As a travel nurse, you’re able to qualify for tax-free income, like reimbursements and stipends. However, to avoid being taxed on your stipend payments, you must have a “tax home.”
The IRS describes a tax home as, “the entire city or general area where your main place of business or work is located, regardless of where you maintain your family home.” To prove you have a tax home, you must satisfy at least two of these three requirements:
- You work and live in the area of your permanent residence some of the time
- You have duplicated expenses when you work somewhere away from your permanent residence
- You’re meaningfully connected to your residence and the community there
As a travel nurse, you’ll usually satisfy the second and third requirements. Unfortunately, if you only satisfy one factor, you won’t be able to deduct travel expenses. To avoid this, we’ve broken down how to successfully keep a tax home into 4 easy rules.
Travel Nurse Tax Home Rules
Here are 4 easy rules you can implement to help make sure you’re successfully keeping your tax home.
1. Duplicate your living expenses
Travel nurse contracts include weekly stipends, which are there to help cover living expenses like housing, travel, and meals. As long as you can prove you are duplicating these costs, they are considered tax-free. The most common example is paying for utilities/rent at your permanent residence while you’re also paying for some sort of housing while on assignment.
2. Rent a second home
Although some facilities may require you to be a certain distance, there is no mileage rule when it comes to tax laws. The IRS just requires you to travel far enough away from your primary residence that you actually need a second place for sleeping. So take advantage of that stipend and rent yourself a second home while on assignment.
3. Go back home
To satisfy tax home requirement number three, you should go back home for at least 30 days a year. This 30 day minimum can be spread out, so if you’d rather not spend a month back home, you can visit a few times in-between contracts. You can also prove your connection to your tax home by keeping your driver’s license, registration, insurance, and voter’s card there.
4. Keep traveling
Your tax home is where you have regular income. If you build regular income somewhere else (for approximately 12 months), that place will become your new tax home. This is called the 1-year rule. In order to deduct travel expenses, the IRS states that assignments in one location cannot last, or be expected to last, for more than one year. So keep traveling!
Taxes are challenging enough to navigate whether you’re a travel nurse or not. Make the process as painless as possible by following these 4 rules to retain your travel nurse tax home.
You can find more tax tips on our blog here
When filing, we recommend you use a trusted tax professional. When traveling, we recommend you use a trusted agency. Founded by nurses for nurses, Ethos Medical Staffing is here to care for you while you care for others. Visit www.ethosmedicalstaffing.com or contact us today!