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Deciphering travel nursing pay and tax rules is one of the most complicated aspects of being a travel nurse or any travel healthcare provider (HCP). Tax homes, tax-free stipends, hourly wages, bonuses, benefits, housing and per diem reimbursements are all vital in understanding your travel nursing pay package and your taxes. With 2022 coming to a close and tax season right around the corner, many travelers have questions that Vivian hopes to answer with some help from a couple of tax professionals.
The Inside Scoop on Tax-Free Stipends and Permanent Tax Homes
Travel nurses may be paid in one of two ways. They might receive a blended rate that includes tax-free stipends and taxable hourly wages, or they’re paid a fully taxed hourly wage. Unfortunately, you can only receive the tax-free stipend option if you can claim a permanent tax home.
Sarah York is an Enrolled Agent with the IRS and has a decade of experience working in the tax industry. She currently works for Keeper, a company with a tax filing app geared toward gig workers. Before that, she worked in public accounting and previously worked with travel nurses, so she understands the unique aspects of their tax situation.
“To qualify for a tax-free stipend, your reimbursed work expenses or housing costs have to be documented for your employer,” said York. “Meaning you must provide proof that you actually had those expenses by supplying receipts, expense reports, bank statements or bills. To use IRS jargon, this system is referred to as an ‘accountable plan’ because, as the name suggests, all the expenses are accounted for on the employer’s books. Stipends paid under accountable plans are tax-free for both state and federal taxes and aren’t reported on your W-2 at the end of the year.”
Tax Planning Specialist Ron Caruthers founded a tax and financial advisory firm 32 years ago, specializing in tax planning and college funding. Many of his clients have been travel nurses, so he’s also familiar with their atypical tax issues.
“They have to have a ‘main home’ according to the IRS and have to ‘duplicate’ expenses by being away from that home to perform business,” he said. “And they can’t stay in one area for longer than 12 months, even if they take time off. So, you can have a tax-free stipend but then lose it if you stay in one area too long.”
Caruthers provided a technical definition of a permanent home per the IRS:
A) You have a main place of residence, perform part of your business there and lodge there when you’re in the area
B) You have living expenses that you have to duplicate because your main business requires you to be away from that home
C) You haven’t abandoned your main home, and you use it when you return and/or you have family members living there
“In English, it basically means that to qualify for a tax-free stipend from the agency, you must have lodging in the new area and still maintain a residence in your permanent home. You can’t give the main home up and just be an itinerant worker,” explained Caruthers.
You must complete and sign a declaration of your permanent tax home with your travel nursing agency if you choose to take the tax-free stipends in your pay. It’s wise to ask beforehand what you need as proof of a tax home so you can prepare any necessary paperwork.
Can You Rent Your Permanent Tax Home from Friends or Family?
“Renting a room from a family member would count, as long as you’re paying the ‘fair market value’ of that room,” said York. “In other words, what would the room go for if rented to someone outside the family?”
Caruthers added, “if you’re renting from someone else where the lease isn’t in your name, I would create a lease with the friend or family member and recommend it be at market rates. I would also keep proof of paying that rent.”
How Long Can You Work in One Location Without Losing Your Tax-Free Stipends?
“As a rule, housing stipends are only deductible for temporary work assignments, meaning less than one year,” York explained. “According to the IRS, anything longer than a year is considered an indefinite assignment.”
Caruthers reiterated that 12 months out of 24 is the general IRS rule, and the 12 months count even if you’re not working consecutively there. This means if you work in one city for 12 months, take off for 2 months, then work in the same city for another 6 months, you’ve gone over the 12 out of 24 rule, and you’re going to lose your tax-free stipends.
Is There Such a Thing as a 50-Mile Rule for Claiming Tax-Free Stipends?
“There is a 50-mile rule for certain types of per diem tax deductions, but they don’t apply in the case of travel nurses,” said York. “The IRS doesn’t give a hard and fast rule [regarding distance]. The only instructions they have is that the travel has to keep you out of town for longer than a typical workday and make it necessary to sleep or rest before returning.”
Caruthers agreed that there isn’t a 50-mile rule for travel nurses, but it’s become such a common number tossed around that many believe there is one.
“I think the reason that a lot of people believe there is [a 50-mile rule] is because the agencies put it in the contract, and it’s considered ‘standard’ to them,” he said. “However, the IRS regulation is that anytime you require lodging to perform your job at your new place, it would qualify regardless of how near or far.”
