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Travel nursing isn’t just about exploring new locations while earning an often-lucrative paycheck. It’s also a great opportunity to gain new experiences in different work settings around the nation. However, all this travel requires planning and a solid understanding of travel nurse residency rules.
Having a permanent place that you call home between assignments offers stability, comfort and a sense of belonging. It’s also tied to important financial considerations, primarily taxes. Before you hit the road on your first (or next) travel nursing contract, consider how where you live and work impacts your residency status.
Why Establishing Residency as a Travel Nurse Is Important
Your legal residency status determines your permanent tax home, how much you owe in taxes and to whom. It also determines whether you qualify for tax-free stipends, which can significantly impact your overall compensation as a travel nurse. However, your permanent home also determines many other vital personal aspects, including where you obtain your driver’s license and vote in elections.
It also impacts you professionally, primarily regarding your professional nurse licensure. Your primary state of residence (PSOR) is your permanent tax home, and your PSOR determines whether you live in an Enhanced Nurse Licensure Compact (eNLC) state or a non-Compact state. Living in a Compact state means you may qualify for a multistate nursing license, which makes it much easier to take travel contracts without the expense of additional licensing in the 39 states that have fully or partially implemented the eNLC as of August 2024.
RELATED: What Are the Nurse Licensure Compact States?
Travel Nurse Compensation and Residency
Travel nurse compensation packages can be complicated. In addition to a base nursing salary, they often include bonuses and stipends for housing, meals and incidental expenditures.
How does that relate to your residency? The stipends are tax-free if your travel nursing contracts are outside your tax home and you duplicate expenses between your permanent home and a temporary home you keep while on assignment. Tax-free income potentially reduces your taxable income significantly, which means you could fall into a lower tax bracket and/or pay less in taxes.
RELATED: Dollars and Sense: Travel Nurse Salaries Explained
What Is a Travel Nurse Tax Home?
While establishing residency occurs on multiple levels — state, county and city — for your tax home, we mean city or sometimes metro area. That’s because your tax home is usually the city or general area where you do most of your work, per Internal Revenue Service (IRS) rules. Most taxpayers primarily use tax homes to determine what activities count as business travel for deduction purposes. However, if you’re a travel nurse, your tax home determines your eligibility for tax-free stipends.
As mentioned, your tax home is usually tied to the location of your job, so it doesn’t necessarily have anything to do with where you live. For example, if a staff nurse lives in Lillian, Alabama, but works full-time in Pensacola, Florida, their tax home is Pensacola.
Things are a bit different for travel nurses because you may not have a regular place of business as you move around the nation for temporary work assignments. To account for this scenario, the IRS offers another way to determine a tax home called your “abode in a real and substantial sense” if you don’t have a regular place of business. In other words, if you’re a travel nurse, your tax home is likely where you live or your permanent residence—circling back to the importance of establishing residency.
Travel Nurse Residency Rules for Tax Homes
If you’re considering using your residence as a travel nursing tax home, the IRS uses the following three factors to determine whether it qualifies:
- You have duplicate living expenses: You must pay housing expenses at your permanent tax home and another home you stay at during your travel nursing contract. These expenses must be reasonable based on fair market value. In other words, you can’t claim your parents’ house as a tax home if you aren’t paying a fair amount for rent and utilities based on the local real estate market.
- You haven’t abandoned your tax home: To meet this requirement, you must frequently return to live at your main home in between contracts. You can also fulfill this factor if one or more family members live there.
- You perform part of your work near your tax home: Keep a per diem job and work a shift or two when you’re home or take a contract near your home each year and live there for the duration.
If you meet all three criteria, you can usually declare your permanent residence as a tax home without incident. You may still be able to claim it under certain circumstances if you only meet two of the three requirements, but if you meet only one criterion, the IRS considers you an itinerant worker without a tax home.
If you’re like many travel nurses, you’ll fulfill the first two criteria but not the third. Usually, this happens when you only take contracts away from home. That doesn’t mean your permanent residence won’t qualify as a tax home. However, the IRS may scrutinize the first two qualifications more closely.
RELATED: Understanding Travel Nursing Tax Rules
How Do You Declare a Tax Home?
You must complete and sign a declaration of your permanent tax home with your travel nursing agency before you start a contract. The process usually involves a single form. Signing the declaration enables the agency to structure your compensation package to include tax-free stipends.
Residency and Tax-Free Travel Nursing Stipends
You only qualify for tax-free stipends when your travel nursing contract takes you far enough away from your tax home that the distance requires an unreasonable commute and rest or sleep before returning to your permanent tax home. To meet this qualification, the contract must:
- Require additional housing: IRS rules state that your travel nursing contracts must be far enough from the “general area of your tax home” to require separate housing arrangements.
