Last week, I talked about the travel nursing housing stipend: the benefits and the rules. That’s probably a good place to start to understand more about the value of establishing a tax home, but I’ll summarize some of that here as well. Essentially, the untaxed travel nursing housing stipend is the biggest financial advantage to travel nursing, but in order to qualify for it you have to have an established tax home.

In this post I’ll talk about what exactly that means, along with how to establish and maintain a tax home. This post isn’t meant to be exhaustive and shouldn’t be your only resource when learning about this, but rather a bit of a crash course. Do your own research, talk to your travel nursing agency, and examine your own individual situation when working to qualify for the untaxed travel nursing stipend.

establishing a tax home

why establish a tax home?

When you sign on with a travel nurse agency and accept a contract, your mind will probably immediately go to housing. Since hospitals typically don’t like to sign on a travel nurse much more than a month in advance, travel nurses have to find last minute furnished housing which can be a challenge. Some agencies offer their own housing for travel nurses, but if you take this that means you forego the travel nursing housing stipend. Unfortunately, this almost never works out in the favor of the travel nurse financially.

So, if you decide to find your own housing (check out some of our tips on that here), you will receive the housing stipend and it may even be untaxed. In order to qualify for the stipend to be untaxed (which is hugely significant as the stipend is typically half or more of a travel nurse’s pay), you must have a qualifying tax home.

what is a tax home?

Generally, 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.

https://www.irs.gov/pub/irs-pdf/p463.pdf

This is the “general” definition, as it says, but this doesn’t apply to people who work in many different places for the majority of their work. For most people, their tax home and permanent residence are one in the same (though these are two distinct entities). However, for seasonal workers, travel nurses, perhaps pro sports players, and many others, this isn’t the case. There is no one place of “regular” business for most travel nurses as the nature of travel nursing is itinerant short term contracts.

the exceptions to the general definition of a tax home

The IRS specifies some further criteria to determine if a person qualifies for their tax home to essentially fall back on their permanent residence:

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.

https://www.irs.gov/pub/irs-pdf/p463.pdf

If you satisfy all three of these criteria, you’re in the clear and your permanent residence can count as your tax home. If you satisfy two, then it’s a case-by-case basis that requires additional factors/elements of your individual situation to be assessed. This second category is what many, if not most, travel nurses fall into. If you only satisfy one of the criteria, you are an itinerant worker and your tax home is wherever you work (meaning you can’t deduct any travel expenses).

For travel nurses, a qualifying tax home is essentially your permanent residence for which you pay fair market value and further maintain by residing there occasionally throughout the year. This is meeting qualifications two and three. Your agency should be able to help you determine if this should qualify you for the untaxed housing stipend. Unfortunately, this is a huge grey area in tax law and many agencies don’t have a firm grasp on the situation. That said, no one seems to, so you kind of just have to do your research, be honest about your situation, and trust your agency as your work authority.

how to maintain a tax home – the rules

can I work as a travel nurse in the same state as my tax home?

Though the IRS has no specific geographic rule determining how far from their tax home a travel nurse must work to qualify for the stipend, there exists some general advice on this topic. Many people and agencies state that if you are working within 60 minutes or 60 miles of your permanent residence/tax home, you will likely not qualify to receive the stipend. Instead you would qualify for a local hourly rate. You, as well as your agency, testify to the IRS whether or not you believe you qualify for the untaxed stipend, so the rules that your agency has are important to know. Even though they may not be an official IRS rule, your agency decides what they think qualifies and therefore whether they will pay you your stipend tax free or not.

The 60 minute/mile rule is a general estimate/trend that varies from agency to agency, and it can vary by facility as well. Some hospitals have their own geographic limitations for travel nurses stating that your tax home must be x miles away from their facility in order for them to take you on. Some won’t accept your application if your permanent residence/tax home is within the same state.

how many days a year do I need to stay at my tax home/permanent residence?

This is also not clearly established by the IRS, but previous rulings seem to indicate that at least 30 days should be spent at your permanent residence/tax home per year. This would be 30 days per calendar year that do not have to be consecutive.

how do I maintain my permanent residence?

Staying at your permanent residence a minimum of 30 days per calendar year (consecutive or non-consecutive) is a loose rule, but a good start to make sure your permanent residence actually qualifies as your permanent residence. There are many different factors that go into the IRS determining where your permanent residence is/if it qualifies. It’s a good idea to consolidate as many things as possible to your permanent residence to show it’s legitimacy as not just your permanent residence, but also your tax home. These other factors/indications will be some of the criteria used to determine whether your permanent residence can count as your tax home (if you meet just two out of the three criteria we discussed above).

Some of these factors may include:

• Are at least some of your possessions currently or permanently at your permanent residence?
• Are you registered to vote in the town of your permanent residence (using the address of your permanent address)?
• Do you receive your tax documents and returns to your permanent residence?
• Are any of your family members (such as your spouse) living at your permanent residence?
• How long have you claimed this home as your permanent residence? Was it your permanent residence before you began travel nursing?
• How much time do you spend at your permanent residence?
• Is your car registered to your permanent residence?
• Is your “legal” address the same as your permanent residence?

Your agency may offer their own list of factors to consider when they ask you to sign an affidavit stating whether you believe you qualify for the untaxed housing stipend or not.

the 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. Many agencies extend this rule further by arguing that you cannot work in the same “area” for more than a year and still qualify for the untaxed stipend. This is another area where you need to check with your travel nurse agency and find out their specific rules and advice.

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

Read more about the “one year rule” here.

check out these resources for more information

• https://www.thegypsynurse.com/blog/what-really-is-a-tax-home/
• https://www.trustedhealth.com/blog/travel-nurse-tax-home-trusted-guides
• https://www.irs.gov/taxtopics/tc511
• https://www.irs.gov/pub/irs-pdf/p523.pdf
• https://universaltaxprofessionals.com/service/taxes-for-travel-nurses/
• https://www.travelnursing.org/travel-nurse-taxes-comprehensive-guide/
• https://www.irs.gov/pub/irs-pdf/p463.pdf
• https://blog.bluepipes.com/travel-nursing-pay-the-50-mile-myth-for-tax-free-stipends/

if you feel confused, don’t worry! you’re not alone