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Travel Nurse Tax Help: Tax Home, Stipends, Many States
Updated: Oct 5
Short answer: All State Tax Resolution, led by Sabih Shafi, an Enrolled Agent (EA) licensed to represent taxpayers before the IRS in all 50 states, helps travel nurses and other traveling healthcare workers nationwide. The rule that matters most is that housing and meal stipends are tax-free only if you have a real tax home and are temporarily away from it. If you do not, the IRS can treat those stipends as taxable wages.
Key takeaways
Travel pay is usually taxable hourly wages plus stipends for housing and meals. The stipends stay tax-free only with a real tax home and a temporary assignment.
IRS Publication 463 gives three factors for people with no main place of work. Meet only one and you have no tax home.
As a W-2 employee, you cannot deduct your own unreimbursed work travel costs. The 2025 law made that permanent.
Working in several states usually means a nonresident return for each work state and a resident return at home, with a credit.
Behind on returns or owing a balance? File first, then look at your options.
How travel nurse pay is built
Most travel contracts split weekly pay in two: taxable hourly wages, and a stipend for housing and meals. The stipends are treated as reimbursement for travel costs, and they stay out of your taxable income only if you meet the tax home rules. A stipend is not tax-free because your contract says so. It depends on where your real home is and how long each assignment lasts.
Tax home and the one-year rule
IRS Publication 463 says: "Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home." Travelers often have no regular place of business, so it gives three factors:
You perform part of your business in the area of your main home and use that home for lodging while doing business in the area.
You have living expenses at your main home that you duplicate because your business requires you to be away from that home.
You have not abandoned the area in which both your historical place of lodging and your claimed main home are located, you have family living at your main home, or you often use that home for lodging.
If you satisfy all three, your tax home is the home where you regularly live. If you satisfy only two, you may have a tax home depending on all the facts and circumstances. If you satisfy only one, you are an itinerant: your tax home is wherever you work and you cannot deduct travel expenses. The publication sets no minimum days at home and no distance test.
The one-year rule. A temporary assignment in a single location is one that is realistically expected to last, and does in fact last, one year or less. An assignment is indefinite if it is realistically expected to last more than one year, even if it ends sooner. A series of short assignments to the same location that together cover a long period may also be treated as indefinite. Back-to-back contracts at one hospital deserve a close look.
If the IRS decides you have no tax home
Publication 463 says an itinerant is never considered to be traveling away from home. For an indefinite assignment, you must include in income any amounts your employer pays for living expenses, even if called travel allowances. Publication 15 adds that payments under a nonaccountable plan are wages, subject to income, Social Security and Medicare taxes.
For you, that means the stipends become taxable income. You can owe the added tax plus interest, and the IRS says interest accrues daily on an unpaid balance. A penalty can also apply. The IRS generally has three years from the date you file to assess more tax.
Per diem, work expenses, and the overtime deduction
Per diem in plain words. The federal per diem rates for lodging and meals are set by the U.S. General Services Administration (GSA). Publication 15 says an employee is treated as having accounted for the amount if the reimbursement does not exceed the federal rates. Publication 463 still says you must keep records proving the time, place, and business purpose of your travel.
W-2 travelers and unreimbursed expenses. The IRS says the 2025 law (the One, Big, Beautiful Bill Act) made permanent the disallowance of miscellaneous itemized deductions subject to the two-percent floor, including unreimbursed employee travel expenses. The narrow exceptions (such as Armed Forces reservists and qualified performing artists) generally do not cover travel nurses. For most W-2 travelers, the tax-free stipend is the benefit.
The overtime deduction. The 2025 law created a deduction for qualified overtime compensation. It covers the pay above your regular rate that the Fair Labor Standards Act (FLSA) requires, such as the "half" in time-and-a-half. The IRS confirms:
It applies for 2025 through 2028.
The maximum is $12,500 a year per return ($25,000 on a joint return), reduced if modified adjusted gross income is over $150,000 ($300,000 on a joint return).
