Are you curious about travel nursing residency rules and regulations? We understand that deciphering these rules, especially when it comes to travel nurse tax tips, can be a daunting task — that’s why we created a guide to the ins-and-outs of residency as it relates to travel nurses.
We'll help equip you with all the information that you need to make informed decisions about your prospective job and the travel nurse pay package that comes with it.
- Travel nurse residency rules
- What are travel nurse housing stipends?
- Tax homes for travel nurses
- How long can a travel nurse stay in one place?
- What is the travel nursing 12-month rule?
- What is the 50-mile rule for travel nursing?
- Are there state residency rules for travel nurses?
Travel Nurse Rules for Residency: What You Need To Know
Travel nurse residency rules
Before we get into what you're going to need to qualify for tax-free stipends on your travel nursing contracts, keep in mind that we're a platform for healthcare professionals, not tax professionals.
These travel nursing tips are a good starting place, but you'll want to talk to a professional tax advisor before you file this tax season to make sure that they give you the tax advice and rules that makes most sense for your specific situation.
Travel nursing is a unique kind of career with plenty of benefits, but some unique challenges when it comes to work related expenses and how to pay taxes. These tax rules and how they affect your compensation packages may differ but pertain to the duration of stay in each place you travel, as well as the income tax implications that come with it.
The stipend payments that make up part of your compensation package are held to some specific rules about where and how long you can stay in a certain place as a travel nurse. We'll break it down for you.
What are travel nurse housing stipends?
A housing stipend is a tax-free stipend provided by a staffing agency to their travel nurses to cover the cost of housing while on assignment.
This lets you choose where you want to live on assignment, maximizes the amount of money you'll take home by maintaining a low taxable income, and is one of the reasons that travel nursing comes with tax advantages, even for assignments with a more modest base pay.
Tax homes for travel nurses
As a travel nurse, your tax home impacts your financial situation. Understanding the tax home and housing requirements for travel nurses is essential to maintain your tax home status, which is how you qualify for receiving tax-free stipends on travel nursing assignments and contracts.
What is a tax home?
Your tax home is the primary location where you conduct your business and earn your income. It can also affect income taxes and your eligibility for travel nurse tax deductions.
If you don't have a tax home, there is no way to prove that you have a need to duplicate expenses, which is why a travel nurse is eligible for stipends.
Having a tax home doesn't mean you have to buy your own house, either, although there are plenty of ways for a travel nurse to quit paying rent and switch to a mortgage! Housing expenses are housing expenses, no matter who technically owns your house.
What are travel nursing rules for tax homes?
You need to meet two out of the three following items to prove that you have a tax home, even if you have a permanent residence:
- Do you ever live and/or work in the area of your permanent residence?
- Do you have travel and living expenses that must be duplicated when you are traveling for business and away from that home?
- Do you have any connection to the area, like family, friends, or other community ties?
You can also show your voter registration, pay state income taxes and federal income taxes with that address listed, a driver's license with the same address, if you have a car registered there, and having mortgage or rent payments at the same place.
Making sure that you're paying fair market value for this permanent primary residence is important, too. It's all about whether or not you are duplicating expenses.
How long can a travel nurse stay in one place?
The IRS tax rules for travel nurses say, "Any work assignment in excess of one year is considered indefinite," which disqualifies you from tax-free stipends.
What is the travel nursing 12-month rule?
The general rule of thumb is you can’t work in one place for more than 12 months in any given 24-month period. This is also referred to as the travel nurse one year rule, or 12-month rule.
You'll also want to make sure that no one place becomes the majority of your income, but that shouldn't be a problem if you keep moving to a new travel nursing position after your last one ends.
What happens if a travel nurse stays somewhere more than a year?
If a travel nurse stays in the same location for more than 52 weeks, their tax home will change to reflect that new area.
Don't try to get around this by trying out different facilities around the metro, either - the IRS can consider the same metropolitan area or an entire city your "tax home."
And if your taxable annual income is all coming from your tax home, you won't be eligible for tax-free stipends any longer.
What is the 50-mile rule for travel nursing?
Traveling healthcare professionals often hear that in order to keep receiving non taxed stipends, all they need to do is work 50 miles from their permanent tax home. That's not exactly true.
While it's a good guideline, there is no official 50-mile rule for travel nurses. The only thing the IRS guidelines for travel nurses cares about is that your travel nursing assignments far enough away that you need to "sleep or rest to meet the demands of your work while away from home."
Again, the tax-free basis depends on whether or not your travel expenses are duplicated.
50-mile rule travel nursing example
The biggest reason the 50-mile rule isn't always true when you're working with a travel nursing agency is that the difference in the size and population of a city, as well as its ease of transit, can greatly impact the time each of those miles takes to travel.
Imagine driving 50 miles away from your family home through the heart of South Dakota. Now imagine doing the same thing through Los Angeles. Although not ideal, a 50-mile commute in a more rural area could be doable, and you could possibly avoid most travel related expenses.
Is the 50-mile travel rule ever true?
Some specific cases do actually use a 50-mile rule to qualify for tax-free stipends, but these tax rules don't apply to travel nurses.
Some agencies and facilities may also have an internal 50-mile rule for ease of compliance and to mark a difference between travel nurses and per diem nurses.
Are there state residency rules for travel nurses?
There aren't specific rules regarding your travel nurse tax home status state by state, but you will need to make sure that you are paying state taxes correctly. Filing taxes as a travel nurse means that you need to pay attention to what income tax looks like in each separate state you're practicing in.
Travel nurse taxes aren't the easiest thing in the world to navigate, but you've got this! Make sure to talk to a tax professional before you start to pay taxes each year, keep your tax home/permanent residence within the guidelines, and you'll find that your compensation package gets a nice little boost when you receive a tax-free stipend or reimbursements and stipend.