If you're a travel nurse receiving tax-free stipends for housing, meals, and incidentals, understanding your tax home is critical. The IRS has specific rules that determine whether your stipends remain tax-free or become fully taxable income—and the difference can cost you thousands of dollars in unexpected taxes and penalties.

This comprehensive guide explains exactly what a tax home is according to the IRS, how to maintain it as a travel nurse, and the common mistakes that trigger audits and tax liabilities. We'll cover the 12-month rule, duplicate expenses requirement, and provide a clear action plan to protect your tax-free status.

What Is a Tax Home? The IRS Definition

Many travel nurses mistakenly believe their tax home is simply where they live or where their family resides. That's not how the IRS defines it.

According to IRS Publication 463, your tax home is defined as:

"Your regular place of business or post of duty, regardless of where you maintain your family home. It includes the entire city or general area in which your business or work is located."

Tax Home vs. Personal Home: What's the Difference?

Your personal home (or family home) is where you live. Your tax home is where you primarily work and earn income. For most people, these are the same location. For travel nurses, they must be different locations to qualify for tax-free stipends.

Key distinction:

Tax home: Your main place of business or regular work location
Personal home: Where you (and often your family) permanently reside

To receive tax-free stipends as a travel nurse, you must be working away from your tax home on a temporary assignment.

How the IRS Determines Your Tax Home as a Travel Nurse

The IRS uses specific criteria to establish where your tax home is located, especially for workers without a single fixed workplace.

The Three-Factor Test

When you don't have a regular or principal place of business (like travel nurses who move between assignments), the IRS applies a three-factor test from Publication 463:

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 haven't abandoned the area where your main home is located. You maintain family members living there, or you frequently return to that home.

Critical requirement: You must satisfy at least two of these three factors to establish your tax home at your permanent residence. Meeting only one factor may result in the IRS classifying you as an itinerant—someone with no tax home—making all your stipends taxable.

What Happens If You're Classified as an Itinerant?

According to the IRS, if you have no regular place of business and no established home base where you maintain living expenses, "your tax home is wherever you work" and "you can't claim a travel expense deduction because you are never considered to be traveling away from home."

For travel nurses, this means:

Your stipends become fully taxable income
You lose tax-free treatment for housing, meals, and incidentals
You may owe back taxes plus penalties and interest if audited

Maintaining a Tax Home: Requirements for Travel Nurses

To maintain your tax home and keep your stipends tax-free, you must demonstrate that your permanent residence (not your travel assignment location) is your true tax home.

Duplicate Expenses: The Core Requirement

The most important factor is duplicating living expenses. You must maintain ongoing housing costs at your permanent home while also paying for temporary housing at your assignment location.

Acceptable duplicate expenses include:

Rent or mortgage payments on your permanent residence
Utilities (electricity, gas, water, internet)
Property taxes and insurance
Storage unit rental (if you don't maintain a full residence)

Important: Simply having a driver's license or voter registration at a certain address is NOT sufficient. The IRS requires actual, ongoing financial obligations that demonstrate you're maintaining a residence.

How Much Must You Spend on Your Tax Home?

The IRS doesn't specify a minimum dollar amount, but your expenses must be substantial and continuous. As a general guideline:

Full residence: Rent/mortgage + utilities should be consistent with local housing costs
Shared residence: Document your share of rent and expenses (get receipts or written agreements)
Storage + address: Minimum approach—storage unit + some additional ties (more audit risk)

Red flag: If your "duplicate expenses" are minimal (e.g., only a P.O. Box or staying rent-free with family without contributing), the IRS may determine you don't have a legitimate tax home.

Working in Your Tax Home Area

The first factor of the three-factor test requires you to "perform part of your business" in your tax home area. For travel nurses, this can include:

Taking per diem or local shifts at hospitals near your permanent residence
Working PRN (as needed) assignments in your home area between travel contracts
Maintaining an active nursing license and working at least occasionally in your home state

How often must you work at your tax home? The IRS doesn't specify a minimum number of shifts, but regular, ongoing work in your tax home area significantly strengthens your position. Many tax professionals recommend working at least a few shifts per year in your home area.

