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With the end of the year comes the stress of the holidays and wrapping up all your business finances. Exactly the kind of the thing you want to stress over as you’re celebrating Christmas, right?
Today’s interview is designed to ease that stress up a little bit! With taxes come a LOT of questions. So I asked my friend Heather Ryan (who shared how to set your business as an RV entrepreneur back on episode 115 of the podcast) to answer a few RV tax questions specific for those of us running a business from our RV.
In addition to her years of experience in preparing tax returns as a federally-licensed enrolled agent, Heather recently published her book, Taxes for RV Owners, to help people like us work and travel easier. I hope you enjoy this short but bookmark-worthy interview with Heather!
Let’s start with the most common question we hear first:
Can I take a home office deduction if I work from my RV?
Unless your RV has a 100% dedicated space for work, then you can’t take a home office deduction. If your RV has a bunkhouse or a garage like a toy hauler, then you might qualify. You also might qualify if you have a sticks-and-bricks home and solely use your RV for travel to clients or jobs.
I heard Wyoming is the best state for registering an online business. Should I register my business in Wyoming to avoid taxes?
Short answer. No. Typically I suggest registering in the state of your domicile unless you have a really good reason not to. I also suggest you use a registered agent.
Should I have a business bank account?
Yes. A business bank account helps keep your personal assets separate from your business. This offers separation of you and your business, especially in the case of an LLC or S corp.
Should my business own my RV?
No. The minute your business owns your RV, it becomes necessary to follow all Department of Transportation rules for commercial vehicles including inspection stations, commercial insurance, commercial driver’s license, etc. There are some exceptions to this answer though.
If I’m a full-time nomad, can I deduct my RV loan interest?
Yes. If you can itemize deductions on Schedule A, then you can include the RV loan interest as your personal residence mortgage. Most full-time nomads that I meet do not have enough deductions to itemize.
Can I take the full cost of my internet and cell phone plans?
For internet and phone services, determine how much you are using your phone and internet for both personal and business use. This gives you the % of business use which you can take as an expense for your business. If you have a separate plan for your business (2 cell phones, one for work and one for personal), then the business portion can be taken 100%.
How do you handle tax when you earn income in multiple states?
If you physically work and earn money in different states, then you most likely will owe income tax to those states. This means you’ll file multiple state returns. Physically working can mean working as a workamper, traveling nurse, vendor attending festivals, or anything along those lines. If you work from home as a W-2 remote employee, then no need to worry about this.
How do you handle paying state income taxes when domiciled in one state, but traveling across the country?
You may owe a tax return to multiple states or to a state that is not your domicile. In this case, you file as a nonresident for any income earned in that state. You usually don’t owe income tax on your entire income.
For example, if you earn income in Montana for being a campground host, but you’re domiciled in Florida, you will need to file a non-resident tax return for Montana and owe income tax for the income earned in Montana.
Another example, if you are a blogger and earn income via affiliate links, etc., I usually say that income is earned wherever your business is registered and passes through to you as the owner depending on how you form your business.
When traveling in our RV to meet clients or potential clients, do we include all of the mileage as an expense even though it’s also our home?
If the RV is your full-time home, you cannot include mileage to move the RV closer to that client as an expense. You can, however, take mileage of a towed car or a truck used to visit that client at the office or to a business meeting with that client. If you’re driving an RV with no separate vehicle, then the miles to visit directly with that client do count. Again, the mileage from a campground to another campground does NOT count. Only the mileage for the direct work or meeting with the client counts.
If you have more tax-related questions for Heather, I highly recommend picking up her book on Kindle or paperback from Amazon (it’s free if you use Kindle Unlimited!). You can also reach out to Heather directly on her website for a 15-minute consultation.