- Be a temporary assignment: The IRS considers the assignment temporary if you expect it to last less than 12 months. If you realistically (or definitely) know the assignment will last longer than a year, it’s typically not viewed as temporary. Keep this in mind when you know in advance that a facility will ask for multiple extensions on your contract.
Do You Need to Keep Receipts When Working Away from Your Tax Home?
Since tax-free stipends aren’t deductions you claim on your taxes, you don’t technically need to keep receipts for the housing expenses they reimburse. However, saving receipts is a smart way to protect yourself, and your employer may require them.
Sometimes, the IRS may audit a travel nurse staffing agency if it suspects the agency is inflating stipends to reduce its payroll taxes. The IRS caps tax-free stipends based on per diem reimbursement rates set for government employees by the United States General Service Administration (an independent agency that helps manage the basic functioning of federal agencies).
These per diem rates vary by location due to contractor-provided average daily rate data on the cost of local lodging. For example, if you need travel nurse housing in New York for a temporary contract, you’d likely get a larger stipend than you would in Omaha, where costs are much lower than in the Big Apple.
If the IRS finds that your housing stipend is significantly higher than your actual expenses, you may need to pay income taxes on the excess amount. Receipts make it easier to prove your costs and minimize liability. Accurate financial records also help you prove that you’re incurring housing expenses at your tax home and the location of a nursing contract. Either way, you’re prepared to present your case if the IRS questions your tax-free stipends.
RELATED: How Travel Nurse Housing Stipends Work
Do Travel Nurses Need a Permanent Residence?
Travel nurses don’t need a permanent residence, but there are advantages to having one. If you don’t have a permanent residence or a primary place of work that qualifies as a tax home, you’re an itinerant worker in the eyes of the IRS. In this scenario, your tax home is where you spend the most time working. Since you don’t have a primary residence or duplicate housing expenses, you won’t qualify for tax-free stipends—a significant financial drawback.
Travel nursing agencies may structure your pay differently when you’re itinerant. Any reimbursement for housing expenses gets taxed as income along with your base salary. Some agencies simply increase your base salary and eliminate stipends to simplify the filing process. Regardless, the increased taxable income will likely put you in a higher tax bracket, which means you might pay more in income taxes.
Advantages of Declaring a Tax Home
Income tax implications motivate many travel nursing professionals to declare a tax home. Using the IRS Tax Withholding Estimator, let’s look at two simplified scenarios in which you filed as single without any dependents or additional deductions:
- Scenario 1: You declare a tax home and take a travel nursing contract with a $30,000 base salary and $15,000 in tax-free stipends. Because you don’t include your stipends as income, you pay $1,619 in federal income taxes.
- Scenario 2: You’re an itinerant worker without a permanent residence/tax home and take a travel nursing contract paying a $45,000 base salary. Since you don’t qualify for tax-free stipends, you pay taxes on the entire amount, creating a tax liability of $3,419.
In both scenarios, your total income is $45,000. However, your taxes are cut in half when you qualify for tax-free stipends. Of course, this example doesn’t account for real-life equations, including dependents, deductions, credits and additional income that change your tax liability. However, it gives you a general idea of how large the difference could be.
Travel Nurse Residency and State Taxes
States levy state income taxes separately, but your residency still plays a role. Travel nurses pay state income taxes where they permanently reside if that state collects earned income taxes (as of August 2024, nine states didn’t levy taxes on earned income—Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming).
Depending on the work state’s residency rules, they might also owe taxes in each state where they worked throughout the year. State tax rules can be complicated, so check the laws carefully to determine your filing requirements.
For example, some states require you to file a return as a part-year resident if you worked there for more than 180 days of the year. To ensure you’re not being taxed twice on the same income, you may qualify for a credit based on the taxes you paid to the work state on your home state tax return.
However, if your home state doesn’t collect income taxes, you will likely owe taxes in the work state and vice versa. The only way to get out of paying state taxes is if both your home state and work state don’t levy earned income taxes.
Lean on an Experienced Tax Professional
As a travel nurse, your permanent and temporary residences can greatly impact your tax bill at the end of the year. Before accepting a travel contract, talk to a tax professional familiar with travel nurse taxes to determine the best course of action.
An experienced tax professional can make your tax filing easier. Consider Intuit TurboTax, where you can choose self-service, assisted or full-service options, or Liberty Tax for in-person, remote or online filing options. If you’re comfortable filing your own taxes with a little guidance, consider FreeTax to E-File quickly and easily.
Read our guide to Understanding Travel Nursing Tax Rules for some of the latest updates and changes to tax laws based on conversations with tax pros in the know. When you’re ready to hit the road, check out Vivian’s travel nursing jobs to find the best opportunities in your desired location around the nation.