Maintaining Ties to Your Tax Home

The third factor examines whether you've abandoned your tax home area. Strong ties include:

Family living at your tax home: Spouse, children, or other dependents residing at your permanent address
Frequent returns home: Visiting your permanent residence between assignments or during time off
Community connections: Active voter registration, professional licenses, bank accounts, healthcare providers, club memberships
Property ownership: Owning a home or maintaining significant personal property at your tax home

The more ties you maintain, the stronger your tax home position.

The 12-Month Rule: When Your Assignment Becomes Permanent

One of the most critical rules for travel nurses is the IRS 12-month rule for temporary assignments.

Temporary vs. Indefinite Assignments

According to IRS Publication 463:

"If you expect employment away from your tax home to last for 1 year or less, it is temporary unless facts and circumstances indicate otherwise. Employment that lasts for more than 1 year is considered indefinite."

What this means for travel nurses:

Temporary assignment (≤12 months): Your tax home remains at your permanent residence. Stipends stay tax-free.
Indefinite assignment (>12 months): The assignment location becomes your new tax home. Stipends become taxable income.

The Rolling 24-Month Window

The 12-month rule applies within any rolling 24-month period. If you work at the same location (or nearby locations within the same commuting area) for more than 12 months out of any 24-month period, that location becomes your tax home.

Example scenario:

You take a 13-week assignment in Phoenix (Week 1-13)
You leave for 8 weeks (Week 14-21)
You return to Phoenix for another 13-week assignment (Week 22-34)
You leave for 12 weeks (Week 35-46)
You return to Phoenix for a third 13-week assignment (Week 47-59)

Result: You've now worked 39 weeks (over 12 months) in Phoenix within a 24-month period. Phoenix becomes your tax home, and your stipends for that third assignment become taxable.

When the Clock Starts

The determination is based on your realistic expectations at the start of the assignment. If you initially expect the assignment to last more than 12 months, it's indefinite from day one.

However, an assignment that starts as temporary can become indefinite if circumstances change. According to the IRS: "An initially temporary assignment may become indefinite due to changed circumstances."

Strategies to Reset the 12-Month Clock

To maintain tax-free stipends, many travel nurses use these strategies:

Limit assignments to 12 months or less in any one location
Take assignments in different metropolitan areas (different commuting zones)
Return to your tax home between assignments and work local shifts
Take breaks of sufficient length before returning to the same area (consult your tax professional)

Important: Working at a different hospital within the same city or commuting area typically does NOT reset the clock. The IRS considers "the entire city or general area" as one location.

The 50-Mile Rule: Myth vs. Reality

You may have heard about the "50-mile rule"—the idea that your tax home must be at least 50 miles from your assignment location.

Is the 50-Mile Rule an IRS Requirement?

No. There is no official IRS 50-mile rule in Publication 463 or any IRS tax code.

The 50-mile guideline comes from:

Travel nursing agencies: Many agencies use 50 miles as an internal policy to minimize audit risk
General practice: A distance threshold helps demonstrate you're truly "away from home" overnight
Reasonableness test: The IRS requires that you need to sleep or rest away from home due to distance—50 miles is a common-sense benchmark

What the IRS Actually Requires

The IRS focuses on whether you're "traveling away from home" and need overnight lodging for business reasons. According to Publication 463, you must be:

"Away from home if your duties require you to be away from the general area of your tax home for a period substantially longer than an ordinary day's work, and you need to get sleep or rest to meet the demands of your work while away."

Key factors:

Can you reasonably commute daily from your tax home? (If yes, you're not "away from home")
Does the assignment require overnight stays due to distance or work hours?
Are you duplicating expenses because business necessitates temporary lodging?

If your assignment is only 30 miles from your permanent home but you could easily commute daily, the IRS may question why you're claiming tax-free housing stipends.

Tax-Free Stipends: What Qualifies and What Doesn't

When you properly maintain a tax home and work temporary assignments, certain reimbursements can be received tax-free.

Qualified Tax-Free Payments

According to IRS rules, these payments can be excluded from taxable income when you meet all requirements:

Housing stipend: Reimbursement for temporary lodging at your assignment location
Meals and incidentals (M&IE): Per diem for food and incidental expenses based on GSA per diem rates
Travel expenses: Transportation to/from your assignment location (airfare, mileage, etc.)

