A tax turtle is not a reptilian accountant. Rather, it is a person or small business who carries their business on their back. Think of 100% remote workers or very, very busy actors. Long-haul truckers can sometimes be considered tax turtles, as well.
Many tax turtles are considered “itinerant workers.” To the IRS, being an itinerant worker means a traveling worker with no real tax home-eliminating many potential tax breaks. These type of workers cannot deduct the cost of mobile homes. Here are a few examples of tax turtles:
- A traveling nurse who does not own a home, but primarily lives at home with his or her parents when not working cannot deduct this home on his or her taxes.
- An insurance agent selling policies for a recreational vehicle (RV) out of his or her own RV cannot deduct the expenses of their personal RV.
- A trucker who travels across the country year-round and stays with friends in a fixed location when not traveling cannot deduct traveling expenses. That home location is not considered a true personal residence.
When legally determining situations like the above, the IRS or court systems take into account precedents set by Revenue Ruling 73-529. Summarized, those factors include:
- The business connection to the locale of the claimed home.
- The duplicative nature of the taxpayer’s living expenses while traveling and at the claimed home.
- The personal attachments to the claimed home.
With these factors mind, consider the trucker tax turtle. He may live with friends in Minnesota when not traveling, but the majority of his time is truly spent in California, where the trucking company that employs him has the most drop-offs. He attributed money to his friends’ home in Minnesota via rent, but his connection to the home stopped at that. He spent more time and more money in California, with a direct connection to his work, thus eliminating his chance at a travel-expense deduction based on the factors set by Revenue Ruling 73-529.
Have you come across a tax turtle in your payroll career?