For anyone planning on workamping or camp hosting, it’s important to understand your tax obligations. Even if you don’t do your own taxes, it’s important to understand these 5 tax considerations when workamping or camp hosting.
You should have a basic understanding of your tax situation so you are prepared to share this information with your tax preparer or the IRS in the case of an audit.
Top 5 tax tips when workamping or camp hosting
1. Domicile vs. residency
Domicile: a common word used for full-time travelers or nomads, but what does it mean? Why is it important? How do you pick a domicile state?
Simply put, your domicile is your home state — the one state you consider your permanent place of residence. You can have more than one physical home, but only one domicile (i.e., a vacation home in one state and your permanent home in another).
Some factors that indicate where you’re domiciled include where you vote, register your car/RV, and receive legal mail. Domicile is fundamentally a question of your intent.
RV Domicile and Residency
As an RVer, your domicile is the place you intend to live once you’re done traveling. Even if your travels never come to an end, or you eventually move to a new state, that’s okay. While you’re traveling, your domicile is, for all intents and purposes, where you intend to live.
In short, your domicile is your home state. You use your domicile as your legal address. You file taxes with that address, register your vehicles in that state, get auto insurance rates based on that address, and have a driver’s license that reflects that state. Even though you might not physically live in your domicile state, it is your home state. With your RV you might reside in many states over the course of a year, but your legal address is still your domicile.
On the other hand, residency is based on how much time you spend in a state. Generally, you are considered a resident of your domicile state. However, if your domicile is another state and you maintain a home in another state where you spend more than 184 days during the year, then you could be a resident of that state. Most state tax authorities have a page explaining exactly what constitutes a resident in that state. It does vary from state to state and some states are stricter about the rules.
This is important because it influences how you will file your taxes and how much of your income is subject to taxes in that state. In general, if you work in a state for less than 6 months during a tax year (Jan-Dec), you are most likely a non-resident of that state. However, if you work in a state for more than 6 months during a tax year, then you might be taxed as a resident in that state.
Let’s look at an example. This is from the New York State Department of Taxation and Finance:
As you can see from the example, if you work in New York for more than 6 months, you very well might be a resident or part-year resident of New York. Each state does have its own definition of resident, so it’s important to research this and understand what it means for the exact state you will be spending time in while you work. Search for terms like “state” residency requirement or something similar.
Once you’ve determined your residency status or requirements, it’s important to know if you’ll be treated as an employee or independent contractor.
2. Employee vs Independent Contractor
I actually have an entire blog post on the differences between employee vs. independent contractor.
To keep it simple, an employee receives a W-2 from their employer and an independent contractor receives a 1099-NEC. When you are interviewing for a job, you should make sure to ask whether you will receive a W-2 or 1099-NEC. This should immediately clear up any confusion. Make sure to get this in writing as well, so it’s well understood for both you and your employer.
If you will be a W-2 employee, then you should fill out a W-4 when you get hired. This will tell your employer your tax information for withholdings including federal and state taxes, Social Security, and Medicare. This means your employer also pays half of the employment taxes for you.
Here’s an example of the different tax forms:
vs.
If you receive a 1099-NEC, then you are considered an independent contractor. Here are the important things you need to consider for taxes.
- Your employer will NOT take out ANY taxes and you will owe self-employment taxes on this income.
- The IRS now classifies you as a business.
- You most likely should make estimated quarterly payments. These are your self-employment taxes and VERY important to understand. This is probably the biggest error I see with those who workamp or camp host. If you don’t make estimated payments, you can be assessed a penalty for underpayment of taxes.
- As a small business owner, you will file a Schedule C as part of your personal tax return.
- It can help lower your tax obligation if you have business expenses. Be aware of what constitutes a legal business expense!
3. Receiving a free campsite
Is your free campsite taxable? How do you deal with this situation? Do you have to report the cost of the campsite as taxable income?
It depends on your employee status discussed above. However, if you are volunteering at a government park or a qualified 501(c)3 non-profit, then your site is generally not taxed.
If you are a camp host or gate guard and required to live on-site, then you generally should not be taxed on your free campsite. This is found in Publication 525, Taxable & NonTaxable Income, under Meals and Lodging. It specifically states you don’t include the campsite in income if:
- The lodging is furnished on the business premises of your employer,
- The lodging is furnished for the convenience of employer, and
- The lodging is a condition of your employment.
In general, I think most will fall into this category. However, if you don’t fall into this category, your free campsite might be considered bartering. This would be considered work in exchange for a site at a private, for-profit employer. Bartering is taxable and the cost of the campsite should be included in income. You need to decide which you fit into here and if you can defend your position in an audit.
4. Filing state taxes
Do you need to file taxes in each state you camp host or workamp? This really depends on the states and how much time you spend in them.
This is where you’ll need to do some research as discussed above in domicile vs. residency.
Here are some things to consider which might help determine if you’ll be liable for state taxes.
- Is it a no-income-tax state? These states include Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. Neither Tennessee nor New Hampshire tax wages.
- Consider whether you will exceed the income filing requirement for that state. Many states have a minimum income you must meet before you are required to pay taxes. However, your employer might have withheld state taxes and you may need to file a return to receive those withholdings back.
- Will the state tax ALL of your income and not simply the income earned in that state? Every state is different on this rule, so be aware and do some research if you’re worried about a state taxing everything including retirement income.
5. Deductions and credits
If you are treated as an independent contract, then you definitely need to be tracking any expenses related to running your business. Remember, you are a business owner if get a 1099-Misc.
This means you need to track any ordinary and necessary expenses for the business. They will be deductible against any income you receive for the business. These can include phone, internet, insurance, office supplies, a computer, etc.
Depending in your income level, you may qualify for certain credits. This includes the earned income credit, child tax credit, and possibly a retirement contribution credit. These all vary according to your situation and dependents.
What about taking travel expenses?
This is a sticky one. Again, I wrote a whole blog post about taking travel expenses as a full-time RVer.
In general, as a workamper or camp host, you will usually NOT have any travel expenses to deduct. Typically deductible travel expenses include going to meet with a client at their office, buying supplies for your business, etc. How many workampers use their vehicle for their job? I don’t know of too many if any at all.
Remember, that you live full-time in your RV. That is your choice. No one else gets to deduct their home expenses for work. That’s called commuting and it’s NOT deductible anywhere. It’s your choice to take a job where you need to travel to get to it.
Lastly, I recommend keeping a travel journal or log. This could include documenting miles, reason for the travel, dates, and any other important information to show that the travel was necessary for work.
What about taking work-related expenses?
Generally, this would be a big no. The 2017 Tax Cuts and Job Act took away the possibility of deducting any work-related expenses as part of itemized deductions.
Remember if you are an independent contractor, those expenses qualify as business expenses. This means they are deductible. You need to keep records for all your expenses though. This means keeping receipts (digital is fine) to back up all your expenses.
What about utilities?
There are a couple of things here. First, many camp hosts receive their site free along with utilities. Therefore, there’s nothing to do deduct.
Second, the IRS does NOT allow personal living expenses as deductions. Think long and hard before you deduct anything that might be considered personal or a home expense.
Again, if you are treated as an independent contractor, then you might be able to deduct phone or internet IF you can prove you used them for your work. Many times a worksite will provide internet or phone services in which case your personal phone is NOT deductible.
Be very careful with this and don’t take anything personal. Again, the IRS does NOT allow deductions for personal living expenses.
There could be exceptions to these if you maintain a permanent home somewhere and are duplicating your living expenses. If you believe this to be the case, then I strongly urge you to talk to a tax professional about your unique situation.
What confuses you about your taxes and being a workamper or camp host?
