Getting past the 1 year IRS rule

  1. As we travel nurses *should* know, one of the main benefits of Travel Nursing is the ability to choose non-taxed travel stipends. We should also know that these stipends are dependent on our status as temporary employees and the good old IRS only considers us temporary if we have been at our location for less than a year. Some travel nurses take a 30 day break and resume work at the same facility after twelve months to continue receiving stipends. I have recently been at a facility more than 12 continuous months as a traveler and I have two agencies giving me two different scenarios (like that has never happened before).

    Agency #1 states I have to take my next assignment at least 50 miles outside of the city where I have completed my past 12 months of work...starting in a new location will allow me to receive the tax-free stipends...or take 30 days off...without pay.

    Agency #2 states I can resume work at the same facility I have worked over a year...but with a different agency. Starting a contract with a new employer, even at the same location, will allow me to continue to receive non-taxable stipends as a temporary employee for a new agency...according to Agency #2.

    Agency #1 disagrees with the logic of Agency #2...and of course, they want to retain my employment, so they are not unbiased.

    Agency #2 wants to regain my business from Agency #1, so they may not be unbiased.

    Anyone been in this situation before and care to weigh in on this topic?

    Thanks in advance.
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  2. 4 Comments

  3. by   Argo
    Actually neither are right. You have to go to a different county/gsa area. If you have been there less than 11 months you can do 30 days off. If you have exceeded 11 months you have to take 90 days off. You can work up to 12 months then work in the next County over. If you exceed 12 months you will be liable for taxes for the entire year. People push the rules but I stick to them, I can't afford to pay a year's taxes after an audit.

    Don't take my word for it though, ask a cpa or tax attorney. Don't rely on your company to tell you what is right. You could also just read the gsa guidelines.
  4. by   NedRN
    I agree, both agencies are wrong. They have their own policies that protect them from the IRS but in no way do their internal policies protect travelers if audited. My own perspective is harsher than Argo's, but guaranteed to win in an audit (at least if you are maintaining a tax home).

    Picture a yardstick with each inch representing a calendar month. Now picture all months arranged liberally. Slide the yardstick along all months. If at any point, the yardstick covers beginning and end at the same location, that is your new tax home.

    One agency was partly right in that taking a new assignment far away (not so close that a commute might be a reasonable option), you can take tax free stipends again. But only if you establish a residence at your new tax home. Your original tax home is now lost.
  5. by   josbarRN
    Thanks, I appreciate having the truth.
  6. by   NedRN
    Wow, I totally blew the tax home description above. Surprised no one said, hey what? Here it is again, corrected.

    Picture a one foot ruler with each inch representing a calendar month. Now picture all months arranged horizontally on the same one inch per month scale. Slide the ruler along all months. If at any point, the yardstick covers beginning and end at the same location, that is your new tax home.

    Some exceptions here. Do one three month assignment, and 6 months later do a second assignment at the same location. That breaks the rule above, but if you go somewhere else at the end of that assignment, the rule is met again. I can't imagine the IRS ruling against that.

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