Tax Disclaimer: The information contained herein is general in nature and based on tax laws that are subject to change. Although some details came from a tax professional we spoke with for another tax-related post, 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 pertaining to their specific situations.
Disclosure: If you click on the included links, we may receive compensation.
This post was originally published in September 2021 and updated in August 2024.
My husband is a travel nurse. We live in SC, but he worked about 6 months in NY. For SC, is he a part time resident of SC? Trying to do state taxes
Hello Nancy and thanks for reaching out! State tax laws vary. Some states may require him to file as a part-year resident, but he doesn’t want to do anything incorrectly that could impact his untaxed housing stipends (if he receives those). We suggest you speak with a tax professional familiar with travel nurse taxes to ensure you file your federal and state tax returns correctly. Taxes for travelers are very complicated, and a tax expert familiar with all the various tax rules can help ensure you get the full refund you deserve while also helping you avoid tax penalties for misfiling.
Hello! I live in Los Angeles and work as a travel nurse in San Diego. After 4 contracts(3months/contract), can i still take travel assignments in San Francisco and still receive tax free stipends and not get in trouble with the IRS?
Hello and thanks for reaching out! The two locations are far apart but in the same state, so not sure how that might factor into the situation. How much time you spent at your permanent tax home in between assignments can also be a big factor. We suggest discussing it with a tax professional familiar with travel nursing tax rules to ensure you’re following current IRS tax rules.
I am a local traveler but farther than 50 miles from my home address and have been commuting into my contract without duplicating rents (I do own my permanent residence and pay to maintain and a mortgage on that). My agency has considered me eligible for the tax-free stipend, now I am seeing that I might not qualify? When I go to do my taxes should I expect to pay taxes on this stipend? For reference I started traveling recently August 2023 and have not had to do a round of taxes since starting. I am just learning of all this now and want to square things up now! Reaching out to my tax expert as well to help me file.
Hello Kaitlyn and thanks for reaching out! One of the listed items you must do to qualify for tax-free stipends per the IRS is duplicate expenses at both your permanent address and your temporary work address. Since you’re not paying rent at your work address, you wouldn’t qualify for tax-free compensation meant to cover living expenses. We strongly encourage you to discuss this with a tax professional who is an expert in taxes for traveling healthcare professionals to get back on track and avoid any large, unexpected tax bills. Our travel tax blog might also provide some insights: https://www.vivian.com/community/money-taxes/understanding-travel-nursing-tax-rules/. We wish you the best of luck in your travel career and hope Vivian can help with any future job hunts!
Hi. I’ve been in my current city since November of last year. By the end of my current contract, I’ll be well over the 12 months. During this time, I worked a travel contract(with tax free stipends) for 6 months, then 5 weeks unemployed(I went to tax home for a portion), then about 3 months I worked per diem(fully taxed, normal pay), now I’m on a new travel contract(with tax free stipends). I’ll be here 13 months in total. Is the unemployment break or the 3 months working fully taxed not included in the count towards my “time spent” in this city in some way? I really hope it isn’t. Or did I have it right the first time when I thought being physically present, living and working regarding of tax or untaxed the only things that matters and my entire 13 months count towards the 12/24 months rule?
Hello Jackie and thanks for reaching out! Travel nurse/healthcare professional taxes can get very complicated and IRS regulations frequently change. We speak with tax experts to get the basic rules to share, but Vivian doesn’t employ a professional tax preparer. We suggest you talk to a tax professional familiar with travel tax rules to ensure you’re following current IRS regulations and help prevent any surprise tax bills.
Hello, thank you for this article! I was wondering if these rules applies to other travel professions. I am not a travel nurse, but I just started my first assignment as a travel pharmacy technician. Several of my travel coworkers has worked a year, took off a month, and came back for another year. I was planning to do the same until I came across this information about 12 months in a 24 month rollover period. Your answer is most appreciate, thanks!
Hello Earl and thanks for reaching out! IRS rules would apply to any travel healthcare professional. We suggest speaking with a tax professional familiar with the current tax rules for travelers to ensure you’re following the most recent IRS regulations to avoid any surprise tax bills. We wish you the best of luck with your travel career and hope Vivian can help with future travel assignments!
What do I do if I’ve been traveling for 2 years and wasn’t aware of any of this? How do I go about the situation?
Hello Luna and thanks for reaching out. Are you saying you’ve been traveling for 2 years without establishing a permanent tax home? If you haven’t been duplicating bills for a permanent tax home, then you won’t qualify for tax-free stipends. If you’ve been receiving tax-free stipends without a permanent tax home, you could have a serious tax issue. We recommend you speak to a tax professional familiar with travel healthcare wages to explore all your options and get back on track.
If you take a contract and have a residence far off but, you reach your 12 month limit and you find another contract in the same state but about 2 hours away from the first place of employment can you take the other assignment and not be subject to the rule or do you have to leave the entire state?