When Can You Not Take Tax-Free Stipends?
You can’t take tax-free stipends if you can’t prove that you duplicate expenses and don’t maintain the cost of living for a permanent home. In this case, you’ll be taxed on your total hourly wage.
“Your personal residence matters for claiming a tax-free work stipend because housing costs are only eligible for reimbursement if they’re duplicated expenses,” said York. “If you give up your apartment during a 6-month assignment out of town, your housing costs in the new location wouldn’t qualify.”
Paying taxes on your entire hourly rate may seem like a disappointment, but it isn’t necessarily a bad thing. When you take tax-free stipends, your annual income appears much lower on your W-2 than what you received. If you want to apply for a mortgage, a car loan or any personal credit or loan, you may not be approved because your income may appear too low. Look at your finances and financial plans for the near future before deciding whether not qualifying for tax-free stipends actually works in your favor.
Are Travel Nurses Being Double-Taxed?
Many travel nurses and healthcare providers are concerned because they’re paying state income taxes where they permanently live and in every state they work in throughout the year (unless one of these states doesn’t collect state income taxes). Thus, the question of whether they’re being double-taxed comes up frequently. York said the answer is that it depends.
“All states are a little different, which is why there’s no straightforward answer,” she explained. “But generally speaking, they would pay taxes in each state they work in. A travel nurse’s employer should track how much was earned while working in each state and break out the wages by the state on their W-2. When it comes time to file, travel nurses will file as non-residents for each location and exclude those earnings on their resident state return. This way, they can avoid double taxation.”
“Some states have reciprocity agreements with neighboring states,” continued York, “which means that they will let non-residents work in their state and allow them to treat all their earnings as part of their resident state. For instance, if your tax home is in Illinois and you take a work assignment in Indiana, all your wages will be treated as Illinois income because those states have a reciprocity agreement with each other.”
Caruthers agreed that most states offer reciprocity with other states. For example, if your tax home is in California, then California would give you an offset on your income taxes for the taxes you paid on what you earned while working in another state.
“You will have to pay taxes in any state you work in unless it’s one of the nine that don’t require income tax,” he said. “Those states are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. So those are good states to make your tax home!”
However, per Caruthers, if you live in California and work in Texas, where there isn’t any state income tax, California will still tax you on your earned income because California is your tax home, and you weren’t required to pay taxes in Texas.
Do Travel Nurses/HCPs Get Audited More Frequently?
Nobody wants to get audited, and the unusual pay packages of travel nurses and HCPs could potentially raise a red flag with the IRS, but does that mean they get audited more frequently? Many websites state that travel nurses should be prepared for an audit because they’re more likely to be audited than the average person. While it’s true that you should always be prepared for an audit, Caruthers said travelers aren’t necessarily any more likely to be audited than anyone else.
“This is a pretty big misconception,” remarked Caruthers. “The average W-2 worker gets audited at the rate of eight per every 1,000 tax returns each year, so travel nurses have a 99.2% chance that they will NOT get audited in any given year.”
“However, most of the ones we work with show a high income even with their stipend, so there’s nothing out of the ordinary to cause a red flag to get raised. In theory, if someone was getting a massive tax-free stipend and showing very little salary, the government might want to ask how they’re paying their bills. But we haven’t seen them get audited at a rate any higher or lower than anybody else.”
Should Travel Nurses Claim Tax Exemption?
Some travel health professionals opt to claim tax exemption on their W-4s so they can take home all their cash on payday and pay taxes on it later. If you do this, be prepared to face a significant tax bill. You could even be hit with an underpayment penalty if you claimed tax exemption for the entire year.
“Do Not Do This,” stressed Caruthers. “I have no idea who started the rumor that this was a good idea, but if I find them, I’m going to kick them in their shins. I don’t advocate violence, but this is one time I might make an exception.”
“Seriously, you’re earning W-2 income, and the government wants tax money on that, so you want those taxes withheld from your checks. Otherwise, you’re going to end up owing them every year, and they’re going to be really grumpy that the money wasn’t withheld all along.”
Bonus Travel Nursing Tax Rules Tip:
“The single biggest tax break in the tax code is having a small business,” advised Caruthers. “Since a lot of travel nurses are in foreign areas without friends or family, at least at first, they may have a little more time on their hands to start a side project. Many of the deductions that went away in 2018 are open to them not as travel nurses but for whatever new project they work on. And we have had several where the side business or side hustle becomes the main hustle when they eventually come off the road from travel nursing.”