Current 2025 per diem rates:

Standard rate: $68/day for meals and incidentals (most U.S. locations)
High-cost areas: Rates vary by location (e.g., New York City, San Francisco have higher rates)
Lodging: Varies significantly by location ($110/day standard, higher in expensive cities)

Check the current rates for your specific assignment location at GSA.gov.

What Happens When You Lose Tax Home Status

If you lose your tax home qualification (become an itinerant, exceed 12 months, or fail the three-factor test), all stipends become taxable wages. This means:

Housing stipends are added to your W-2 as income
Meal per diems become taxable
You owe income tax, Social Security, and Medicare taxes on the full amount
If discovered during an audit, you may owe back taxes, penalties, and interest

Example impact: If you received $25,000/year in tax-free stipends but don't qualify for tax-free treatment, you could owe $6,000-$9,000+ in additional federal and state taxes, plus penalties.

Documentation: Proving Your Tax Home to the IRS

If the IRS audits you, the burden of proof is on you to demonstrate you maintained a legitimate tax home. Keep thorough records of:

Required Documentation

Lease or mortgage statements for your permanent residence
Utility bills (electric, gas, water, internet) showing ongoing expenses
Rent receipts or cancelled checks proving duplicate housing payments
Bank statements with your permanent address
Pay stubs from local work at your tax home location (if applicable)
Driver's license, vehicle registration, voter registration at your tax home
Travel receipts showing trips home between assignments
Assignment contracts showing length and location of each travel contract

How Long to Keep Records

The IRS can audit tax returns for up to 3 years after filing (or 6 years if they suspect substantial underreporting). Keep all tax home documentation for at least 7 years to be safe.

Common Tax Home Mistakes Travel Nurses Make

Avoid these costly errors that trigger audits and tax liabilities:

1. Living Rent-Free With Family Without Contributing

Simply listing your parents' or siblings' address as your "permanent residence" while not paying rent or expenses is insufficient. The IRS requires actual duplicate expenses. Either:

Pay documented rent to family members (get a written lease agreement)
Pay a substantial share of household expenses (utilities, property tax, etc.)
Rent your own apartment/room and maintain it continuously

2. Using Only a P.O. Box or Mail Forwarding Service

A mailing address alone doesn't establish a tax home. You need:

A physical residential address (not a commercial mailbox)
Actual housing expenses at that location
Evidence you use the residence, not just receive mail there

Note: Services like Your Tax Base provide a legitimate Florida residential address (non-CMRA) with lease documentation and mail forwarding, which helps establish domicile for state tax purposes—but you still need to maintain duplicate expenses to satisfy IRS tax home rules for federal per diem treatment.

3. Exceeding 12 Months in the Same Location

Extending assignments or returning to the same city multiple times within 24 months can push you over the 12-month threshold. Track your time carefully and plan assignments to avoid this.

4. Not Working in Your Tax Home Area

If you never work shifts in your supposed tax home area for years, the IRS may question whether it's truly your "regular place of business." Pick up at least occasional local shifts to strengthen your position.

5. Keeping Poor Records

Without documentation of expenses, assignment locations, and dates worked, you can't prove your tax home status during an audit. Maintain organized records from day one.

State Tax Considerations for Travel Nurses

Tax home rules affect your federal income tax treatment. For state income taxes, different rules apply based on residency and domicile.

State Residency vs. Tax Home

Your state tax residency is determined by:

Domicile: Where you intend to permanently reside
Statutory residency: Spending more than 183 days in certain states

You can minimize state income taxes by establishing domicile in a zero-income-tax state like Florida, Texas, Tennessee, or Washington.

Key difference:

Federal tax home (for per diem): Your main place of business; where you work and earn income
State domicile (for state taxes): Your permanent home; where you intend to return

Many travel nurses establish Florida domicile to eliminate state income tax while maintaining a different location as their federal tax home for per diem purposes. See our Florida Domicile Guide for details.

Working With a Tax Professional

Given the complexity of tax home rules, travel nurses should work with a tax professional who specializes in travel nursing taxes. They can help:

Determine if your current situation qualifies for tax-free stipends
Structure your housing and expenses to meet IRS requirements
Plan assignment locations to avoid the 12-month rule
Prepare proper documentation for potential audits
File accurate tax returns that reflect your tax home status

Red flag: If your travel nursing agency or recruiter advises you on tax matters, get a second opinion from an independent CPA. Agencies have a financial incentive to pay stipends (lower payroll taxes for them), but you bear the tax liability if rules aren't followed correctly.

