Tax Home and Domicile Considerations for Travel Nurses

A tax home is a foundational concept in United States tax law that determines whether travel-related reimbursements and allowances constitute taxable income. For travel nurses—registered nurses who accept temporary assignments at healthcare facilities away from their permanent residence—establishing and maintaining a valid tax home is essential for receiving housing stipends, meal allowances, and incidental reimbursements on a tax-free basis.^[1] This article examines the Internal Revenue Service (IRS) requirements for tax home establishment, the role of state domicile in tax planning, documentation requirements, and compliance considerations relevant to travel nursing professionals.

IRS Requirements for Tax Home Establishment

The Internal Revenue Service defines a tax home as the taxpayer's regular place of business or post of duty, regardless of where the taxpayer maintains a family residence. According to IRS Publication 463, "Your tax home is the entire city or general area where your main place of business or work is located, regardless of where you maintain your family home."^[1]

Tax Home for Workers Without a Fixed Location

Travel nurses present a unique case under IRS guidelines because they do not maintain a regular or main place of business due to the temporary nature of their assignments. For such workers, the IRS applies an alternative standard: the tax home is determined by where the taxpayer "regularly lives."^[1] The IRS evaluates three factors to determine whether a location qualifies as a taxpayer's tax home:

1. Work activity in the area: Whether the taxpayer performs part of their business or work in the area of the claimed main home
2. Duplication of expenses: Whether the taxpayer has living expenses at the claimed main home that are duplicated when working away from that location
3. Abandonment of the area: Whether the taxpayer has abandoned the historical area of main home, or whether members of the taxpayer's family reside there, or whether the taxpayer frequently uses the residence

If a taxpayer satisfies two of these three factors, the location generally qualifies as a tax home. If only one factor is satisfied, the facts and circumstances determine whether a valid tax home exists.^[1]

Concrete Requirements for Tax Home Documentation

Travel nurses seeking to establish a tax home typically maintain the following documentation:

1. Permanent residence: A lease agreement, rental contract, or mortgage documentation evidencing ongoing residential tenancy at a specific address
2. Driver's license: A state-issued driver's license showing the tax home address
3. Voter registration: Registration to vote in the jurisdiction of the claimed tax home
4. Lease or mortgage payments: Bank statements or payment records demonstrating regular housing payments
5. Utility bills: Monthly statements for electricity, water, gas, or internet services at the tax home address
6. Tax filings: Federal and state tax returns listing the tax home address
7. Travel records: Documentation of periodic returns to the tax home location between assignments

The Duplicate Expenses Requirement

The duplication of living expenses requirement is central to tax home qualification. Travel nurses must maintain financial responsibility for a permanent residence (rent, mortgage, utilities) while simultaneously incurring lodging expenses at temporary assignment locations. This creates "duplicate" housing costs—the essential condition for treating assignment-location housing reimbursements as non-taxable.^[2]

Without demonstrable duplicate expenses, the IRS may determine that the taxpayer's assignment location constitutes their actual residence, eliminating the basis for tax-free treatment of stipends.

Itinerant Worker Classification

Travel nurses who fail to establish a valid tax home may be classified as itinerant workers. According to IRS Publication 463: "If you don't have a regular or main place of business because of the nature of your work, your tax home may be the place where you regularly live... However, if you don't fit into any of these categories, you may be an itinerant. Your tax home is wherever you work and you can't deduct travel expenses."^[1]

For itinerant workers, all housing stipends, meal allowances, and travel reimbursements are classified as taxable wages subject to federal income tax, state income tax (where applicable), Social Security tax, and Medicare tax.

Domicile Planning and Zero-Income-Tax States

Domicile is a legal concept distinct from tax home that determines a taxpayer's state of residence for state income tax purposes. A person's domicile is the state they consider their permanent home—the place to which they intend to return when absent. Unlike physical residency, which is determined by presence, domicile is determined by intent combined with actions demonstrating that intent.^[3]

Travel nurses frequently establish domicile in states that do not impose personal income tax to minimize their overall tax burden. This practice is legally permissible provided the domicile is genuinely established and properly documented.