“The best way I can describe it is that the tax code is 81,000 pages long, and roughly 30 of those pages show you what you’re supposed to pay, and all the rest show you how to save money on your taxes. But the majority of those savings are for the self-employed individual. So, if you have the time, get something else started while you’re on the road. Literally, any business will do.”
Tax Disclaimer: The information contained herein is general in nature and based on tax laws that are subject to change. Although many details came from tax experts, the writer isn’t a tax expert and can’t guarantee the accuracy or completeness of any information contained in this post. This publication doesn’t and isn’t intended to provide tax, legal or accounting advice. Readers should always consult their personal tax advisors concerning the application of current and new tax laws as they pertain to their specific situations.
Hi! I really appreciate all this info. I have a specific question about the 12 months in a 24 month rolling period rule. Do you know if this trumps the not returning to an area 3 years in a row. I worked in a contract for 1.5 months in 2022, and I plan to return to the same one for 6 months this year (2023), and 5 months next year (2024.) This would make me violate the 3 years in a row rule but I wouldn’t be in violation of the 12 months in 24 rolling period since it would just be 11.5 months. What are you thoughts on this?
Hello Emmy and thanks for reaching out! Some tax experts we’ve spoken to have warned not to return to the same area 3 years in a row because it sets a precedent. Here’s another way to look at it. Even though you’re not working in one place for longer than 12 months in any rolling 24-month period, are you making more income in this one place than you do at your tax home? If you continually earn most of your income in the same place, then your tax home could eventually shift to the place you keep returning to. Once it becomes your tax home, you no qualify for tax-free stipends and you may end up owing taxes. However, we always advise you to speak with a tax professional familiar with the unique rules of travel nursing. Most IRS rules for travelers aren’t clearly defined, so tax professionals often rely on previous IRS court cases for guidance. They also keep track of any changes in the current tax code, so it’s critical that you seek their opinion before potentially doing something that could lead to an unexpected and potentially expensive tax bill.
Hi there! Great article.
My question is are there any minimum requirements of income at your tax home? Like if I went home to my tax home and worked to maintain my tax home in this regard.
Is there a certain amount of time, or money, or percent of income that is clearly defined to suffice? In addition to renting a room from my family for fair market value.
Thanks!!
Thanks Caleb! We’re glad you enjoyed the article. According to IRS Publication 463, a travel healthcare professional’s tax home is where they regularly live and they must meet at least two of the following factors to qualify for tax-free stipends:
1. You perform part of your business in the area of your main home and use that home for lodging while doing business in the area.
2. You have living expenses at your main home that you duplicate because your business requires you to be away from that home.
3. You haven’t abandoned the area in which both your historical place of lodging and your claimed main home are located; you have a member or members of your family living at your main home; or you often use that home for lodging.
Regarding time, money or percentage of income, the IRS can be vague and there often aren’t any hard and fast rules. We’ve received some suggestions from tax experts based on court cases or recommendations from IRS attornies that might help. Some tax experts suggest that you spend around 30 days per year at your tax home. These days don’t have to be consecutive. Currently, there aren’t any IRS guidelines on a set amount of money or percentage you must earn in your home area, but some tax professionals suggest earning 25% of your taxable income in the area of your tax home to maintain your home through work. As always, you should consult a tax expert familiar with the unique tax requirements of travelers to ensure you’re following the most current rules. We hope this information helps!
Moira,
Are you able to cite more information regarding the 12 out of 24 month rolling period in a metropolitan area? Where did this information actually come from? I have spoken to multiple senior recruiters who have been in their companies for years and no one has any idea where this actually comes from but comes up as a “general travel IRS rule” on the internet and cannot be seen on any IRS affiliated websites.
Much thanks!
Hello Philip and thanks for reaching out! That information came directly from one of the tax professionals I spoke with. I’ve asked for more detailed information, including a possible place online or in the tax statutes that I can share with our readers. As soon as I have this information, I’ll pass it along and update the post so everyone can access it. I hope to have more to share soon!
If you take a contract in Wi but spend 26wks at one city and then take another 26wk contract 3.5hrs away in a different city but still in Wi does the 12month rule still apply?
