Travel nurse tax home rules

What the IRS means by a tax home

In IRS Publication 463, your tax home is generally your regular or main place of work, wherever you keep your family home. It covers the whole city or general area, not one building. For a staff nurse, that's simply the area around the hospital where they work.

Full-time travelers are different. If you work 13 weeks in one state and 13 in another, you may have no regular place of work at all. Then Publication 463 says your tax home can be the place where you regularly live, but only if it passes a three-factor test. If it doesn't, the IRS treats you as itinerant (Publication 463 also uses the word transient). Your tax home is wherever you happen to work, so you're never away from it, and travel allowances can't be paid tax-free.

The three-factor test

The test comes from IRS Revenue Ruling 73-529 and appears in Publication 463. It asks three questions:

1. Do you do part of your work near your main home, and stay in that home while you do? Picking up per diem shifts near home between contracts, or taking a local contract there, are common ways travelers meet this one.
2. Do you have living expenses at that home that you duplicate when work takes you away? Paying a mortgage or rent at home while you also pay rent on assignment is the typical example.
3. Have you kept your ties to the area? This one is met if you haven't left the area where you've historically lived and your main home is there, or a family member lives in the home, or you often stay there yourself.

How the answers add up:

• All three: the home where you regularly live is your tax home.
• Two: you may have a tax home, depending on all the facts and circumstances. The IRS looks closely at cases like this.
• One or none: you're itinerant, with no tax home to be away from.

Many full-time travelers never work near home, so they miss the first factor and land in the two-factor group. That's where records matter most, because the outcome depends on facts you can show.

Duplicated expenses: paying for two places

The second factor is the one people most often get wrong. You have to be paying real costs to keep up a home while you also pay for lodging on assignment: mortgage or rent, property tax, homeowner's or renter's insurance, utilities and upkeep.

• A mailing address isn't a home. A P.O. box, a mail-forwarding service, a storage unit or a relative's address on your license doesn't give you living expenses to duplicate.
• Living with family. If you stay with parents or other relatives between contracts, an informal arrangement may not be enough. Tax professionals who work with travelers usually suggest paying a fair rent under a written agreement, by a method that leaves a record.
• Renting your home out. If you rent your place to someone else while you travel, ask a tax professional how that affects your claim. It can make the home look less like the place you live.
• Giving up your home. If you move out of your apartment and pay nothing anywhere else, there's nothing to duplicate, even if you plan to settle in the same city later.

The one-year rule, and going back home

Work in one general area is temporary if it's realistically expected to last, and does last, a year or less. If it's realistically expected to last more than a year, it's indefinite from the start, whether or not it actually does, and that area becomes your tax home. If a contract starts out temporary and an extension makes it likely to run past a year, it stays temporary until the date that expectation changes.

The rule is about the area, not the hospital. Back-to-back contracts at two hospitals in the same metro area can add up to one long stretch of work there. Some tax preparers who work with travelers use a rule of thumb of no more than 12 months in one area within any 24 months. That guideline is common in the industry, but it isn't in the IRS text.

The same goes for trips home. You'll sometimes hear that travelers have to go back to their tax home every 30 days. Publication 463 sets no such schedule. What helps is the pattern: going back between contracts, staying in the home, and working nearby when you can all support the second and third factors. Keep proof of those trips.

If you don't have a tax home

You can still take travel contracts. What changes is the tax. Without a tax home, lodging and meal allowances don't qualify as tax-free travel reimbursements, so they should be paid as taxable wages. If an agency pays them tax-free anyway and the IRS later decides you had no tax home, you could owe the tax on those allowances, plus interest and possibly penalties.

Some agencies ask you to confirm in writing that you have a tax home before they pay a stipend tax-free. Answer honestly. If you don't have one, compare offers by total pay, since the split between hourly rate and stipend no longer saves you tax. A higher hourly rate also raises your overtime pay.

Deductions and state taxes

Under the 2017 Tax Cuts and Jobs Act, W-2 employees generally couldn't deduct unreimbursed job expenses on a federal return from 2018 through 2025. The One Big Beautiful Bill Act, signed in July 2025, made that permanent. So for a W-2 traveler, the federal benefit of a tax home comes through tax-free allowances the agency pays under an accountable plan, not through deducting your own rent, mileage or meals at tax time.

Independent contractors are different. If you work on a 1099, travel expenses away from your tax home are generally business expenses on Schedule C, under the same tax home rules.

State taxes follow their own rules. You'll generally owe tax to the states where you earn wages, if they have an income tax, and file a resident return in your home state, which usually gives credit for tax paid to other states. Some states also treat job expenses differently from the federal return.

Records to keep

• Your deed or lease at home, and statements showing you paid the mortgage or rent
• Utility bills, property tax and insurance for that home
• Each assignment contract with its dates and location, and pay stubs showing wages and allowances
• Leases and rent receipts for each place you stayed on assignment
• Proof of trips home, such as travel and fuel receipts, and pay stubs for any work you did there
• Ties to the area: driver's license, vehicle registration, voter registration and bank accounts at your home address
• A simple log of where you worked and where you slept each month

Keep records for at least three years after you file, which is the IRS's general window to review a return. It can be longer in some cases.

This is general information, not tax advice. Tax home questions turn on your own facts, and the IRS looks at them case by case. Read Publication 463 and talk to a tax professional who works with travel healthcare workers before you rely on a tax-free stipend. For how stipend amounts are set, see how housing stipends work and the stipend calculator.