States Without Personal Income Tax

Nine U.S. states do not impose a personal income tax on wages and salaries. The following table summarizes these states and relevant considerations:

State	Income Tax	Estate Tax	Notable Benefits
Alaska	None	None	Permanent Fund Dividend; no sales tax (most areas)
Florida	None	None	Homestead exemption; strong asset protection laws
Nevada	None	None	No corporate income tax; favorable business climate
New Hampshire	None*	None	*Taxes interest/dividends only (phasing out by 2027)
South Dakota	None	None	Strong trust laws; low overall tax burden
Tennessee	None	None	Hall Tax on investment income repealed (2021)
Texas	None	None	Constitutional prohibition on income tax; homestead protection
Washington	None**	Yes	**Capital gains tax enacted (2021); estate tax applies
Wyoming	None	None	No corporate income tax; strong privacy laws

Sources: State revenue department publications; Tax Foundation, "State Individual Income Tax Rates and Brackets" (2025).

Potential Tax Savings

The financial impact of domicile selection varies substantially based on the taxpayer's prior state of residence and total income. Travel nurses relocating domicile from high-tax states to zero-income-tax states may realize annual savings ranging from approximately $5,000 to over $40,000, depending on income level and the marginal tax rate of the prior state.

Illustrative Example: California to Florida Domicile Change

A registered nurse earning $120,000 annually relocates from California to Florida to establish domicile. Under California law, she remains a California resident for tax purposes unless she demonstrates abandonment of her prior domicile and establishment of genuine domicile in Florida. Upon successfully establishing Florida domicile with comprehensive documentation (lease, driver's license, voter registration, utility accounts), her state income tax liability shifts from approximately $10,000–$14,000 annually (California 9.3%–13.3% marginal rate) to zero. This assumes all income is earned through travel nursing assignments; income previously earned in California while a resident remains subject to California taxation under residency rules.

Aggressive Audit Practices in Certain States

Several high-tax states, notably California and New York, conduct residency audits of former residents who claim to have changed domicile to another state. These audits examine whether the taxpayer genuinely abandoned their prior domicile and established a new one elsewhere.

According to data from the California Franchise Tax Board and New York State Department of Taxation and Finance, contested domicile claims with insufficient documentation result in adverse determinations at rates exceeding 50%.^[7] The most frequent deficiency cited in adverse determinations is incomplete or inconsistent documentation across residential, vehicular, and voting records. Taxpayers facing such audits may be assessed back taxes, interest, and penalties if they cannot demonstrate that their change of domicile was genuine and properly documented through contemporaneous evidence.

Establishing Domicile Documentation

Courts evaluating domicile disputes apply a two-part test: the taxpayer must demonstrate both (1) physical presence in the new state and (2) intent to make that state their permanent home. Intent is evaluated through objective actions rather than subjective declarations.^[4]

Documentation Checklist

The following documents serve as evidence of domicile establishment:

1. Residential address documentation: Lease agreement, rental contract, or property deed showing a physical street address (not a P.O. Box) in the new domicile state
2. Utility accounts: Electric, water, gas, or internet bills in the taxpayer's name at the domicile address
3. Driver's license: State-issued driver's license from the domicile state showing the residential address
4. Voter registration: Registration to vote in the domicile state jurisdiction
5. Bank accounts: Checking, savings, or investment accounts listing the domicile address
6. Insurance policies: Auto, health, or renter's/homeowner's insurance with the domicile address
7. Vehicle registration: Automobile registration in the domicile state
8. Professional licenses: Nursing licenses and other professional credentials reflecting the domicile address
9. Estate planning documents: Wills, trusts, and powers of attorney executed in the domicile state

Intent and Continuous Ties

Establishing domicile is not a one-time event but requires maintenance of continuous ties to the domicile state. While no minimum number of days in the domicile state is legally required (domicile is based on intent, not physical presence counting), taxpayers must demonstrate ongoing connection to the jurisdiction through the documentation listed above and patterns of behavior consistent with genuine residence.

Courts have consistently articulated this principle: "Domicile once established continues until a new one is acquired... The acquisition of a new domicile requires the concurrence of (1) residence at the new domicile and (2) intention to remain there."^[8]

Stipend Tax Treatment

Travel nursing compensation typically includes a base hourly wage plus various stipends: housing allowances, meal per diems, and incidental expense reimbursements. The tax treatment of these stipends depends on whether the travel nurse has established a valid tax home.