Hello Jessica and thanks for reaching out. The generally accepted rule of thumb is never to work more than 12 months in any rolling 24-month period in the same metropolitan area. Recruiters may tell you that you can stay as long as you want in the same state as long as you move to different areas of the state. However, it can get tricky if you work in two cities that aren’t in the same metro area but are close enough to allow a reasonable commute. We wouldn’t consider 3.5 hours a reasonable commute, so the two cities are likely far enough apart that they wouldn’t count as the same “area.” However, you must also take care not to inadvertently become a resident of the state where you’re working and it becomes your tax home. Always ensure you’re spending enough time in your tax home and that you can prove you’re duplicating expenses in both places. Unfortunately, the IRS doesn’t provide clearly defined rules when discussing “area” or the time allowed in a given area, leaving it somewhat open to interpretation. Because we’re not tax experts, Vivian always encourages travelers to speak with a tax professional familiar with current travel nursing rules to ensure they stay in step with IRS tax rules.
Do you have to back pay stipend taxes if you go staff at a contract site? A little context- we originally lived about 40 miles from current hospital where we worked in the area for 5 years prior. Have since moved 100+ miles away but have taken a contract here since September. Would that fall into the longer than 12 months rule and would we then owe back taxes on the tax free stipends we’ve been receiving?
Hello Leslie and thanks for reaching out. Generally, if you can prove you duplicated expenses at your permanent tax home and your temporary assignment home throughout your travel contract, you shouldn’t have to pay back tax-free stipends. However, we always suggest speaking to a tax professional familiar with the unique tax laws of travel healthcare professionals to ensure you don’t end up with a surprise tax bill.
One more question, If I didn’t work a shift because I was sick or the facility had a low census will that affect my Weekly Allowance? My agency deduct from my allowance if I call in sick or got cancelled by the hospital
Hello David, deductions from your weekly allowance should be spelled out very clearly in your travel contract. If you’re unsure, ask your recruiter to explain because it can significantly impact your pay. Agencies lower your pay/allowances when you miss a shift because they don’t get paid if you’re not working. However, there’s a difference between you missing a shift and the hospital canceling a shift. If you miss a shift, your contract probably includes a clause stating how much the agency will deduct from your weekly pay/allowance per hour missed. Some offer paid sick leave, but this would be included in your contract. If the hospital cancels your shift, whether you’re paid in full depends on if your contract includes a guaranteed hours policy. If your contract guarantees 100% of the contracted hours, you should be paid the full amount outlined in your contract. If you don’t have this guarantee, you probably won’t be paid for cancellations by the hospital. Keep in mind that at some hospitals, if they cancel a shift but offer you another one in place of it and you turn it down, then it becomes a missed shift, not a canceled shift, and you’ll probably lose money for that shift.
My agency pays me non-taxable stipend weekly as per the GSA max amount, I was reading if I don’t submit an expense report to my employer I should be taxed on the whole amount, is this accurate?
Hello David and thanks for reaching out! You must complete and sign a declaration of your permanent tax home with your travel nursing agency, then confirm with your agency what kind of documentation they require. You should keep documentation that you maintain a permanent tax home away from your travel home to prove you qualify for tax-free stipends, even if they don’t require it. Other documentation can vary by agency and current IRS tax rules. We always advise that you speak with a tax expert familiar with the unique tax situation of travel healthcare professionals to ensure you’re following all IRS tax rules.
Can you provide a legitimate reference (IRS website, government website, detox) for the 12 months in a 24 month time period rule for tax homes? I’m trying to find the actual information on the IRS website. I’ve seen and heard that if you leave for 30 days and Cole back your fine, but I also keep hearing this 12-24 rule but I can’t find actual documentation of it, only on other travel nursing websites
Hello Nicole and thanks for reaching out! We received the details on the 12 out of 24 months rule from one of the tax professionals we spoke with directly about travel nursing tax rules. We’ll reach out to see if they can provide the actual statute that covers that particular topic and post an update with this information when it becomes available. Vivian strives to ensure everyone has much information as possible. Stay tuned!
Hi I have decided I’d like to do travel nursing. I retired early so I can only earn a certain amount before they start deducting money from my monthly SS check. My question is does the stipend count towards your earned income limit for the year or is it just the taxable earnings that count. Someone said it doesn’t count against it and someone else said yes it does. Ani information would be helpful. Thank you
Hi Mary and thanks for reaching out! Generally, tax-free stipends for housing, meals and other incidentals aren’t included as taxed income on your W-2. However, to ensure you don’t inadvertently go over the amount allowed for your social security disbursements, we recommend consulting with a tax professional who understands the current tax rules regarding travel healthcare professionals. IRS rules often change, so it’s always best to talk to an expert in the field. You might also ask the nurse staffing agency how they report stipends, as this could potentially differ by agency. We wish you the best of luck in your travel nursing journey and hope Vivian can assist you!
