To begin, I recommend you speak with an accountant or tax professional regarding the benefits of having a tax home before making the decision to either keep your tax home or not. This article is in no way advice on the subject, you should always consult a professional for tax advice. Here are the top reasons it’s important maintaining a tax home while travel nursing.
Tax Home versus Permanent Residence
A “tax home” by definition is a home where you return to regularly and incur recurring expenses. Strong legal and historical ties must be evident by any of the following: driver’s license, voter registration, car registration, mail delivery, and outside expenses such as banking. This can apply to either a mortgage, apartment, or home share (renting with a roommate).
- For example, Calvin owns a 1,500 square foot home with a mortgage he pays every month. He has bank statements proving recurring expenses. When Calvin travels for his career, he continues to pay these expenses to keep his home. This is his tax home because when he travels, he will have a duplication of expenses. Calvin is entitled to tax free stipends.
A “permanent residence” by definition is a place where you live that has legal and historical ties; however, does not require your maintenance the primary home.
- For example, Julie lives with her mother and father. Being their daughter, Julie does not pay rent or recurring expenses. Julie cannot claim this house as her tax home, but can claim the home as her permanent residence. Julie is notentitled to tax free stipends.
Who Does Not Qualify for Tax Free Stipends
There are several misunderstandings regarding who can qualify for tax free stipends. Here are a few examples of those who do not qualify for these stipends.
- Renting your home and not maintaining a portion of the home for yourself even if it is your tax-free home.
- If you live in an RV that you take with you to assignments. For example, if you take your home with you then you do not incur duplicate expenses.
- Staying in one location for 12 months or longer. You must return home to your tax home.
- Spend at a minimum 30 days a year at your home. This is not an enchanted number just a suggestion.
- Do not return to one area a third year in a row. This develops a pattern and becomes a primary/persistent place of income.
How Far Must You Travel to Qualify for Tax Free Stipends
Distance is not the only qualifier for Travel Nursing stipends. It is what you do at the end of your shift which determines if the assignment is far enough to qualify as a Travel Assignment. If you return home at the end of your shift, you cannot deduct miles and/or meals as tax free per diem stipends. The 50-mile radius is a policy set by the travel recruitment companies and not based on IRS guidelines. *Please note: just because you sleep away from home does not automatically qualify you for tax free reimbursement. The facility must be farther than a normal commute.
Tax free income is based on two factors: (1) the healthcare facility is too far to return home every day and (2) the position is temporary and does not require you to move your residence. An employee must maintain a second residence and everything related to the second residence qualifies for tax free reimbursement.
What Receipts Should I Keep for Tax Free Stipends?
- KEEP COPIES OF YOUR TRAVEL NURSING CONTRACTS!! Travel Nursing Companies are not required to keep these records.
- Keep Mileage Logs. Print a copy of google maps with the calculated distance between your residence (either tax home, primary, or secondary) for your records and documentation. Also document trips home during the contract.
- Do not save copies of receipts for grocery, food, and/or gas. These are covered under meal per diems and renting a vehicle if necessary.