Tuesday, July 26, 2016

No Justice!

Oftentimes there is no justice when it comes to tax law. With the major problems facing this country, congress considering the needs of RVers are not among them.

Although I have sited the Jackson case many times since it was published, the implication has not hit home.

To summarize, the Jackson's  took their case to court and lost. Not because they didn't keep proper records, not because they didn't have documented receipts, not because of missing mileage logs, not because of a lack of client records. Basically it boiled down to Code Section 280 A(d) which defines a dwelling unit.

For your convenience the underlined line above contains a link to the entire ruling.

So, what are we left with? Basically, treat your business as though you don't have an RV and take the time tested deductions that have stood through the years. Be through with all your documentation and the required record keeping.

Most importantly, enjoy your RV and your lifestyle. We are indeed the lucky ones!

Saturday, March 19, 2016

Q.  We live in a RV full-time and I write and take photographs for travel destination articles for the major RVing and sailing magazines   I also write travel destination articles and RVing related articles and publish photos on my website which earns advertising revenue.

Everywhere we traveled in 2015 was a destination that I wrote an article about for an RVing magazine, and the same is going to be true in 2016 (the magazines have contracted me to write articles for 2016 about destinations we will be traveling to).

So, we aren’t idly traveling — we're traveling from one destination I write about to the next (a truly dream life!).

In 2015 we drove our truck about 25,000 miles total, and we towed our RV for about half of those miles getting from place to place (the rest of the miles were “personal” once we arrived at a destination, getting around town doing errands, etc.

My question is this:  can I “safely” deduct the miles of travel that took us from one destination to the next so I could write those magazine articles, if the miles were documented in a log book as you describe?

A.  In view of the court cases sited, I'm not positive there is a safe answer. However, if you had no RV but were working out of a stationery dwelling such as a house or apartment, there is no question your mileage would be deductible, as long as you returned to the place you started. This seems to be the big problem for RVers. Your travel is certainly legitimate and as long as you are not deducting any expenses of the RV, I see no problem in taking a deduction for mileage.

The safest course would be to make certain you have a "tax home" that you travel to and from. A sharp IRS  agent in an audit situation could declare you a "tax turtle" which means every destination to travel to becomes your tax home, and therefore travel does not exist. Don't you just hate how complicated our tax lives have become?

Tuesday, February 16, 2016

Working & Living in a motor home

Q.  I am a Certified Life Coach, I teach seminars each weekend across the country and want to purchase a motor home to use for travel and to live in. I do not own a home or rent currently. I will see clients in the motor home, use cellphone and internet/skype for clients 6 hours a day, wrote my blog and update website weekly, etc via satellite and wired connections where possible. 
What might be tax deductible regarding the motor home?
Thank you for your thoughts,

A.  Please go to my post on September 30,2014 where you will find a link for the Jackson case. The Jackson case pretty much but a death knell on writing off a motor home for business purposes, even though both the court and the IRS agreed to the business use. The problem is a conflicting law which totally disallows writing off the business use of a RV.If you have a permanent place of business, that is one you return to on a regular basis, it is possible you may qualify for travel expenses. If no permanent place exists, you won't be able to take travel expenses either. It's a bummer, but there are no tax breaks for us RVers, working in our RVs or not. Thanks for writing and good luck with your seminars.

Sunday, January 31, 2016

Answers Forthcoming!

As you can see I am months behind with a new post. Very few questions came in during the second half of the year, and most of the answers could be found in the archives with just a little searching.

I usually don't write about personal stuff, but in this case I feel I owe you an explanation. While on the road on an island in the Puget Sound, I came very close to dying in my sleep. Fortunately my darling husband woke up to find me not breathing & without any heartbeat. After 3 days on life support, 5 days in critical care, and with one miracle after another on top of each other, I managed to recover without any brain damage what-so-ever. I simply stopped breathing. An electrical problem was declared to be the culprit and I now sport a ICD (implantable cardiac defibrillator). I decided the rest of the year needed to be devoted to staying healthy, so catching up on this was not in the forefront of my mind.

Then life happens, and as soon as we turned into the new year, I had to get ready for a very busy tax season. So please hang on, and I'll get back to your questions very soon. All our travel plans got cancelled and yes, Bob endured some life altering events as well. I am happy to report we are both well and looking forward to getting on the road again as soon after April 15th as possible!

Wishing you a very belated Happy & Healthy New Year!

Thursday, May 21, 2015

Deductions for Volunteers

Q.  My spouse and I are volunteers at a State Park, approximately 300 miles from our home for 6 weeks. We are not full timers, and are paying for our own travel expenses, meals, plus providing supplies for me to run their Interpretive program and arts/crafts.  Also, I use my POV to distro activity flyers each week at seven locations throughout the park. We also use POV to drive 14 miles RT to obtain supplies, run errands (I paid $55 to print and laminate posters and teaching materials). 

We are keeping gas receipts and logging about 15 miles/day 3-4 times each week. Park provides a RV site, uniform shirt, but we had to purchase work pants, shoes, gloves plus lots of bug spray. 

What are our possible IRS allowable deductions?

A.  Travel from your home to your work place is considered "commuting" and therefore is not a deduction. However, the mileage you put on your POV for business purposes is deductible. In order to take the deduction you must have a log book, kept on a contemporaneous basis showing the mileage & business purpose for your mileage. Personally I keep a little pocket calendar in the glove box of my car during the tax filing season to keep track of mileage for numerous trips to the post office and banks, and the occasional trips to business clients. The IRS is very strict about this: no log, no deduction!

All of your out-of-pocket costs for supplies are deductible. The costs of your uniforms which I know are required are also deductible. The really good news is that the use of your parking space is considered to be for the convenience of your employer, and therefore a tax free benefit! 

Thanks for being a volunteer at one of our beautiful state parks. We just left Valley of the Rogue State Park in OR yesterday and enjoy every minute of our stays in the few state parks where a big rig can fit! Thanks also for writing and stay safe.

Monday, May 18, 2015

What Exactly is an RV Lot?

Q.   I just found your Blog. It is tremendous and has excellent advice.
I am hoping you can lead me in the right direction with my question.
I owned an RV site. I bought it in 2006 and used it personally until 2011. In 2011 I converted it to full time RV site rental use. It has been in a rental program managed by the park company (they work for the owners) since then. It has a concrete pad, a small dog house with electrical links and a small storage shed. It has had no personal use since 2011. I sold it in 2014 at an approximately a 50% profit.
The Federal tax books identify all sorts of properties that one may own and how to treat them tax wise - residential, real, and etc. However, they do not mention RV site.
I am struggling with how to label the property and what forms to use for the sale. Do you have any suggestions?

A.  RV lots are like any other lot anywhere: real property. Improvements are just that. When you sell your RV lot, your tax basis would be the purchase price together with the cost of purchase along with the capital improvements you added to your lot. In this case you added a concrete pad, dog house, a storage shed, and electrical connections. The total of this becomes your "tax basis" and when deducted from your net selling price results in either a capital gain or loss. This is reported on form 8949 and ultimately Form 4797 (if you took any depreciation on the capital improvements) and Schedule D. Thanks for a good question!

Friday, May 15, 2015

Time is Money!

Although I try to post questions as they come in, this year became too hectic. Along with new clients, many new schedules, and all those ACA (Affordable Care Act) questions and forms, I got really behind. Hopefully I got back to you as individuals so as not to hold up the filing of your return. I finally had to give up posting some questions, and will now endeavor to post those that may be of general interest. Thanks for your patience and as always, I really appreciate your following this blog!