I am considering taking a travel assignment. I am trying to decide whether to take the tax free housing stipend or be fully taxed. My Tax home is in NC and I have paid off my mortgage..so, i don’t have that expense anymore..but i have all the up keep and property taxes on it ..
Hello Tracy and thanks for reaching out! You should qualify because you’re still maintaining a permanent tax home, but we suggest double-checking with a tax professional familiar with tax rules for travel healthcare professionals to ensure you’re following all current IRS rules. Remember, if you rent out your home or earn any kind of revenue on the home while you’re traveling, you must claim that income on your taxes. We wish you the best of luck with your travel career and hope Vivian can be of further assistance!
I have been working as a traveler rad Tech for almost a year. I have ben receiving a tax free per diem amount the whole time. They are having trouble replacing me right away, though they have a replacement about a month later. I don’t want to leave them short, and I know after a year I lose my tax free per diem. But a question was brought up by a co-worker and he said that he heard if you go over the 12 months , not only do you lose the tax free pay going forward, but they actually go back and tax you on the pay that you originally got as tax free for the last year. Seems a bit harsh, but will the IRS do that?
Hello David and thanks for reaching out! The IRS has a rule about working in the same place for more than 12 months in any 24-month period. If you go over this time limit, you lose your tax-free status and it’s possible that you could end up with a tax bill for previous tax-free payments. It’s important that you speak with a tax professional familiar with tax rules for travel healthcare professionals about your potential tax liability before working past the 12-month period.
Hi! I have been at a facility for 1 year. It is about 80 miles away from my home and in the same state where I live. I did tax free stipends for the year and just recently switched to a fully taxed hourly pay with no stipends. Since switching to fully taxed, does this mean the 12 month rule no longer applies to me?
Hello Brianna and thanks for reaching out! Yes, the 12 months out of 24 months rule only applies to tax-free stipends. But you don’t want to jeopardize your previous qualification for tax-free stipends and accidentally end up with an unexpected tax bill. We suggest you speak with a tax professional familiar with tax rules for travel healthcare providers to determine exactly how you should proceed to close the period you claimed these stipends correctly. Once that period has been settled, the 12-month rule would no longer apply to you as a fully-taxed traveler.
Hi, so I live with my parents and just took my first travel assignment. is it ok that my parents house is my tax home for now (I don’t pay them rent so I have no proof of duplicate expenses). I stay with a friend where my travel assignment is located.
Hello Gina and thanks for reaching out! If you’re claiming tax-free stipends, this situation will likely lead to issues when filing your income taxes. You must duplicate expenses to qualify for tax-free stipends to cover housing, meals and other incidentals. If you’re not claiming tax-free stipends and your entire salary is fully taxed, then there are no rules regarding your housing situation and you can do whatever you want. However, if you’re receiving tax-free stipends, Vivian suggests you check with a tax professional familiar with travel nurses’ unique tax situation to ensure you follow current IRS tax rules. Congrats on your first travel assignment!!
What about food stipend? How do we produce proof for ‘duplication’? If there aren’t any, why can’t local travelers get food stipend without housing stipend?
Hello Ashley and thanks for reaching out. Travel nurses/HCPs must qualify for tax-free stipends by keeping a permanent tax home where they duplicate living expenses (housing at fair market value, etc.). If you can’t claim a permanent tax home, then you don’t qualify for tax-free stipends. Tax-free stipends have two components, lodging is one and meals and incidentals is the other. Unfortunately, if you don’t qualify for tax-free stipends, then you don’t qualify for lodging stipends or food stipends because they’re tied together as the total allowance provided for expenditures individuals incur when traveling away from home. We know it can be confusing and always advise talking to a tax professional if you’re unsure whether you qualify for tax-free stipends.
Can gas receipts to and from work, car maintenance, car payment/insurance, cell phone things like that be used for tax right off?
Hello Heidi and thanks for reaching out! Unfortunately, the Tax Cuts and Jobs Act of 2018 did away with deductions like gas, mileage and food for travel nurses and other healthcare professionals, so you wouldn’t be able to deduct these travel-related expenses on your federal tax return. A handful of states still allow mileage deductions on your state return, so you might be able to use certain expenses on your state return but not your federal one. However, federal tax laws are subject to change, which is why we always suggest speaking to a tax professional familiar with tax rules related to travel healthcare workers to ensure you have the most up-to-date information and receive as many deductions as possible. If you itemize your deductions instead of taking the standard deduction, you may be able to claim some of the things you mention. Again, you should speak to a tax pro to see exactly what’s allowed in your specific situation.