Action Plan: Protecting Your Tax Home Status

Follow these steps to maintain a legitimate tax home and protect your tax-free stipends:

Establish a permanent residence: Rent an apartment, room, or house where you maintain continuous housing expenses
Pay duplicate expenses: Keep paying rent/mortgage and utilities at your permanent residence throughout your travel assignments
Document everything: Save all receipts, leases, utility bills, and bank statements proving ongoing expenses
Work in your tax home area: Pick up at least some local shifts or per diem work near your permanent residence
Maintain strong ties: Keep your driver's license, voter registration, bank accounts, and other connections to your tax home
Visit regularly: Return to your permanent residence between assignments when possible
Track your assignments: Monitor the 12-month rule carefully; avoid exceeding 12 months in the same area within any 24-month period
Work with a specialized CPA: Get professional guidance for your specific situation
Consider Florida domicile for state tax savings: Establish domicile in a zero-tax state to eliminate state income taxes (separate from federal tax home rules)

Frequently Asked Questions

Can my tax home be in a different state than where I'm domiciled?

Yes. Your federal tax home (for per diem purposes) and your state domicile (for state income tax purposes) are two different concepts. Many travel nurses maintain a tax home in one state (where they own/rent property) while establishing domicile in a zero-tax state like Florida.

What if I live in an RV full-time?

Full-time RVers face unique challenges establishing a tax home. You'll need to show you have a regular place of business and maintain duplicate expenses. Options include:

Renting a storage unit plus maintaining a residential address (weaker position)
Renting a room or apartment you keep available while traveling
Owning property (even if you're rarely there) with ongoing expenses

Consult a tax professional familiar with mobile workers to structure your situation properly.

Do I need to spend a minimum number of days at my tax home each year?

The IRS doesn't specify a minimum number of days, but you must maintain substantial, continuous expenses and demonstrate you haven't abandoned the location. Visiting between assignments and working occasional local shifts strengthens your position.

What if I want to buy a house at my assignment location?

Buying a home at your assignment location is a strong signal to the IRS that you've established a new tax home there. If you purchase property where you're working, be prepared for that location to become your tax home, making future stipends at that location taxable.

Can I claim tax-free stipends for back-to-back assignments in different cities?

Yes, as long as:

Each location is a different metropolitan area (different commuting zones)
You maintain your tax home with duplicate expenses
You don't exceed 12 months in any single location within 24 months
Each assignment is genuinely temporary (expected to last ≤12 months)

What happens if my agency gets audited?

If the IRS audits your travel nursing agency and questions their stipend payments, the agency may request documentation from you proving your tax home status. This is why maintaining thorough records is critical—even if you're never personally audited, you may need to provide proof to your employer.

Final Thoughts

Maintaining a proper tax home is the foundation of receiving tax-free stipends as a travel nurse. The IRS rules are clear: you must have a regular place of business (your permanent residence), duplicate living expenses, and work temporary assignments away from that tax home.

Key takeaways:

Your tax home is your main place of business, not necessarily where your family lives
You must meet at least 2 of 3 factors in the IRS three-factor test
Duplicate expenses are critical—maintain continuous housing costs at your permanent residence
The 12-month rule limits how long you can work in one location with tax-free stipends
The 50-mile rule is not an official IRS requirement, but distance matters for proving you're "away from home"
Document everything—receipts, leases, utility bills, assignment contracts
Work with a specialized travel nurse CPA to ensure compliance

For state income tax savings, consider establishing Florida domicile to eliminate state income tax entirely. Your Tax Base provides Florida residential addresses (non-CMRA), lease documentation, and mail forwarding services specifically designed for travel nurses and mobile professionals. Contact us today to learn how we can help you save thousands on state taxes.

Disclaimer: This article provides general information about IRS tax home rules and should not be considered tax advice. Consult with a qualified tax professional about your specific situation. Tax laws and IRS guidance are subject to change.

For more travel nurse tax strategies, see our Travel Nurse Tax Home Requirements and Florida Domicile Guide.

Travel Nurse Tax Home Explained: The Complete IRS Guide for 2025