Tax-free stipends are one of the biggest financial perks of travel nursing. But there is a catch: if you don’t have a valid travel nurse tax home, that “tax-free” money could actually be taxable income waiting to trigger an audit.
The IRS rules for travel nurses are notorious for being complex. Myths about the “50-mile rule” and “sleeping in your car” circulate in breakrooms constantly, putting nurses at risk of a surprise tax bill.
Stop guessing. We worked with a Certified Public Accountant (CPA) to separate fact from fiction. Here is the definitive guide to understanding your tax home, the 12-month rule, and how to keep your hard-earned money safe.
What Are the IRS Travel Nurse Tax Home Guidelines?
The IRS defines your “tax home” as the general area where you work, not necessarily where your family lives. Think of it this way: it is usually the city or area where your job is based.
Travel nurse tax home rules differ slightly. Since you don’t have one permanent job location, your tax home is often the place you live between contracts. When you set this up correctly, it allows you to receive tax-free stipends and keep more of the money you earn.
IRS Travel Nurse Rules: Your Tax Home
If tax-free stipends are the goal, having a tax home is the key.
Because travel nurses don’t work in one office year-round, the IRS looks at whether you can show a true “home base.” That usually means proving you have a permanent place to live, that you pay real expenses there, and that you maintain strong ties to that town.
Get that right, and the stipends you receive for housing and meals while traveling generally won’t be taxed.
To qualify for tax-free stipends, you must duplicate your living expenses. This means you must pay fair market value rent (or a mortgage) at your permanent home base while paying for lodging at your travel assignment.
Travel Nurse Stipend Rules: IRS Requirements
To qualify for tax-free stipends, travel nurses generally need to meet three core requirements:
1. A Permanent Residence
You must maintain a real home in a specific location. This is your home base.
2. Duplicate Living Expenses
This is the biggest factor. You need to pay for two places at the same time, your home base and your assignment housing. That means paying rent or a mortgage at home, plus lodging where you’re working.
3. Strong Ties to Home
Documents like your driver’s license, voter registration, and car registration should all reflect your home base address.
Also, your assignments must be temporary. If a job is expected to last more than one year, the IRS travel stipend rules change completely.
Why Is It Important to Have an Established Tax Home?
We spoke with Josh Katz, a CPA from Universal Tax Professionals, who explained that your tax home is the deciding factor for how your stipends are treated.
If you want your stipends to be tax-free, you generally must be duplicating expenses. That means you are paying to maintain your main home—rent, mortgage, or property taxes—while also paying for housing at your assignment location.
If you are unsure where you fall, this is one of those situations where a quick conversation with a tax professional can save you a lot of money.
Is a Tax Home Important?
It really comes down to your goals.
If tax-free stipends matter to you, then yes, having a tax home is essential.
If you move from place to place without a home base, you will usually pay more in taxes. If you are working locally and going home every night, your stipends are generally taxed like regular income.
You aren’t required to have a tax home. But if you don’t, it is crucial to tell your agency so your pay is taxed correctly.
Can You Use Your Parents’ Home as Your Tax Home?
Yes, but this is an area where many nurses get tripped up.
You must pay your parents “fair market value” rent. Small payments or just “helping out” with groceries usually won’t meet IRS requirements.
To follow the rules, you need to pay real rent, similar to what a landlord would charge in that neighborhood, and keep proof of those payments.
Are There 50-Mile IRS Travel Nurse Rules for Tax Homes?
Despite how often you hear it, there is no official “50-mile rule” in the tax code.
What the IRS actually looks at is whether your job requires you to stay somewhere overnight to get proper sleep or rest. If the commute is too long for a normal workday and you need lodging, that supports the case for duplicated expenses.
Napping in your car doesn’t count. You must pay for actual lodging.
‘Sleep or Rest’ Test: Is your assignment far enough away that you require substantial sleep or rest before you can safely return home?” — Josh Katz, CPA, Universal Tax Professionals
Do I Still Get a Stipend If I Am a Local Travel Nurse?
If your assignment is close enough that you don’t need overnight housing, your stipend is usually considered taxable income.