Hello! I’m still confused about the laws. I’m in Colorado and about to travel out of state. I own a large home and want to rent out one room while I’m gone on furnished finder but can I still claim it is my home base if we still use the house? Thanks!
Hello Krystle and thanks for reaching out. We understand how confusing tax rules can be for travel nurses/HCPs. That’s why it’s so important to speak with a tax professional familiar with the unique tax rules for travel healthcare workers to ensure you’re following current IRS tax rules fully. From the information we’ve received, if you duplicate expenses at your permanent home and your temporary home while traveling and you claim any rental income you receive on your taxes, you may still qualify for tax-free stipends. However, we don’t have a tax pro on our staff. It’s essential that you seek out the advice of a professional tax preparer to cover all your bases.
Hi! If I am a traveling rad tech, do these same laws apply to me?
Hello and thanks for reaching out! Yes, the tax rules that apply to travel nurses apply to all travel healthcare professionals. Because tax laws change periodically, Vivian always advises travelers to contact a tax professional familiar with the unique tax rules of travel health jobs to ensure they stay current.
I am currently a travel nurse taking my first assignment in California but my tax home is Michigan. I have to fill out a tax home declaration for this assignment. I am having a hard time answering the question A. I maintain a tax home and the address of that tax home is ( mandatory, no PO Box and consistent with my W-4) or B. I do not maintain a tax home. As such, I understand the IRS considers my tax home the area of my temporary assignment.
Hello Akunna and thanks for reaching out! The travel staffing agency is trying to determine if you qualify for tax-free stipends. To do so, you must be able to declare a permanent tax home. For travel nurses and healthcare professionals, if you maintain a permanent residence (in Michigan) and duplicate expenses between your permanent home and a home you keep while on temporary assignment (in California), then you declare your permanent home (in Michigan) on your tax home declaration. Your permanent home address is what you use on your W-4. However, to ensure you’re following current IRS rules and correctly duplicating expenses to qualify for tax-free stipends, Vivian always suggests speaking with a tax professional familiar with the unique tax rules of traveling healthcare professionals. Congratulations on your first assignment!
Hi! Thank you for the article! I’m on my first contract job ever, and was told by my travel agency’s recruiter that because I signed two 6-month contracts, I don’t have to go home and can work at the same hospital indefinitely without getting audited by the IRS. Is this true? Also, my home is in Texas but I’m working in New Mexico. Does that mean that my New Mexico taxes will be reimbursed because my home is in Texas?
Thanks a bunch!!
Hello Ruben, Congratulations on your first travel contract! Vivian always suggests speaking to a local tax professional to ensure you follow all IRS rules because tax rules are complex and can change. However, even if you have separate contracts, if you work more than 12 months out of a 24-month period in the same location (even if it’s at a different facility and even if you take time off between contracts), you can lose your permanent tax home status and your tax-free stipends. Because Texas doesn’t collect personal income taxes, it could impact whether New Mexico keeps the personal income taxes it collected. Each state’s rules differ. Vivian doesn’t have a tax expert on staff, so it’s very important to contact a tax professional with knowledge of travel nursing tax rules to ensure you’re receiving all the reimbursements you deserve and you’re not doing anything that goes against IRS tax rules.
I’m a local traveler at my current assignment and have never taken a tax free stipend as my hourly waged is taxed instead. I am coming up on a year at this assignment. I know for nurses who take tax free stipends it is recommended that they do not surpass 1 year in any single contract. Would this apply to me as well even if I do not receive the tax free stipend or can I remain at my current assignment after my 1 year?
Hello Christine and thanks for reaching out! The 12 out of 24 months rule applies to nurses who don’t want to lose their permanent tax home, which would cause them to lose their tax-free stipends. Since you travel locally and don’t receive tax-free stipends, this shouldn’t have any impact on you. For more specific answers regarding your taxes, we always advise talking to a local tax expert.
so planning to get an assignment an hour away from home
and planning to stay in the hotel for only 3 nights is that okay?
