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One of the best parts of being a travel nurse is the travel nurse housing stipend you collect as part of your paycheck, if you qualify. Because stipends aren’t taxed, not every traveler qualifies for them, and that’s where some confusion occurs. Whether you’re new to travel nursing or never fully grasped how travel nurse housing stipends work, this comprehensive guide should help you better understand this essential part of a travel nurse salary.
What Are Travel Nurse Stipends?
Stipends are like reimbursements, except you get them in advance instead of after the fact. Travel nurse stipends are the money a travel nurse agency adds to their salary to cover housing costs while on a travel assignment.
However, you may also hear the term stipends used for meals and incidentals, which are calculated separately from housing. Despite being calculated and paid out separately, if a traveler doesn’t qualify for housing stipends, they don’t qualify for M&I stipends either. It may not sound fair, but the two are tied together even if they’re paid apart from each other.
Are Travel Nurse Housing Stipends Taxed?
No, travel nurse housing stipends aren’t taxed. Thus, if you qualify for stipends, you don’t pay income taxes on them. To be eligible for tax-free stipends, you must have duplicate expenses between your permanent tax home and another home you stay at while on assignment.
You pay income taxes on your hourly salary, so your paycheck has a blended rate of taxed and untaxed monies. Your housing stipend may be quoted as a daily, weekly or monthly rate but generally goes on the same weekly or bi-weekly paycheck as your salary.
How Are Travel Nurse Housing Stipends Determined?
The General Service Administration (GSA) determines the maximum amount for travel nurse housing stipends. These amounts are based on the location of the assignment and the per diem rates for federal employees. A per diem rate is the maximum allowance the government reimburses a federal employee for expenses they incur while traveling on official business.
The GSA defines three expense categories: housing, meals and incidentals. This post only covers housing. Because the cost of living varies across the country, the GSA publishes different rates for different locations. You can explore current per diem rates by city or zip code on the GSA’s website.
Travel nurse agencies can’t pay more than the maximum amount stipulated by the GSA without raising red flags. Although you may have heard differently, they also aren’t required to pay the maximum housing stipend or even a set percentage of this maximum.
GSA rates are based on short-term stays, with overnight accommodations usually in a hotel. Travel nurse contracts typically last about 13 weeks and nurses may stay in a house or apartment under a short-term lease, which is cheaper than staying a few nights in a hotel. Even if a travel nurse stays in a hotel, most of these establishments offer significant discounts for extended stays.
Thus, actual housing costs for a travel nurse are usually less per day than for federal employees. The GSA simply states the maximum amount an employer can reimburse an employee without the exchange of receipts. However, you must still keep receipts to prove you do have lodging expenses.
How Do Travel Nursing Agencies Calculate Housing Stipends?
Each travel nursing agency may have its own way of calculating housing stipends. However, they typically consider three primary factors:
- Bill Rate
- GSA Maximum
- IRS Guidelines
Bill rates are a huge determining factor for housing stipends and the entire pay package because they’re the total amount a healthcare facility pays the travel nurse agency for supplying them with a travel nurse to fill a specific role. The agency uses the bill rate to cover every cost associated with an assignment, including the travel nurse’s salary and stipends. The larger the bill rate, the more the agency can afford to allocate for housing.
Related: Everything Travel Nurses Want to Know About Bill Rates
As previously covered, the GSA maximum is the ceiling. Some travel nurse agencies may pay the maximum amount if the bill rate supports it, while others might only pay a fixed percentage of the maximum on all their contracts. Still, others might pay more than the bill rate because travelers net more money if they receive more non-taxable income, making their jobs more attractive. However, this is against the rules and will raise red flags. Keep this in mind when choosing a travel nurse agency.
The travel nurse agency must also follow IRS guidelines. Per its guidelines, the agency should provide a housing stipend amount that they reasonably expect the traveler will need to cover the actual cost of housing in the area they’re working. Obviously, housing in Los Angeles or New York would likely cost more than accommodations in a smaller city in the Midwest. Thus, by IRS guidelines, stipends would be lower in the cities with lower-cost housing.
