In yesterday’s post, I talked about tax homes with regards to travel nursing. I defined the term, explained why it’s relevant, and talked about some of the rules regarding tax homes for travel nurses. I briefly touched on one specific rule about tax homes that I want to discuss in more detail today: the travel nurse one year rule.

what is the one year rule?

The one year rule basically states that you cannot work as a travel nurse in one location for more than one year if you wish to continue receiving the housing stipend tax-free. Some agencies have their own version of the one year rule and simply won’t let you renew a contract for more than a year even if you’re willing to take on the tax ramifications. All in all, it’s a general rule of thumb that you cannot work the same travel nurse contract, or remain in the same “area” working as a travel nurse, for more than one year.

You can deduct travel expenses paid or incurred in connection with a temporary work assignment away from home. However, you can’t deduct travel expenses paid in connection with an indefinite work assignment. Any work assignment in excess of one year is considered indefinite.

https://www.irs.gov/taxtopics/tc511

where does this rule come from?

First and foremost, this rule comes from the IRS and has to do with your tax home as a travel nurse. In order for the travel nursing housing stipend to qualify to be untaxed, you must maintain a legal tax home at your permanent residence away from where you work as a travel nurse. Check out my post on the topic of travel nursing tax homes for more information.

That said, many agencies have their own “one year rule” and may limit you to one year in one area or one year working the same contract even if you’d be willing to pay taxes on your full income. Hospitals also can institute their own rules limiting how long they’re willing to have you as a travel nurse work at their facility.

Altogether, it’s generally a good idea to plan to not spend more than a year in one place as a travel nurse. If you do choose to stay in one area that long, you’ll face serious financial (tax) ramifications and you may run into issues with your agency and/or the hospital you’re working at as well. If you’re considering it, talk to your recruiter to start getting more information on if your agency would support that decision and also the hospital.

does the one year rule pertain to a single contract or a whole city?

The travel nurse one year rule certainly applies to a single contract, but also may apply to a whole city as well. In specifying this rule, the IRS mentions that a “work assignment” may not last more than one year, but also a “work location” and a “temporary location.” This specification of “location” has led many to believe that the one year rule applies to the general area in which you work, not just the actual work contract. This has widely been interpreted to mean that you cannot work in the same city for more than one year (within a 24 month time period) as a travel nurse. Check with your agency for advice on this and to see how they interpret the general location aspect of the travel nurse one year rule.

Any work assignment in excess of one year is considered indefinite. Also, you may not deduct travel expenses at a work location if you realistically expect that you’ll work there for more than one year, whether or not you actually work there that long. If you realistically expect to work at a temporary location for one year or less, and the expectation changes so that at some point you realistically expect to work there for more than one year, travel expenses become nondeductible when your expectation changes.

https://www.irs.gov/taxtopics/tc511

can I work in the same area for 12 months non-consecutively?

Though I have not been able to find this specified by the IRS, many travel nursing agency websites claim that this applies to a 24 month time period. So within a 24 month period you may not work as a travel nurse in one location for more than 12 months consecutively or non-consecutively.

what are the tax implications of the travel nurse one year rule?

You do not qualify for the untaxed housing stipend if you work the same travel nurse contract for more than a year or work as a travel nurse within the same general area/city for more than a year. You do not lose the housing stipend altogether, but it will be taxed along with the rest of your income. This is especially financially significant when you consider that this will put you in a much higher income tax bracket as well. At this point, your tax home will be considered to move with you every different assignment that you take. This means that you will not qualify for any travel expense reimbursements whatsoever. The financial advantage to travel nursing dwindles significantly in the face of the housing stipend being taxed, though it can still be financially advantageous for some.

You can deduct travel expenses paid or incurred in connection with a temporary work assignment away from home. However, you can’t deduct travel expenses paid in connection with an indefinite work assignment. Any work assignment in excess of one year is considered indefinite.

https://www.irs.gov/taxtopics/tc511

Resources

• https://www.irs.gov/taxtopics/tc511
• https://www.hosthealthcare.com/blog/how-long-can-a-travel-nurse-stay-in-one-location/
• https://blog.bluepipes.com/how-long-travel-nurse-stay-one-place/
• https://www.trustednursestaffing.com/how-long-can-a-travel-nurse-stay-in-one-place/

did you know about the travel nurse one year rule?