Hello Roselyn and thanks for reaching out! If you’re wondering if it’s okay if you take tax-free stipends in this situation, you should speak to your recruiter and local tax expert to make sure it meets any stipulations the employer may have included in the travel contract and the specific tax rules in your state. Both can vary a great deal, so it’s not possible to make this determination without more information. To ensure you’re following all the rules, it’s best to speak to local experts who have all the pertinent details. We wish you the best of luck in your travels and hope we can be of assistance!
I live 50 mile radius from my travel assignment so I qualified to be paid as travel nurse with housing stipend, food and etc. I signed the “tax exempt” does it mean I owe IRS at the end of the year?
Hello Zoey and thanks for reaching out. You shouldn’t owe taxes on any untaxed stipends and per diems for meals and other incidentals. However, you do still pay income taxes on your actual salary. Be sure to speak to a tax professional to ensure you understand your tax liability and avoid any surprises at the end of the year.
Rachel – have a question – working on a travel assignment in Calif for almost a year – my tax home is in Texas. Would Calif be my tax home if I continue working there over a year? How would I continue to work in Calif and claim Texas as my tax home? Do I need to take a break of 2 -4 weeks and then continue to work in California with a completely different agency. thanks
Hello Linda, and thanks for reaching out. Changing agencies shouldn’t make a difference. It’s all about time and location. The generally accepted rule of thumb is never to work more than 12 months in any rolling 24-month period in the same metropolitan area. Most recruiters will tell you that you can stay as long as you want in the same state as long as you move to different areas of the state. However, it can get tricky if you work in two cities that aren’t in the same metro area but are close enough to allow a reasonable commute. You must also take care not to inadvertently become a resident of the state where you’re working, and it becomes your tax home. You always want to ensure you’re spending enough time in your tax home (Texas), and you can provide you’re duplicating expenses in California and Texas. Unfortunately, the IRS doesn’t provide clearly defined rules when discussing “area” or the time allowed in a given area, leaving it somewhat open to interpretation. Because we’re not tax experts, Vivian always encourages travelers to speak with a tax professional familiar with current travel nursing rules to ensure they stay in step with IRS tax rules.
Great article, thank you. I have one question. If I take a travel assignment in, let’s say San Diego CA, and work there for 9 months, can I then take an assignment in Sacremento CA for 9 months without having to pay back taxes on my per dium? I guess I’m wondering if the 12 months out of 24 months means one area or one state. Several nurses have told me that I will not be able to be in one state more than 12 months out of 24 months.
Thanks!
Thanks Lisa, we’re glad you liked it! The generally accepted rule of thumb is never to work more than 12 months in any rolling 24-month period in the same metropolitan area. Most recruiters will tell you that you can stay as long as you want in the same state, as long as you move to different areas of the state. However, it can get tricky if you work in two cities within the same state that aren’t in the same metro area but are close enough together to allow a reasonable commute. Also, you must take care not to inadvertently become a resident of the state you’re working in and lose your permanent tax home. Unfortunately, the IRS doesn’t provide clearly defined rules when discussing “area” or the time allowed in a given area, leaving it somewhat open to interpretation. Because we’re not tax experts, Vivian always encourages travelers to speak with a tax professional familiar with current travel nursing rules to ensure they stay in step with IRS tax rules.
Hi this article says fair market value should be paid for renting out a room or so in family or friends home for duplicating purposes if not having a lease of their own… I spoke with my tax person & I was told that shared expenses had a different story. Because it’s not technically “rent”… I was told if we were to send money for utilities and room or if the total pay for the utilities and mortgage is divided equally amongst those living in the same home, that – that is fine too so it may not always equal fair market value.
Hello JC, and thank you for sharing information provided by your tax expert! Vivian always recommends deferring to what your tax expert tells you, because they’re the experts. The fair market value wording is used to ensure new travelers understand that they can’t pay a very low amount, say $100 per month when a shared residence in their area typically goes for say $800 (these are just made up numbers) and claim they’re duplicating expenses. If you’re splitting up the cost, you should be paying your portion of the fair market value. IRS rules can be very confusing because they’re not black and white for travel nurses/HCPs, so talking to tax experts familiar with travel nursing rules is always best.
Hello, thank you for a great article and opportunity to ask questions! I have my permanent tax home in hawaii and would take travel assignments in Texas this year. I want to relocate to Texas this year, will that make me get taxed back on all my previous travel to Texas even though I was living in Hawaii at the time?
