Travel nurse tax home rules: what the IRS actually says

The short version

• Tax-free stipends only work if you're traveling away from your tax home on a temporary assignment.
• If you have no regular place of work, the IRS uses a three-factor test to decide whether the home you keep counts. Meet all three and it does.
• Stipends above the federal per diem rate for the work ZIP are taxable wages, even with a tax home.
• An assignment expected to last more than a year makes that city your new tax home.

What the IRS calls a tax home

“Generally, your tax home is your regular place of business or post of duty.” (IRS Publication 463, chapter 1)

It covers the whole city or general area of that work, not just the building. Travel nurses usually don't have one regular place of work, which is why the next test matters.

No main place of work: the three-factor test

When you don't have a regular or main place of work, Publication 463 says your tax home may be the home where you regularly live. It checks three factors:

1. You do part of your work in the area of your main home and use that home for lodging while working there.
2. Your living expenses at your main home are duplicated because your work keeps you away from it.
3. You haven't abandoned the area of your main home: family lives there, or you often use the home for lodging.

• All three: your tax home is the home where you regularly live.
• Two of three: you may have a tax home, depending on all the facts and circumstances.
• One or none: you're an itinerant. Your tax home is wherever you work, so you're never traveling away from home and can't receive tax-free travel stipends.

Practically, nurses keep records that line up with each factor, such as shifts worked near home, a lease or mortgage and utility bills showing the duplicated cost, and proof they regularly return. Publication 463 doesn't set a minimum distance from home; distance rules you hear about are usually agency policies, so ask yours.

How stipends are taxed

Agencies pay housing and meals as per diem allowances under an accountable plan. Under Publication 463, an allowance up to the federal rate for the location isn't taxable. If it's more than the federal rate, the excess goes into box 1 of your W-2 as wages.

The federal rate is the GSA per diem: a lodging rate (which can change by season) and a meals and incidentals (M&IE) rate for each area. That's why TravelNurseMap shows the “housing stipend ceiling” as the GSA lodging rate × 7. Check an offer against the ceiling for the work ZIP and your dates, or browse ceilings by state.

The one-year rule

A single-location assignment that's realistically expected to last one year or less is temporary, and your tax home doesn't move. If it's realistically expected to last more than a year, it's indefinite, even if it ends early. That location becomes your tax home, and living-expense payments there have to be included in income. Watch extensions: several back-to-back contracts at one hospital can change what's “realistically expected.”

Before you sign

• Ask the agency how they verify your tax home, and what happens to stipends if you don't have one.
• Confirm the stipends are at or under the GSA rate for the work ZIP and dates.
• Keep records for every factor, every year.
• For your situation, talk to a tax professional who works with travel clinicians.