Hauser, deputy assistant secretary for program operations of the Employee Benefits Security Administration at the Labor Department. “It shouldn’t matter what product you’re recommending, and that’s what the rule does.”

This isn’t the first effort to update the federal retirement law known as ERISA , which was enacted in 1974 to oversee private pension plans before 401(k)s existed. Strengthening its protections has been the subject of intense debate for more than a decade, over three presidential administrations.

Indeed, critics (including financial industry stakeholders) say the new regulation — initially introduced in October — was rushed, but the Labor Department has been working on different versions since it introduced its first proposal in 2010 . The Obama administration issued a more stringent rule in 2016 , but the Trump administration hit the brakes before it was fully implemented . An appeals court later struck it down in 2018 . Agency officials said they took comments from the financial industry and others into account and made several changes that are reflected in the final rule . But Lisa M. Gomez, assistant secretary for Employee Benefits Security, said the investor protections remain. “There is nothing in these clarifications or changes that one should interpret as a watering down or a real change in position from the proposal,” she said on a media briefing call.

When the onus is on individuals to save and invest for a financially secure retirement, with money that must last through advanced age, investor protections are paramount. Still, individuals might be wondering why they aren’t entitled to fiduciary-level advice on all of their money, all of the time, regardless of what account it sits in or what type of product they’re investing in.

Here’s an overview of how the rules have changed and what it means for you — and how to find fiduciary-level professionals, regardless of the political climate.

What’s changed and where do these rules apply?

The regulation redefines who is considered an investment fiduciary. Before the changes, financial professionals had to meet a five-part test before they were held to that standard — and one part stated that the person making the recommendation must provide the advice on a regular basis. That means one-time recommendations were not necessarily included, which left 401(k) rollover guidance at risk.

The new rule aims to level the playing field for all financial professionals — including investment brokers and insurance salespeople — who describe themselves as trusted advisers when providing advice about your retirement money. It doesn’t matter whether they’re recommending mutual funds, stock investments, insurance products like annuities, illiquid real estate investments — it’s all covered. Investment brokers selling retirement plans to businesses would also be held to the fiduciary standard.

Why is fiduciary status important? What does it even mean?

Fiduciaries under the federal law known as ERISA must follow strict rules of conduct and avoid conflicts of interest. That means they can’t provide advice that affects their compensation, unless they meet certain conditions to ensure investors are protected. This includes putting policies in place to mitigate those conflicts. Investment professionals must also be upfront with customers about their roles as fiduciaries — if they have conflicts, and many do, they must now acknowledge their fiduciary status in writing.

That should go a long way in helping retirees who land in their offices, said Joe Peiffer, a founding partner of Peiffer Wolf Carr Kane Conway & Wise, a law firm in New Orleans. He said he has represented thousands of investors who have received poor advice, including from insurance salespeople who call themselves financial advisers when selling indexed annuity products and universal life policies — often with “disastrous” results.

“They’re exactly the kind of case that the new D.O.L. rule is trying to address,” he said, referring to the Department of Labor. “Because, currently, when we sue these ‘advisers,’ their response is that they are nothing more than insurance salesman that do not have a fiduciary duty.”

I want to work with someone who will always act in my best interest, on all of my money, not just retirement accounts.

No financial adviser is entirely conflict-free, but the ecosystem in which your adviser works matters — and will influence what type of conflicts are embedded in the way they do business. Some brokers, for example, may be paid more to sell one product over another product. Or, the firm itself might have complex revenue sharing agreements, which is when a mutual fund company makes payments to a brokerage firm — and some funds may pay a firm fatter fees than others.

Under the new rule, any financial professional making recommendations must have “policies and procedures to manage conflicts of interest and ensure providers follow these guidelines,” department officials said.

The simplest way to buy advice is to hire a “fee-only” independent certified financial planner who is a registered investment adviser, which means they are required to act as fiduciaries when providing investment advice about securities (stocks, mutual funds and the like). As part of that fiduciary duty, they must eliminate conflicts or disclose them.

“Your odds of conflicts go up, the longer their disclosures are,” said Benjamin Edwards, a professor at the William S. Boyd School of Law at the University of Las Vegas.

What questions should I ask when choosing an adviser?

There are several , but the most important: Are you a fiduciary who promises to put my interests ahead of yours 100 percent of the time with 100 percent of my money? How do you get paid — and will you get paid more for recommending one investment over another? What’s your investment philosophy — does it involve mostly low cost index-based investments?

Oh, and by the way, will you sign this fiduciary pledge ? If they refuse, find a new adviser who will.

Where can I find a trusted adviser?

There are more places now than there have been in the past: XY Planning Network , Garrett Planning Network and the National Association of Personal Financial Advisors (NAPFA ) are all trade groups whose members accept only fee-based compensation, which minimizes their conflicts of interest. They also allow you to search for professionals based on their expertise (retirement planning, for example, or stock option exercise strategies), “You don’t want the adviser to be learning about how to help you on the fly,” said Alan Moore, a financial planner and co-founder of XY Planning Network.

There are also newer entrants, including Domain Money and Facet , which connect people to independent financial planners who get paid flat fees.

Roboadvisers , or companies that lean heavily on technology to manage your investments but also often have human financial advisers, may be a solid option for people who are just starting out — or who have an investment plan they want to put into place and let run on autopilot.

One of the most valuable services an adviser can provide is saving us from ourselves, in the darkest market moments, when an individual may be most likely to give into emotion and sell investments (or buy) at the worst possible time. Just make sure the adviser is a fiduciary.

Tara Siegel Bernard writes about personal finance, from saving for college to paying for retirement and everything in between. More about Tara Siegel Bernard

A Guide to Making Better Financial Moves

Making sense of your finances can be complicated. the tips below can help..

Credit card debt is rising, and shopping for a card with a lower interest rate can help you save money. Here are some things to know .

Whether you’re looking to make your home more energy-efficient, install solar panels or buy an electric car, this guide can help you save money and fight climate change .

Starting this year, some of the money in 529 college savings accounts can be used for retirement if it’s not needed for education. Here is how it works .

Are you trying to improve your credit profile? You can now choose to have your on-time rent payments reported to the credit bureaus  to enhance your score.

Americans’ credit card debt and late payments are rising, and card interest rates remain high, but many people lack a plan to pay down their debt. Here’s what you can do .

There are few challenges facing students more daunting than paying for college. This guide can help you make sense of it all .