What happens if you break the travel nurse one year rule?
If you work in the same location for too long, you could lose your tax-free stipend, decreasing the money you get to keep in your pocket. This is because if you stay in one place for longer than a year, the IRS could assume you’ve moved there and tax you on both your permanent location and temporary work assignment locations.
Additionally, if your tax home status shifts, you may have to pay taxes on all the tax-free reimbursements and stipends you received during the time you were in that area. That’s a large, unexpected expense you probably don’t want.
Staying in one place for too long could mean you will lose your stipends and increase your taxes. You also must make sure the income you make in one location doesn’t make up the majority of your total income to keep your tax benefits and home from changing. These rules can still be a little vague, so here's a breakdown for some situations you may run into as a traveler.
How long can a travel nurse stay at the same hospital?
Generally, a travel nurse should not remain in the same hospital, or in the same city or general area, for more than a year at a time.
You should also make sure that no single hospital becomes your main source of income over this time, or you risk the hospital’s city becoming your tax home.
How long can a travel nurse stay in one city?
Again, you should not work more than 12 months in the same city. Some travelers think they can work in the same city for longer than 12 months if they change hospitals during that time. This is incorrect: your tax home will still shift to that city. You also still want to ensure that no one city becomes the major source of income over this period.
How long can a travel nurse stay in one area?
This question is a bit more difficult, because the definition of “area” from the IRS is limited.
Let’s say you work at two different hospitals that are 50 miles apart repeatedly over a 24-month period. These hospitals are probably not considered the same city or even the same metropolitan area.
However, if you lived in between the two hospitals, your 25-mile commute might be reasonable. You wouldn’t have to stay overnight in either city, meaning you don’t need to duplicate expenses, and your tax home could now shift.
For this reason, it’s good to still follow the 12-month rule for working in the same area (think reasonable commutes) and make sure no area becomes the leading source of your income in this time.
How long can a travel nurse stay in one state?
On the other hand, a travel nurse could stay in one state longer than 12 months, if they worked in different areas within that state enough that they never spent more than 12 months in one area.
Remember, you must still meet the other requirements for maintaining a tax home.
How long does a travel nurse have to work somewhere else before they can return to the same place?
How long you must leave an area before you can return to work depends on three things:
- How long you have already worked there
- How long you plan to work there when you return
- The percentage of annual income that area will account for
Here's an example: a travel nurse works somewhere for 11 months and then leaves to work in a different area for one month. It might seem like they could immediately return to the first area after that month. Unfortunately, there isn’t a clear rule that says a 30-day break is sufficient.
As a travel nurse, if you want to continue receiving tax-free stipends, you should continue to move around to different areas and ensure most of your income is not coming from one location for too long.
At the end of the day, healthcare travelers must move around to different locations on a regular basis to keep their tax home and tax-free stipends. That doesn’t mean you can’t extend a travel nursing assignment with a travel nurse agency that you love, but with all the great travel nurse jobs available, you might have a hard time staying in one place during your travel nursing journey!