This is an easy place to make a mistake. Treating taxable money as tax-free can lead to an unpleasant surprise when you file your return.
Do I Have to Pay State Taxes in All the States I Work In?
In most cases, yes.
You file one federal return with the IRS. But you likely also need to file state tax returns in each state where you worked.
Your home state return is usually filed as a “resident.” Other states are typically filed as “nonresident” returns. The good news is that many nurses receive a credit at home for taxes paid elsewhere.
Some states—like Texas, Florida, and Tennessee—don’t tax wages at all. Even so, rules vary, so it is always worth double-checking.
What If I Don’t Have a Tax Home or Permanent Residence?
If you travel continuously and don’t maintain a home base, the IRS may consider you an “itinerant.”
In that case, your tax home is generally wherever you are working that day. Since you aren’t duplicating expenses, stipends are usually taxable, and you may not qualify for resident tax credits in any state.
The IRS Travel Nurse One-Year Rule Explained
The travel nurse’s one-year rule, IRS guidelines are based on expectation, not just the calendar.
If you accept a job—or extend a contract—that you realistically expect to last longer than one year in the same location, the assignment becomes “indefinite.”
From the moment that expectation exists, that location becomes your new tax home. Stipends generally become taxable right away—not just after the 12th month passes.
Keeping Your Stipend Tax-Free
If you want to keep stipends tax-free, the rule is simple: maintain a home base and duplicate expenses.
Many tax professionals recommend returning home for approximately 30 days each year to demonstrate ongoing ties. The IRS doesn’t require a set number, but consistency matters.
Helpful proof can include rent or mortgage payments, active utilities, current licenses, and normal financial activity in your home area.
Tax Planning and Record-Keeping
Good records matter more than most people realize.
Most W-2 travel nurses can’t deduct unreimbursed work expenses on their federal return. That makes protecting your stipend treatment even more important.
Save contracts, receipts, and housing records. If questions ever come up, documentation makes everything easier. When in doubt, a tax professional can help you avoid costly mistakes.
Common Myths and Exceptions
- Myth: “I just need to be 50 miles away.”
- Reality: It is about whether you need overnight rest away from home.
- Myth: “Any payment to my parents counts.”
- Reality: Rent must be fair market value to qualify.
Avoiding Audits and Penalties
Staying organized goes a long way. Keep clear records, understand whether your assignments are temporary or indefinite, and ask for professional help when you are unsure.
Every State and Situation Is Different
This guide covers the basics, but no two tax situations are exactly the same. Tax laws change, and small details matter. Getting advice tailored to your specific life is always a smart move.
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FAQs: IRS Travel Nurse Tax Rules
How does the IRS define a tax home for travel nurses?
The IRS says a tax home is the general area of your main place of work. If you don’t have one main workplace, your tax home may be your permanent residence—as long as you pay to live there and keep strong ties to the area.
How do travel nurses qualify for tax-free stipends?
You may qualify when you work a temporary job away from your home base and pay for two places to live. That means paying rent or a mortgage at home and paying for housing at your assignment location.
What is the IRS 12-month rule for travel nurses?
If you expect to work in one location for more than one year, the assignment is considered “indefinite.” Your stipends generally become taxable from the moment that expectation exists—not after the year is over.
Can a travel nurse use a parent’s home as a tax home?
Yes, but you must pay fair market value rent. Informal arrangements or small payments don’t meet IRS requirements. Written agreements and proof of payment are strongly recommended.
How do travel nurses prove their tax home if they are audited?
Keep records showing you have a permanent residence and duplicate expenses. This includes lease or mortgage statements, utility bills, proof of legal ties, and records showing you return home between contracts.
Are travel nurse stipends always tax-free?
No. Stipends are only tax-free when the IRS travel nurse rules are met. Without a qualifying tax home, duplicated expenses, or a temporary assignment, stipends are generally taxable.
Do travel nurses have to pay state taxes in every state they work in?
You may need to file nonresident state tax returns in the states where you worked, along with a resident return in your home state. Some states don’t tax wages, but rules vary, so always review each state’s requirements.
