How long can I work away from home while receiving per diem?

Question

I am a long term computer consultant, coming up on my first year at the client site. I have heard from other people, that if you go home for 30-days or more, it resets the clock as far as the IRS is concerned. Otherwise, after a year they consider you a resident of the state that you are working in.

Answer 1

I think that the "30 day rule only applies to employees who have taken overseas jobs. The Federal IRS could care less where you work as long as you file your return.

It is your home State IRS you should be concerned about. Theoretically, your permanent residence and/or where your registered your business would dictate your State of record for tax purposes. However, if you had any significant earnings outside your "home" State, you will have to file an income tax form in the client's State, claiming a credit on your "home State" tax form.

For example, if you lived in Ohio and the client is in Indiana, you would be responsible for filing in the 2 States, claiming income from Indiana and "Credit" on Ohio's.

I would recommend that you contact the Federal IRS as well as the two States to determine what your obligations and responsibilities are.