Important Travel Nurse Tax Home Rules, Exceptions, & Advice From a CPA

According to the IRS, “your tax home is the general area of your main place of business, employment, or post of duty, regardless of where you maintain your family home.” In other words, it is the city where you work or the place where you are getting taxed.  

For travel nurses, if you do not have a permanent work location, then “your tax home may be the place you regularly live” or the place you would return to in between travel nurse contracts.  

I spoke with Josh Katz, a CPA from Universal Tax Professionals; he explained, “a tax home is important for your stipend.” If you want a tax-free stipend, meaning the income on your paycheck labeled as the stipend is not included in your taxable income, then it is essential to have a tax home where you are duplicating living expenses.  

Duplicating living expenses means you are spending money to maintain a permanent residence by paying rent, a mortgage, or residential taxes, while at the same time paying rent or living expenses in your travel location or place of employment.  

Is A Tax Home Important?

It depends on your circumstances and goals. If you want your stipend tax-free, then it is vital to establish a tax home and show proof of duplicating your living expenses. Consider these points and how they apply to your situation:  

• If you travel from place to place and do not establish a tax home, you could end up paying more federal and state taxes.  
• If you are a local travel nurse who does not need to spend money on overnight lodging, you may need to include your stipend as taxable income.  

• But you do not have to have a permanent tax home. If it is too difficult to maintain a permanent residence, you do not have to. Still, you must disclose this information honestly to your travel nurse agency and ensure you follow the correct tax rules where you work.

Your parents’ home can be your tax home if you can show you are paying to maintain your residence there. In other words, you must keep receipts showing you are paying your parents for lodging while working in another location where you are also paying for travel nurse housing.

According to Josh, “50 miles is a good benchmark, but not a set-in-stone rule.” What’s more important is where you rest between shifts. If you live far enough away that you are unable to drive home to get adequate rest before your next shift and need to pay for lodging, then it would be considered duplicating your tax home, even if it is less than 50 miles away.  

Napping in your car does not count. You must be away from your permanent residence from dusk to dawn and show payment for your lodging.  

On the flip side, if you are on a local assignment and working at the hospital across town and do not need to pay for lodging between shifts, then your stipend should be included in your taxable income. Don't get caught with a large tax bill at the end of the year because you didn't know your stipend should be taxed.

Yes, you'll pay taxes for each state and file differently in each state. In your home state, you will file as a resident. In all the other states, you will file as a nonresident. You can often get a tax credit for the extra taxes paid. In other words, if you paid $100 in state taxes as a nonresident, you may get a tax credit for that amount in your home state.

An example would be if you have established your tax home in Illinois, but are working in California. You will still have to pay the state taxes in California. If you paid $100 in California state taxes, you could get a tax credit in Illinois.  

Every state is different, so it is important to follow the state rules where you are working. Many states like Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, New Hampshire, Washington, and Wyoming do not have personal income taxes, meaning you would not need to file or pay state taxes in those locations.  

If you live in a state where you do not file state taxes, you may not be eligible for a tax credit.  

For nurses who travel in their homes, whether it is a converted van or an RV, or you just travel from location to location, your tax situation is a bit different. According to the IRS, you are considered an itinerant.  

An itinerant is a person who travels from place to place for work. In this case, your tax home is your place of employment. As a result, you may be subject to pay state taxes in each state without a tax credit because you do not have a home state. Your stipend may also be taxable since you are not duplicating expenses.  

When extending travel assignments, take care not to extend past 12 months. The IRS will consider this your new tax home. You can avoid this by returning to your tax home before the 1-year mark or taking an assignment in another location.

The main takeaway from this article is that you must maintain a tax home and duplicate your expenses if you wish to accept a tax-free stipend. Per the IRS, the best practice is to return to your tax home 30 days out of the year, even if that time is spread out over several trips.  

You can maintain evidence of your tax home in the following ways:

• Payments for rent, mortgage, utilities, or home insurance
• Paying another person to watch the home for you
• Maintaining a driver’s license and car registration in your home state
• Maintaining your voter registration in your home state
• Using credit cards when returning to your home state

Every State and Situation Is Different

Even though these are the general rules when it comes to tax homes, every state and personal tax situation is different. Always consult a tax professional when filing your taxes to ensure you are protecting your earnings.  

This article is not tax advice. You should consult a professional tax advisor for more information about your unique situation.  

If your head is swimming with information about stipends, housing, taxes, insurance, or more, our Clinician Success Team, accessible through the AdvantisConnect portal, is with you every step of the way to help you land a high-paying assignment, secure all necessary documentation, and answer any questions.