The term “tax home” generally means the location of a taxpayer’s regular or principal place of business. Temporary presence or the maintenance of a dwelling in the United States does not necessarily mean that the individual’s tax home is in the United States.
this holds true regardless of whether this dwelling is used by the individual’s spouse and dependents. The Internal Revenue Service has issued a Rev. Rul. 93-86.which establishes guidelines for determining whether a work assignment away from the taxpayer’s regular place of employment is temporary (so that his or her tax home is maintained) or is indefinite (so that the old tax home is relinquished).
The courts and the Service have held that employment is temporary for this purpose only if its termination can be foreseen within a reasonably short period of time.
Employment that is initially temporary may become indefinite due to changed circumstances. Neither the Service nor the courts have attempted to prescribe any specific criteria delineating the dividing line between the itinerant taxpayer who has his "home" wherever he is working, and the taxpayer who because of the nature of his business, has no regular or principal place of business but does have a "regular place of abode in a real and substantial sense."
The Service will recognize that a taxpayer has a "home" for traveling expense deduction purposes if he claims an abode and, under bona fide circumstances, satisfies all three objective factors set forth in the preceding paragraph. If a tax-payer is not recognized as having a "home" by virtue of the above, but does, under bona fide circumstances, satisfy two of the three objective factors set forth in the preceding paragraph, then all the facts and circumstances of his case will be subjected to close scrutiny to determine whether he has a "home" for traveling expense deduction purposes in the form of a regular place of abode in a real and substantial sense, or whether he is an itinerant.
Not all foreign nationals who accept a U.S. assignment establish a tax home in the U.S. In those cases where a U.S. tax home is not established, the individual is treated for tax purposes as being on a “temporary assignment” in the U.S. A temporary assignment is defined as an assignment where the tax home (principal place of work or employment) does not change. If the intent of the assignment is to return to the original work location within one year, the assignment is considered a temporary assignment (all other assignments are considered indefinite or long-term).
The tax advantage of a temporary assignment is that employer-provided benefits such as lodging, meals, travel, and certain other items related to the assignment might not be (if properly structured) considered taxable wages to the employee. In the case of a long-term assignment, these items are typically considered taxable wages.
If these expenses are not paid or reimbursed by the employer, the individual might be allowed to deduct those costs related to the assignment (lodging, meals, transportation, etc.) as an itemized deduction (subject to certain limitations).