Stipends? Taxes? IRS?

NedRN · Sep 2, 2018

If you are traveling away from home on business (which is what most travel nurses do), the IRS allows you to deduct expenses on your tax return. Think salesman flying into some city for a couple of days. He can deduct travel costs, meals (at 50%), and lodging. Alternatively, your employer (the travel company) can "reimburse" you for these expenses based on standard amounts the federal government provides. These are stipends, and can be used as you see fit without paying income taxes on them, state or federal.

If you do not maintain a permanent residence, you are itinerant (without a home). Thus everywhere you work is home and all compensation is taxable. If you maintain a home, but work in the same general area away from home for more than one year, IRS rules say this is your new tax home and again, all your income is taxable. There is no reason at this point why you should have a tax benefit over local residents. You live there and receive all your income there. You can still have a permanent home somewhere else, but it is now a second home for tax purposes.

You can read much much more about this topic on PanTravelers or TravelTax. Above is a very simple description but there is a lot more. Good to be knowledgeable about this topic before you start traveling as a mistake can prove costly and agencies will say anything to get you contracted (like just use your Grandma's address and we can pay you tax free). A good bit of the financial advantage of travel nursing depends on these tax free stipends.

ArvinC EMT, ADN, BSN, RN · Sep 2, 2018

I am thinking about it, and have been researching I kind of understands at 80 percent best now. Do you think it is really worth it? Cause afcoridng to the IRS I have to make most of my money in my permanent home. For example 5 months travel 7 months at permanent home area. Or am I wrong?

NedRN · Sep 2, 2018

You are wrong. I've never worked in my tax home.

Ms_Interpret · Sep 2, 2018

My first piece of advice when considering the financial implications of travel nursing is to choose your agency and your recruiter very carefully. Do your research into the business of travel nursing in general, research the travel companies you are considering extensively (especially as it pertains to any past or present lawsuits, wage recharacterization, and overall business practices), and research any recruiters you talk to. PM me if you would like resources to that end.

And as for tax deductions, federal policy enacted this year (2018) has done away with the ability to itemize and deduct unreimbursed business expenses. The current legislature is scheduled to remain in effect until 2025.

Ms_Interpret · Sep 3, 2018

If you are traveling away from home on business (which is what most travel nurses do), the IRS allows you to deduct expenses on your tax return. Think salesman flying into some city for a couple of days. He can deduct travel costs, meals (at 50%), and lodging.

Not anymore. No more deductions for these expenses. At least not until 2025 as it stands now.

NedRN · Sep 3, 2018

True, but still a good analogy to explain the basic principles. Companies are still allowed to reimburse business expenses. Very few travelers ever itemized expenses as company reimbursements were far better. It is the 1099 employees mostly that suffer from the rule change and there are other mechanisms to benefit most independent contractors.

Argo · Sep 3, 2018

I haven't bothered to itemize as a travel nurse, the stipends way more than cover anything that I spend.

I also have never worked where I live. As for the IRS length of time rule, there is a rule but it is open to interpretation. Some companies say its under 12 months then you have to leave, some say its 12 months total in a 2 year period, some say its under 11 months and you need a month off, some say its 3 months off after 12 months, etc. I try to go to the minimum as I would like to avoid scrutiny of tax people at all costs.... I use a CPA and have had the same guy for 12 years. Personally, I dont stay over 9 months at a single place. I did do 9 months, take a 3 month break then did another 6 months but thats my longest stent anywhere. We have had permanent residence in Bend OR for almost 4 years. My wife stays at home.

I make more than double working as a traveler vs working staff at the local hospital. Up until this year i have only worked 7 months, on average, each of the prior 4 years. Now im gonna work 10 months a year for a couple years so i can pay all my bills/house off. Then I'll work 3 months a year/1 assignment.

/username, BSN, RN · Sep 4, 2018

You are wrong. I've never worked in my tax home.

That's odd, as your tax home is where the majority of your economic activity takes place, not where your physical residence is. I find it very strange that you don't work in the area where the majority of your income comes from.

Ms_Interpret · Sep 4, 2018

That's odd, as your tax home is where the majority of your economic activity takes place, not where your physical residence is. I find it very strange that you don't work in the area where the majority of your income comes from.

For workers (like traveling healthcare professionals) that have no fixed workplace and travel to numerous locations for work, the IRS considers their city of permanent residence or where they regularly live, to be their tax home.

NedRN · Sep 4, 2018

That's odd, as your tax home is where the majority of your economic activity takes place, not where your physical residence is. I find it very strange that you don't work in the area where the majority of your income comes from.

If you want to learn the underlying laws and regulations, I'd encourage you to visit PanTravelers or TravelTax. A forum is ill suited for a ten page lecture. But briefly, while a tax home can be a preponderance of supporting evidence, there are three main pillars of which you must have meet only two out of three. Working at your tax home is the one most travelers don't have.

Yes, having a preponderance of income in one location can certainly make that your tax home but that is only a problem for travelers with recurring assignments or those who work past 12 months in one area.

Perhaps a practice history would be a better argument than nuts and bolts. So called "tax advantage" has been the prevailing practice since

1993 and is thoroughly baked into the IRS regs. Currently there are 30,000 nurse travelers (lots more in other medical fields) and 400 or so agencies (with their lawyers and accountants) doing this.

/username, BSN, RN · Sep 4, 2018

For workers (like traveling healthcare professionals) that have no fixed workplace and travel to numerous locations for work, the IRS considers their city of permanent residence or where they regularly live, to be their tax home.

That's not true.

The IRS guidelines are located here: Publication 463 (2