Hello Betty and thanks for reaching out! It’s difficult to say without knowing the location in which you’ve been working and the new location you plan on working in next. The IRS can consider a substantial areas as the same location. For example, an entire metro area can be considered the same location, and some metros are quite vast. If you could comfortably commute from your current job to your new job, it might be considered the same area. Two hours could be considered a comfortable commute. If it’s considered the same area, you could go over your 12-month limit and lose your tax-free stipends. We suggest speaking to a tax professional familiar with travel healthcare tax rules to ensure you’re following current IRS regulations to avoid a surprise tax bill.
Hi there, I am coming up on a year on at a facility. I’d like to take another contract in the same state or area. My recruiter says that I have to leave for 30 days other sources say I have to leave for 24 months. What is correct?
Hello Keisha and thanks for reaching out! Based on what we were told by a couple of tax experts for our Understanding Travel Nursing Tax Rules blog post found here: https://www.vivian.com/community/money-taxes/understanding-travel-nursing-tax-rules/, the general rule is no more than 12 months in a rolling 24-month period. So, if you’ve worked there for 12 months, you’d need to leave for 12 months to comply with the 24-month period. However, we always suggest speaking with a tax professional familiar with current tax rules for travel healthcare professionals to ensure you’re following the most recent IRS regulations as they can change.
If your traveling in the same state that is your tax home but do it far enough away to where you get the stipend does the 12 month rule still apply?
Hello Ashley and thanks for reaching out! Yes, if you’re receiving tax-free stipends, the 12-month rule would still apply. You would need to move to a different area, which might mean a different metro area or state to continue receiving tax-free stipends. We suggest speaking with a tax professional who understands travel HCP tax rules to ensure you’re following current IRS guidelines and don’t end up with a surprise tax bill.
Hello, I have been taking 13 week contracts at the hospital in TX that I am at now for almost a year. I go home to FL often and for a couple weeks at a time in-between contracts. They want me to sign on again, but that would put me over the 1 year mark. I’m duplicating expenses and home for more than 30 days out of the year. Since the contracts are broken up into 13 weeks would I have to leave the metropolitan area for a year still?
Hello Kevin and thanks for reaching out! We always recommend talking with a tax expert familiar with travel healthcare rules to ensure you’re following current IRS tax rules. According to the tax professionals we spoke to while creating our Understanding Travel Nurse Tax Rules post here: https://www.vivian.com/community/money-taxes/understanding-travel-nursing-tax-rules/, you only qualify for tax-free stipends for temporary assignments that last for less than one year. They go on to say that there’s a general rule about staying in the same location for no more than 12 months out a rolling 24-month period, even if the 12 months isn’t consecutive. Thus, it won’t matter that the contracts are separate or that you briefly leave before returning, if all the work occurs at the same location.
If you stay at a facility longer than 12 months, can you still receive stipend if it is taxed?
Hello Josh and thanks for reaching out! If you’re receiving a fully taxed salary, then it doesn’t matter how long you stay in one place. However, you could lose your permanent tax home if you have one. This means you would pay state income taxes to the state in which you’re working instead of the state in which you live permanently (if applicable). It’s also possible that if you become a resident where you’re working, the facility may consider you a local traveler, which could lower your pay. We suggest speaking to a tax professional familiar with tax rules for travel healthcare professionals to ensure you understand all the implications involved.
Hello Moira, I wanted to follow up on Josh’s question and your response. If someone works as a travel nurse and is completing a year where they duplicated expenses and received tax free stipends, can they then work as a local contract/Agency nurse or staff nurse without violating the 12 month rule/potentially owing taxes on the tax free stipends received previously? However, they may still lose their tax home, correct?
And will this still be true if they were still considered and worked as a Travel Nurse after the the 12 months but the stipends are taxed?
Hello Kyle and thanks for reaching out! If you had a permanent tax home and can prove you duplicated your expenses during the 12-month period, you shouldn’t owe taxes on your previously earned tax-free stipends UNLESS you knew from the beginning that you would remain in the same location for longer than 12 months. If you realistically expected to work in the same location for more than one year, the assignment typically isn’t considered temporary, and those stipends may be considered taxable income. If you continue to work in the same place beyond 12 months, you’ll likely lose your tax home no matter what type of position you take. However, travel taxes are really complicated and open to interpretation because they’re not clearly spelled out by the IRS. We always suggest talking to a tax professional familiar with the unique tax situation of a traveler to ensure you follow current IRS tax rules. After speaking with a tax professional, we recently updated our travel nursing tax blog, which might provide a bit more guidance: https://www.vivian.com/community/money-taxes/understanding-travel-nursing-tax-rules/. But we still encourage you to talk to a tax pro who can guide you based on your specific situation.