Travel Nursing Without a Tax Home: What It Means for Your Taxes

Travel nursing offers flexibility, adventure, and competitive pay, but tax implications can be complex—especially without a tax home. A tax home determines whether stipends for housing, meals, and transportation are tax-free or taxable income. Nurses who do not meet the requirements for maintaining a tax home may face unexpected tax liabilities.

Criteria for a Tax Home

The IRS defines a tax home as a person’s primary place of business or employment, not necessarily where they live. For travel nurses, this is typically where they earn most of their income. If work is performed in multiple locations without a primary base, the IRS may determine that no tax home exists, leading to higher taxable income.

To establish a tax home, a nurse must meet at least one of three criteria:

– Maintain regular employment in a specific area.
– Incur substantial expenses to maintain a residence while working elsewhere.
– Demonstrate a pattern of returning to a primary location for work.

If none of these conditions are met, the IRS classifies the individual as an itinerant worker, making all income, including stipends, taxable.

A mailing address or driver’s license does not establish a tax home. The IRS looks at financial ties such as a mortgage or lease and whether the individual returns to that location for work.

Taxable Treatment of Stipends

Without a tax home, stipends for housing, meals, and incidentals are treated as taxable income rather than tax-free reimbursements. The IRS considers these payments additional wages, subject to federal income tax, Social Security, and Medicare taxes.

Since stipends make up a large portion of a travel nurse’s compensation, the tax impact can be significant. For example, if a nurse receives a $2,000 monthly housing stipend but lacks a tax home, that amount is added to taxable wages. Assuming a 22% combined federal and FICA tax rate, the nurse could owe an additional $440 in taxes each month, or $5,280 annually.

Employers typically do not withhold taxes on stipends, which can lead to an unexpected tax bill. Nurses in this situation may need to make estimated tax payments each quarter to avoid penalties. The IRS imposes underpayment penalties when taxes owed exceed $1,000 at year-end, calculated based on the federal short-term interest rate plus 3%. As of 2024, this rate fluctuates quarterly, making it important to stay updated.

Travel Expense Classifications

Without a tax home, travel-related expenses such as lodging, meals, and transportation are generally not deductible, as the IRS considers the nurse’s work location to be their primary residence.

Lodging

For nurses with a tax home, employer-provided housing stipends are tax-free. Without one, any housing allowance or reimbursement is taxable. Rent, hotel stays, or other lodging costs must be paid with after-tax dollars, increasing overall expenses.

If a nurse rents an apartment for $1,800 per month while on assignment, that amount is fully taxable if reimbursed by the employer. If the nurse pays out of pocket, there is no tax deduction available. The IRS allows deductions for temporary work assignments lasting less than one year, but without a tax home, the entire country is considered the nurse’s tax home, making these costs personal rather than business-related.

Meals

Meal stipends follow per diem rates set by the General Services Administration (GSA), which vary by location. Without a tax home, these stipends are taxable income.

The IRS allows a 50% deduction for business-related meal expenses, but this applies only to those with a qualifying tax home. Travel nurses classified as itinerant workers cannot deduct meal costs.

For instance, in 2024, the GSA per diem rate for meals in San Francisco is $79 per day. If a nurse receives this amount as a stipend but lacks a tax home, the full $79 is added to taxable income. Over a 13-week assignment, this totals $7,105 in additional taxable wages, potentially increasing tax liability by over $1,500, depending on the nurse’s tax bracket.

Transportation

Travel nurses often incur transportation costs, including airfare, rental cars, and mileage for personal vehicles. With a tax home, these expenses may be reimbursed tax-free or deducted if not reimbursed. Without one, transportation costs are generally not deductible, as the IRS considers them personal commuting expenses.

The IRS sets a standard mileage rate each year for business travel, which in 2024 is 67 cents per mile. However, without a tax home, mileage between assignments or to a new work location is not deductible.

For example, if a nurse drives 1,200 miles to a new assignment, the potential deduction at the 2024 rate would be $804. Without a tax home, this deduction is unavailable, meaning the nurse must cover the full cost out of pocket. Similarly, airfare and rental car expenses are not deductible unless directly related to a temporary business trip rather than a relocation for work.

Reporting Requirements

Accurate tax reporting is essential for travel nurses, as improper filings can lead to audits, penalties, and unexpected liabilities. Wages, including taxable stipends, must be correctly reported on a Form W-2, with all compensation subject to withholding for federal and state income taxes, as well as FICA taxes. Unlike tax-free reimbursements, which do not appear on a W-2, taxable stipends are included in Box 1 (Wages, Tips, Other Compensation), increasing reported earnings and potentially pushing a nurse into a higher tax bracket.

Self-employed travel nurses or those working as independent contractors face additional filing obligations. Instead of receiving a W-2, they receive a Form 1099-NEC, requiring them to track income and expenses independently. Since taxes are not withheld from 1099 income, estimated quarterly tax payments must be made using Form 1040-ES to avoid underpayment penalties. The IRS applies penalties when annual tax liability exceeds $1,000, calculated based on the underpayment amount and the federal short-term interest rate plus 3%.