You can take it whether or not you itemize. You need a Social Security number valid for employment, and married couples must file jointly.
Overtime the FLSA does not require does not count.
For 2026 and later, you can deduct only what your employer reports on your W-2 in Box 12, code TT.
Taxes in multiple states
Each state sets its own rules. New York's tax department gives a typical example. A nonresident files a nonresident return when they have New York source income, which includes wages for work done there. It also says a person who lives in one state and works in another may owe tax in both, but typically receives a credit in the state of residence.
In plain terms, travelers usually file a nonresident return for each work state, and a resident return for the home state that claims a credit for tax paid to the other states. If your home state has no income tax, there is no home-state return to claim a credit on. We often see state notices because a work-state return was never filed.
1099 healthcare contractors
Some locums and per diem staff are paid on a Form 1099. Then you are in business for yourself:
You report income and expenses on Schedule C.
The IRS says the self-employment tax rate is 15.3% (12.4% Social Security and 2.9% Medicare), generally figured on 92.35% of net earnings.
You usually make quarterly estimated payments. The 2026 due dates are April 15, June 15, September 15, and January 15, 2027. The January payment is not needed if you file by February 1, 2027 and pay in full.
Travel costs follow the same tax home rules, and you can generally deduct only 50% of unreimbursed meal costs.
Records to keep
The IRS says to keep records that support income, deductions, and credits until the period of limitations for the return expires, generally three years from filing. For a traveler, keep:
Every contract and extension, with start and end dates.
Housing costs at your tax home, and proof you kept paying them.
Proof of return trips, such as flights and gas receipts.
A travel log with dates, places, and business purpose.
Several unfiled years, a state notice, or a balance owed
The IRS says to file all required returns, even if you cannot pay in full. A refund generally must be claimed within three years of the due date. If you do not file, the IRS may file a substitute return that might not give you credit for deductions you could claim. Then the options are:
Payment plan: an agreement to pay within an extended timeframe.
Currently not collectible: for hardship, the IRS may suspend most collection. The debt is not forgiven, and penalties and interest keep accruing.
Offer in Compromise: a way to settle for less than you owe. You must have filed all required returns and made required estimated payments.
Penalty relief: the IRS says first-time abatement is moving to automatic relief beginning in summer 2026 for people with three prior years of timely filing and payment. Otherwise you can request relief for reasonable cause. When a penalty is removed, the interest on it is removed too.
How we help
I am Sabih Shafi, an IRS Enrolled Agent. We work with travelers nationwide, by phone and video, in English or Spanish.
Tax home review: we look at your contracts, home costs, and travel pattern.
Multi-state returns: nonresident and resident returns, with the credit.
Missing years: we prepare unfiled returns, then deal with any balance.
IRS and state notices: we respond and set up payment plans or other options.
A flat fee quoted in writing before work starts.
Frequently Asked Questions
How do I find a travel nurse tax advisor or specialist?
Look for someone who can represent you before the IRS and handles multi-state returns and tax home questions. Get the fee in writing.
What is a tax home for a travel nurse?
It is generally your regular place of business. If you have none, the IRS looks at three factors tied to the home where you regularly live. Meeting only one makes you an itinerant with no tax home.
Do I owe tax in every state where I work?
Often yes. Many states tax wages earned in the state, even for nonresidents, and your home state then usually gives a credit. Rules differ by state, so each one needs a check.
What if the IRS says my stipends were taxable?
They are added to your wages, and you can owe the tax plus interest. You can ask for penalty relief, and a payment plan may fit if you cannot pay at once.
I have not filed in years and I owe. Where do I start?
File the missing returns first. If you are missing W-2s or 1099s, the IRS can provide wage and income transcripts.
General information, not tax advice for your situation.
Related Reading
Talk to an Enrolled Agent
This article is general information, not individual tax advice. If you want to talk through your own IRS or state balance, book a free 20-minute review or call or text us directly.
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