How Do Travel Nurses File Their Taxes?

Travel nurses navigate a distinct financial landscape that presents unique tax considerations. Their profession involves diverse income streams and a range of expenses, which differ significantly from traditional employment. Understanding these nuances is important for accurate tax filing and compliance with federal and state regulations.

Understanding Travel Nurse Income

Travel nurses receive income through various channels, each with specific tax implications. Income is often reported on a Form W-2, reflecting their base hourly wage and any overtime pay. This income is taxable and subject to federal, state, and local taxes.

Travel nurse compensation often includes non-taxable stipends or per diems. These stipends cover expenses like housing, meals, and incidental costs incurred while working away from their established tax home. For stipends to remain non-taxable, a travel nurse must maintain a “tax home” and their assignments must be temporary, generally under one year in a single location.

The IRS defines a tax home as the main place of business or work, regardless of where a taxpayer maintains their family home. For travel nurses, this is usually their permanent residence, provided they incur expenses to maintain it while on assignment. Establishing a tax home requires proving duplicated living expenses at both the tax home and temporary work location. If a travel nurse does not qualify for a tax home, or an assignment extends beyond the temporary period (generally 12 months in one location), stipends for housing, meals, and incidentals become taxable income.

Beyond base pay and stipends, travel nurses may also receive other forms of compensation such as sign-on bonuses, completion bonuses, or taxable reimbursements. These are generally taxable income. Agencies typically structure pay packages with modest base pay alongside stipends, allowing a portion to be non-taxable if IRS rules are followed. Travel nurses should carefully review their pay stubs and year-end statements to identify and categorize all income sources, ensuring accurate reporting.

Deductible Expenses for Travel Nurses

Travel nurses may deduct ordinary and necessary work-related expenses. Federal tax law changes eliminated many unreimbursed employee business expense deductions for W-2 employees. However, some states still allow these deductions on state income tax returns.

Professional expenses can reduce taxable income. These include costs for professional licenses in different states, certification fees, and continuing education to maintain or upgrade nursing qualifications. Membership fees for professional nursing organizations and malpractice insurance premiums are also deductible. Uniforms, scrubs, and necessary medical equipment (e.g., stethoscopes, nursing shoes) are deductible if not reimbursed by an employer.

Travel-related expenses are deductible if not covered by non-taxable stipends or if stipends become fully taxable. This includes mileage to and from assignments, airfare, or other public transportation. Lodging costs are also deductible if not covered by a non-taxable stipend. When claiming deductions, differentiate between expenses reimbursed by the agency and those paid out-of-pocket, as you cannot deduct expenses already tax-free reimbursed.

Meticulous record-keeping is important for substantiating deductions. Travel nurses should retain receipts for all expenses, maintain detailed mileage logs, and keep records of their contracts and pay breakdowns. This documentation is important for accurately preparing tax returns and providing proof in an audit.

State Tax Considerations

Multi-state work makes navigating state tax obligations significant for travel nurses. The concepts of “domicile” and “physical presence” are central to determining state residency. Your domicile is generally your permanent home, the place you intend to return to. Physical presence refers to time spent in a state.

Travel nurses often file multiple state tax returns. This often includes a resident tax return for their home state (domicile) and non-resident tax returns for every state where they earned income. Income earned within a state’s borders is generally subject to that state’s tax laws. Some states may also require a part-year resident return if residency was established for only a portion of the year.

Most states offer a tax credit for taxes paid to other states to prevent double taxation. This credit reduces home state tax liability by the income tax paid to another state on the same income. However, the credit is usually limited to the tax that would have been owed on that income in the home state.

Consider states without a state income tax. As of 2025, these include:
Alaska
Florida
Nevada
New Hampshire
South Dakota
Tennessee
Texas
Washington
Wyoming

Wages earned in these states are not subject to state income tax, simplifying filing, though federal income tax still applies. Some states have reciprocity agreements, meaning residents working in one state but living in another may only pay income taxes in their state of residence. These agreements simplify filing and prevent double taxation.

Preparing and Filing Your Tax Return

Preparing and filing a tax return begins with gathering all necessary financial documents. This includes W-2 forms from each staffing agency, reporting taxable wages and withholdings. If classified as an independent contractor, Form 1099-NECs will be issued. Detailed breakdowns of stipends are also important, particularly to distinguish between taxable and non-taxable portions. Organized records of deductible expenses, including receipts, mileage logs, and other supporting documentation, are crucial for accurate reporting.

Once documents are compiled, travel nurses have options for filing their tax returns. Many use commercial tax preparation software. These programs guide users through the filing process and handle multi-state filings, though some may require additional fees for state returns. Alternatively, hiring a qualified tax professional (e.g., a Certified Public Accountant (CPA) or an Enrolled Agent (EA)) can be beneficial, especially given the complexities of multi-state income and unique deductions. An experienced tax professional can offer specialized guidance and help maximize legitimate deductions.

Regardless of the chosen method, accurately inputting information from income statements and expense records is paramount. The federal income tax return deadline is April 15th annually, unless this date falls on a weekend or holiday. If more time is needed, an automatic six-month extension can be requested by filing Form 4868 with the IRS by the April deadline. An extension to file is not an extension to pay; any estimated tax owed must still be paid by the original April deadline to avoid penalties and interest. After filing, retain copies of completed tax returns and all supporting documents for at least three years.