Tax-Free Treatment Requirements

Housing allowances, meal stipends, and incidental allowances may be received tax-free if the following conditions are met:

1. Valid tax home: The travel nurse maintains a legitimate tax home as defined by IRS Publication 463
2. Temporary assignment: The work assignment at the distant location is expected to last (and does last) one year or less
3. Duplication of expenses: The travel nurse incurs housing expenses at the assignment location while maintaining financial responsibility for the tax home residence
4. Substantiation: The amounts received do not exceed IRS per diem rates for the assignment location, or if they do, the excess is treated as taxable wages

Taxable Classification

When the above conditions are not met, stipends are classified as taxable compensation. Specific circumstances resulting in taxable treatment include:

• The travel nurse does not have a valid tax home (itinerant worker classification)
• The assignment extends beyond one year, causing it to become "indefinite" rather than "temporary" under IRS rules
• The travel nurse does not incur duplicate expenses (e.g., lives rent-free at a family member's residence)
• Stipend amounts exceed substantiated actual expenses or applicable per diem rates

IRS Revenue Ruling 99-7 provides guidance on the tax treatment of travel expenses and reimbursements for workers with no regular place of business, which applies to travel nursing situations.^[5]

Compliance Considerations

Travel nurses receiving tax-free stipends assume responsibility for maintaining documentation sufficient to substantiate their tax home status in the event of an IRS examination.

Audit Risk Factors

The IRS may select returns for examination based on various factors, including:

• High ratio of non-taxable stipends to taxable wages
• Claimed tax home in a different state from license registrations or other documentation
• Inconsistent addresses across tax returns, W-2 forms, and official documents
• Absence of documented returns to the tax home location
• Failure to demonstrate duplicate expense payments

Recommended Practices

Tax practitioners advising travel nurses generally recommend the following practices for maintaining compliant tax home status:

1. Periodic returns: Visiting the tax home location at least once per calendar quarter, with 30 or more days annually considered a strong indicator of maintained connection^[1]
2. Document retention: Maintaining lease agreements, utility bills, payment records, and travel receipts for a minimum of seven years
3. Address consistency: Ensuring all official documents (driver's license, voter registration, bank accounts, professional licenses) reflect the tax home address
4. Assignment duration monitoring: Tracking cumulative time at each assignment location to avoid exceeding the one-year temporary assignment threshold

While the IRS does not specify a minimum number of days that must be spent at the tax home, auditors evaluating tax home claims assess the totality of circumstances, including documented intent to return and actual patterns of use.^[1]

Professional Assistance

Given the complexity of tax home and domicile requirements, travel nurses frequently engage tax professionals specializing in travel healthcare taxation, and may utilize domicile establishment services specializing in travel healthcare that provide compliant residential addresses, triple-verified lease documentation, and coordinated utility account setup in zero-income-tax states. Such services eliminate common documentation gaps (mismatched addresses, inconsistent state records, missing substantiation) that trigger audit flags and help mobile professionals establish compliant documentation that satisfies both IRS tax home requirements and state domicile standards.

Penalties for Non-Compliance

Travel nurses who receive tax-free stipends without maintaining a valid tax home may be subject to:

• Back taxes: Reclassification of stipends as taxable income for the affected tax years
• Interest: IRS-imposed interest on unpaid taxes from the original due date
• Accuracy-related penalties: Up to 20% of the underpayment attributable to negligence or substantial understatement of income^[6]
• State tax assessments: Additional state income tax liability if the taxpayer's claimed domicile is successfully challenged by another state

See Also

• Travel Nurse Tax Home Requirements Explained
• Travel Nurse Tax Home: The Complete IRS Guide for 2025
• Florida Domicile Guide for Mobile Professionals
• IRS Audit Defense: What Travel Nurses Need to Know

References

1. Internal Revenue Service, Publication 463: Travel, Gift, and Car Expenses
2. Internal Revenue Service, Publication 17: Your Federal Income Tax
3. Florida Statutes § 222.17: Declaration of Domicile
4. Matter of Bodfish v. Gallman, New York Court of Appeals (domicile intent standard)
5. IRS Revenue Ruling 99-7: Travel expenses for workers with no regular place of business
6. Internal Revenue Service: Accuracy-Related Penalty
7. State audit data synthesis derived from California Franchise Tax Board and New York State Department of Taxation and Finance residency audit protocols and published determinations
8. Established common law principle of domicile; see Restatement (Second) of Conflict of Laws § 18 (1971)

External Resources

Travel nurses seeking to establish compliant tax home documentation may benefit from domicile establishment services that provide residential addresses in zero-income-tax states with proper lease documentation and utility account setup.

Sources & Methodology: This article synthesizes guidance from IRS Publications 463 and 17, state domicile statutes, tax practitioner case experience, and state revenue department audit protocols. Specific statistics (audit rates, tax savings ranges) are derived from available state data and professional analysis; individual results vary.

Disclaimer: This article provides general information about federal and state tax concepts and does not constitute legal, tax, or financial advice. Tax laws are complex and subject to change. Individuals should consult qualified tax professionals or attorneys for advice specific to their circumstances.