Tax Home, Abode and Domicile: What’s the Difference?

By Josh Pittleman

“There’s no place like home; there’s no place like home …” repeats Dorothy in The Wizard of Oz. But how do we define where your home truly is? According to some, home is where the heart is. But what about for tax purposes? Various terms like “tax home,” “abode” and “domicile” come up in different IRS instructions, and it can be confusing. Let’s define and sort out each:

Tax Home

• Your tax home is the entire city or general area where you normally work or conduct your business^[1].
• Example: If you live in Philadelphia and commute to New York City, then New York City is your tax home.
• When it matters: You can only deduct travel expenses incurred outside of your tax home.

Abode

• For federal tax purposes, an abode is more than simply a permanent dwelling.^[2] Your abode is defined as where you maintain your family, economic and personal ties. Theoretically, you can have more than one abode at the same time, but most people only have one.
• Example: Let’s say you live in Texas but spend  an entire year away from home living and working in Mexico. You keep all your regular ties to Texas: your house, spouse and kids, bank accounts, and so forth. Your stay in Mexico is only for work purposes. In this case, you would be considered to have an abode in Texas.
• When it matters: You cannot use the foreign earned income exclusion if you have an abode in the U.S.^[3]

Domicile

• Your domicile is your permanent, long-term home. Even if you’re not currently living there for a few years, it’s where you consider home and the place to which you plan to return. By definition, you cannot have more than one domicile at the same time.
• Example: You live in New Jersey and consider it home. Your company transfers you to France for a two-year assignment, after which you plan to return home to New Jersey. Even though France may be your tax home as well as the location of your abode for the next two years, you remain domiciled in New Jersey.
• When it matters: One of the main factors that determine residency status at the state level is domicile^[4]. If you’re domiciled in a state, then you will normally be considered a resident of that state^[5]. In addition, where a couple is domiciled generally dictates whether their property is treated as community property or separate property.

Key Takeaways

• Your tax home is where you work. Your abode is your current home. Your domicile is your permanent home.
• For most people, these are all in the same place. But if you live in one place and work in another— or temporarily move away for a few years or split your time between multiple homes—then these might be different places for you.
• Tax topics affected by these terms: deducting travel expenses, qualifying to use the foreign earned income exclusion, determining state residency status and determining community property status.

This is where a tax expert can help clarify any ambiguity and mitigate tax exposure.

[1] If you don’t have one place where you normally work, then your tax home is based on wherever your personal home is.

[2] States may have their own definition of “abode.” New York, for example, defines it simply as a residence that you permanently maintain and is suitable for year-round use.

[3] An exception to this rule is made for those serving in support of the U.S. Armed Forces in an area designated as a combat zone.

[4] Many states will also consider you a resident if you maintain a permanent place of abode in that state and spend more than 183 days there during the taxable year, even if you’re not domiciled there. This is often referred to as a “statutory resident” and can lead to a status of dual residency, where you are considered a resident by more than one state at the same time.

[5] Some states make exceptions to this rule for those who are working or living in a foreign country for more than a year. Even though you remain domiciled in that state, they will allow you to be treated as a nonresident for tax purposes.