Montgomery’s guide demystifies the most common tax questions that arise when you start living and working on the road. The subject isn’t sexy but if anyone can tackle this subject and turn it into quick, easy reading, he can. As a small business consultant, tax preparer and bookkeeping service provider, he acquired an extensive understanding of the vagabond lifestyle while living on the road between 1996 and 2012. As an enrolled agent, Montgomery has earned the privilege of representing taxpayers before the IRS, and his unique qualifications have earned him the title of “RV Tax Master” for Workamper University (see workamper.com/education/). With Montgomery’s expertise, you know the advice in this book is solid.
Picking a Domicile
Whether you’re dreaming about hitting the road or have been on it for many years, Can I Write Off My RV? is indispensable for your full-timer education, especially if you plan to work or volunteer during your travels. The book begins by outlining the basics of choosing a domicile (the state in which you legally reside and call home). Although many RVing books also cover this topic, Montgomery’s is unique in that it presents the multitude of ways in which a chosen domicile can affect your tax situation. For example, many RVers own property in one state but call another state, with no income tax, their domicile. The book explains the tax implications of investing too much time and money outside of your legal domicile.
Can I Write Off My RV? also does a comprehensive job of explaining the requirements for deducting your RV as a first or a second home. For example, at a most basic level, the extent of the RV’s deductibility as a second home will depend on the way in which it’s used. If you want to deduct the initial cost, depreciation and the maintenance of the RV, you must prove that it’s being utilized in certain ways, such as solely for business use or volunteering missions that require use of the RV. Whether or not you can take a full or partial deduction also depends on how well you can prove usage through travel diaries and RV mileage logbooks, which Montgomery discusses extensively.
Learn Tax Tips for Mobile Entrepreneurs
You may also be surprised to learn that if a full-time RVer has no primary residence other than an RV, none of the lodging portion can be written off, but some deductions can be taken if the RV is being used for business. Montgomery offers many helpful suggestions for determining which expenses are deductible and how to keep good records in the event you need to prove their legitimacy to IRS auditors. To help you get started, Montgomery has designed a basic Excel workbook geared toward new entrepreneurs who lack a bookkeeping system like QuickBooks Pro.
Another useful tip for mobile entrepreneurs helps to determine if the home office RV is eligible for the latest home office deductions. Montgomery explains that a new IRS rule that allows home-based business owners to deduct up to 300 square feet (at $5 per square foot) of their home office means that even if your mobile business only uses a 12-foot compartment in an eight-foot wide RV, you can eliminate $480 from your tax liability.
Examine Different Tax Liability Scenarios
Perhaps the most useful aspect of the book is the way in which Montgomery paints several different scenarios that clearly illustrate just how these taxation rules apply to both full-time and part-time RVers. You’ll find five different examples of how RVers are applying tax laws to their circumstances and you’ll probably fall into one of them:
Tax Scenario 1: A Part-Timer with a Home Base and High Itemized Deductions: Self-employed, semi-retired couple with paid-off mortgage on a home, and a financed RV, travel seasonally to different job sites.
Tax Scenario 2: A Part-Timer with a Home Base and Standard Deductions: Retired couple with paid-off mortgage and RV, as well as low living expenses, travel seasonally while Workamping along the way.
Tax Scenario 3: A Full-timer with Itemized Deductions: Retired couple goes full-timing in a luxurious, financed RV while traveling to volunteer jobs.
Tax Scenario 4: A Full-timer with Standard Deductions: Single RVer goes full-timing and attempts to deduct career-change expenses.
Tax Scenario 5: A Self-Employed Full-timer with Standard Deductions: A young couple with one child goes full-timing and starts two small businesses from the road.
The book’s conclusion is especially memorable as Montgomery reiterates basic principles that greatly simplify anyone’s tax liabilities: live below your means, budget and minimize expenses, stay out of debt, and save money. He also advises:
“Talk with a tax professional to determine an estimate of your tax liability before the end of the year or before you make the “big jump” to RVing so that you will have an idea of your tax liability in advance. It is always nice to have at least some idea of what is coming…”
You can purchase Can I Write Off My RV? at George Montgomery’s website, businessandtaxplanning.com or at Amazon.com.
(Disclaimer: Montgomery is the tax preparer that my husband and I have worked with since 2011.) n
Rene Agredano and her husband, Jim Nelson, have been full-timing since June 2007. As non-retired full-timers they love showing others the benefits of the full-time RVing lifestyle by chronicling their adventures at LiveWorkDream.com.
The 5 tax scenarios almost cover all scenarios. I am a recently retired, single (for tax purposes) with a long term, low income, established S-Corp. I am now a full-timer with a new financed Class A. I do have a fully paid for home. I am now going to travel around promoting my product. The RV is my personal asset, but I need to write it off as a company expense. Lease? I guess I do need an accountant.