We’re glad you liked the article, Rebecca. If you’re concerned about being taxed on tax-free stipends you received while living in Hawaii and working in Texas, you shouldn’t be required to pay taxes on those stipends as long as you have proof that Hawaii was your permanent tax home while you were taking travel assignments in Texas. No matter the situation, always be sure you can prove that you were duplicating expenses in both locations during a specific time period. We also suggest reaching out to a tax expert familiar with travel nursing to ensure you have all the appropropriate documentation and are following all current federal and state tax rules to cover all your bases. Best of luck with your upcoming relocation!
Hello!
If my parents RENT a property as their primary residence and do not OWN another home and I wanted to make the rented property my tax home… Would my rent or shared expenses (utilities) for this property be considered taxable income to my parents since they do not own the home? I would imagine not, and it would only be considered shared expenses to my parents and considered income to the landlord, but I wanted to double check.
Thank you for your time!
Thanks for reaching out! Tax laws regarding taxable income can be complicated and Vivian doesn’t employ a tax expert. Whether your parents would need to count your rent as taxable income could hinge on whether you’re included on the lease. Also, if you pay your rent to your parents who combine it with their money and pay the rent with one check on their own account, you may be technically renting from your parents and not the landlord. We advise you to speak to a tax professional in your area to ensure you’re truly paying rent to the landlord and not your parents to avoid confusion on the taxable income question.
If my tax home has been in Northern NJ for the last few years, but I have been travel nursing across the country in different areas (for 1.5 years), but now am planning on moving to southern NJ(about 100 minutes away)… Do I have to wait to take a travel job in the NYC/Northern NJ area and get per diems? If not, how long will I have to wait until I can?
Thanks for reaching out! There shouldn’t be a waiting period as long as you meet the permanent residence criteria in your new location. If you’re duplicating expenses per the IRS rules to receive tax-free stipends and you meet permanent residence criteria, you should be good to go. However, double-check with the travel agency and/or hiring facility to confirm when you qualify for tax-free stipends just to cover all your bases. Best of luck with your upcoming move!
Hello I have a question. I had an apartment in Los Angeles and took a travel contract in Boston. The first 5 months of my travel contract, I paid my apartment lease in LA while also paying rent in Boston. I did not renew my LA apartment lease during the middle of my 2nd contract in Boston and moved all my stuff to my parents house who lives in Orange County (considered same metropolitan area). If I share expenses and utilities with my parents on the house (pay each month part of mortgage and utilities) and change my drivers license and voters registration and forward all my mail there, as well as come home between contracts, is this enough to still qualify for the tax free stipends and be viewed okay by the IRS if audited ? I plan to work as a travel nurse in Boston no more than 9 months total as a travel nurse. Im trying to maintain California as my tax home
Thanks for reaching out, Lisa! Although Vivian doesn’t employ a tax expert, the general travel nursing rule is you must be able to prove that you contribute a ‘reasonable monetary amount’ (determined by the IRS) to a home that you own or rent. If you claim a rented room as a tax home (for example, at your parents’ house), the monthly amount paid must be comparable to similar market prices in the area. If you are audited and claim a permanent tax home, you must prove you’re duplicating expenses. It’s wise to ask in advance what you need as proof of a tax home so you can prepare any necessary paperwork. We suggest reaching out to a travel nurse tax expert for further advice.
Anyone know of this new IRS rule of having to break a contract for 35 days after being there 1 year?
Thanks for reaching out, Terry! Although Vivian doesn’t employ a tax expert, the general travel nursing rule has always been that you can’t spend more than 12 months in a single metro area within any rolling 24-month period to meet the tax exemption eligibility requirements. We suggest reaching out to a travel nurse tax expert for further advice.
How do I prove I paid a family member for housing come tax time?
Through apps like zelle or veno so you have proof! Never through cash. Then you can save these receipts and prove to IRS you are paying rent
I want to know if I am a travel nurse my home state is WI and I am doing an assignment in CA which state do I pay for taxes on my paycheck each week
Hi Michelle- sorry for the delayed response. You pay taxes where you work. So any work in WI- you will pay taxes on that income. For your assignment in California, you will pay CA state taxes and file a state tax return for CA during tax season.
I’ve been working in Texas, they do not have a state tax but I notice that I’m paying Alabama state taxes even though I’m not working there.
Alabama is my home state.
Actually you pay taxes in your home state AND in the state you work, if that state has a state income tax.
You will pay taxes in bothe states.
If your eligible at the end of the year and have a valid tax home, you will get the CA taxes refunded when you file.