Average Travel Nurse Housing Stipend
It’s almost impossible to calculate an average travel nurse housing stipend because they vary dramatically based on many factors and between regions. However, stipends almost always cover the cost of suitable housing in the area you’re contracted to work. In very rare cases, the stipend won’t be enough.
Although you can determine the GSA maximum in cities across the nation, this might not do you any good since the bill rate and the agency ultimately decide on the actual stipend. Instead of fixating on the stipend amount, it’s better to evaluate the entire pay package to determine whether the pay is good enough for each travel nursing job.
Do You Qualify for Tax-Free Housing Stipends?
Tax-free stipends often comprise the bulk of a travel nurse’s weekly salary, so it’s essential to learn the rules determining whether you qualify to claim them.
If you take agency housing instead of making your own housing arrangements, you don’t qualify for tax-free housing stipends. As previously covered, you don’t qualify for tax-free housing stipends if you don’t duplicate housing expenses between a permanent tax home and another residence while on travel assignments.
According to the Internal Revenue Service (IRS) Publication 463, under normal circumstances, your tax home is “your regular place of business or post of duty, regardless of where you maintain your family home. It includes the entire city or general area in which your business or work is located.”
However, travel nurses don’t have a regular place of business due to the nature of their work. They may spend time working in many places, so their tax home may be where they regularly live.
The IRS created a three-part test to help travel healthcare workers determine their tax home status because they don’t have a regular place of work. You must satisfy two of the following three criteria found in Publication 463 to qualify for tax-free housing stipends:
- 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.
- You have living expenses at your main home that you duplicate because your business requires you to be away from that home.
- 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.
If you satisfy all three, your tax home is definitely where you normally live. If you satisfy two of the three, you probably have a tax home, depending on your exact circumstances. If you only satisfy one of them, you’re considered itinerant and don’t qualify for tax-free stipends.
Once you determine that you have a permanent tax home, you must complete and sign a declaration with your travel nursing agency to receive tax-free housing 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.
Related: Understanding Travel Nursing Tax Rules
One more important thing to keep in mind is that there’s no such thing as a 50-mile rule regarding whether you qualify for tax-free housing stipends. The IRS defines traveling away from home as:
- Your duties require you to be away from the general area of your tax home substantially longer than an ordinary day’s work, and
- You need to sleep or rest to meet the demands of your work while away from home.
Nowhere in the tax rules does the IRS set a specific distance. However, you will see and hear “50 miles” many times.
Do You Get Paid Housing Stipends When You’re Not Working?
Whether you get your housing stipend when you’re not working depends on why you’re not working. First, the GSA quotes daily rates because government employees generally only travel a few days at a time.
Travel nurses don’t work every day of the week, but they’re away from their permanent homes every day and usually can’t return there between shifts. Therefore, they must secure housing for the entire contract, not just the days they work. Travel nurse agencies have a reasonable expectation that travel nurses incur housing expenses every day they’re on an assignment, so they pay housing stipends every day of the week, not just scheduled workdays.
That being said, if you miss one or more shifts due to illness, unscheduled vacations or for whatever reason, you may lose your housing stipend for those days. The travel agency doesn’t get paid for the days you don’t work, so you don’t either.
Stipends are part of your salary, so don’t expect to get that money if you call in. Agencies break down the housing stipend for the entire contract to an hourly rate, so if you miss a 10-hour shift, it deducts 10 hours of stipends from your pay.
However, if the hospital cancels your shift(s), you may still collect housing stipends if your contract includes a guaranteed hours clause. If you signed a lease and the hospital cancels a large chunk of the contract for cause, such as performance or disciplinary issues, you could be on the hook to cover the cost for the remainder of the lease. To avoid this risk, try to find month-to-month leases, stay at extended-stay hotels or use housing options with more flexible terms.
Please Note: We aren’t tax advisers, Certified Public Accountants or attorneys. We aren’t in any way providing any tax advice. All information contained within this blog regarding taxes is purely informational. Vivian always suggests seeking the advice of professional tax advisors to ensure you have the correct and most current information for your unique situation.
