Permanent Tax Home and Travel Nursing

Nebraska Windmills
One major benefit to being a travel nurse is the tax free treatment given to travel expenses and housing. When you take a travel nursing assignment away from home, any payments you receive from your travel nursing agency are viewed as reimbursement by the IRS and not as income. But this is only the case if you maintain a Permanent Tax Home separate and apart from where your travel assignment is located.

What is a Permanent Tax Home?
A Pemanent Tax Home is the city or area where the travel nurse maintains his or her regular place of business.  It is important for a travel nurse to maintain a separate Permanent Tax Home because without doing so, any travel or housing related payments received will be taxed by the IRS as income. 

For example, if I have a Permanent Tax Home in North Carolina and I am on assignment in California the payments my travel nurse agency gives me are non-taxable.  The IRS views these payments as reimbursement for travel and housing.  However, if I decide to pull up roots and leave North Carolina then my new Permanent Tax Home is likely to become California or some other subsequent travel nursing assignment.  In this situation, any payments I receive from my travel nurse agency will be viewed as taxable income and not reimbursement.

Questions Used to Determine Permanent Tax Home
At least two of the three following questions must be met in determining where your Permanent Tax Home is located.

First, does the travel nurse perform at least a portion of his or her work near the home and use that home for lodging while working in the area?

Second, does the travel nurse have living expenses (mortgage, rent, utilities, etc.) at the permanent tax home that are duplicated while the traveler is on assignment away from home?

Third, does the travel nurse have members of the family living at the permanent tax home, use the home frequently or otherwise not abandoned the home?

Failure to satisfy at least two of these factors will render the travel nurse an "itinerant worker" and the tax home will be deemed to be where the travel nurse is working.  Itinerant Workers are never viewed as working away from home.

Satisfying two of the three factors, however, does not automatically mean a permanent tax home exists.  If two of the three factors are present, the IRS will look to the following factors in determining the existence of a permanent tax home:
  • The travel nurse's tax home address is the same as that used for his or her professional license.
  • The travel nurse's tax home address is the address of record for filing income tax.
  • The tax home has phone service or is the travel nurse's primary mailing address.
  • License plates and driver’s license are registered in the tax home city.
  • The primary banking relationship is in the vicinity of the tax home.
  • The travel nurse is registered to vote in the tax home precinct.
  • The travel nurse belongs to a church, club, or other associations in the tax home vicinity.
For more information on the importance of establishing a Permanent Tax Home, contact your travel nursing agency.