If you’re a travel nurse, you’ve probably asked yourself, “What is a tax home?” at least once. Unfortunately, the answer to this question isn’t black and white, and it can get pretty complex. For new nurses especially, trying to figure out the concept of a tax home can be mind-boggling and frustrating. Luckily, we’re here to help! Keep reading to learn more about tax homes for travel nurses.
Tax Home Tips for Travel Nurses
What is a Tax Home?
Simply put, a tax home is a geographical location where you earn the majority of your income. However, your tax home isn’t always your permanent residence, or where your driver’s license is registered. For many travel nurses it is, but sometimes it isn’t. It all depends on income. Having a tax home allows travel nurses to save on taxes for certain deductible when they’re away from home.
Tax Home Requirements
Now, you may be asking, how does this apply to travel nurses who have no primary place of income? As a travel nurse, you probably spend most of your time jumping from one assignment to the next. So, how do travel nurses maintain a tax home? The IRS requires travel nurses to satisfy three requirements to do this. According to Publication 463, the requirements are as follows:
- “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 in which both your historical place of lodging and your claimed main home are located; you have a member of members of your family living at your main home; or you often use that home for lodging.”
Travel nurses must meet at least two of these requirements to have an acceptable tax home. Many travel nurses easily maintain their tax home by returning to their permanent residence to work for at least part of the year. Usually, this is done between assignments. For example, a travel nurse will take on a 13-week assignment in Georgia, return home to work for another 13 weeks, and then begin another assignment. That way, they will still be making the majority of their income at home.
Tax Home Tips
Before establishing a tax home as a travel nurse, there are a few important things to keep in mind. Here are a few tax home tips for travel nurses:
- Do not rent out your tax home. While it may seem ideal to rent your tax home while you’re traveling, it will most likely disqualify you from receiving a tax-free income.
- Don’t stay in one place for too long. Like we said above, it’s a good idea to return home between travel nursing jobs. If a travel nurse works in one city for more than a year over a two-year span, the IRS may think that they’ve abandoned their tax home.
- Contribute to monthly expenses at your tax home. Travel nurses must be able to prove that they personally contribute monthly to the care and maintenance of their tax home. If they can’t, they will not qualify as having a tax home. For example, if a relative or spouse takes care of most of the residence’s expenses while you’re on assignment, it cannot be considered a tax home.
- Keep a record of everything. As a travel nurse, it’s crucial to keep meticulous records of your travel expenses. Keeping proper documentation will make filing taxes go much more smoothly once tax season comes around.
Now, hopefully you have a better answer to the question, “what is a tax home?” Even for experienced travel nurses, it can be tough to figure out. Do you have any travel nurse tax home advice? Share with us in the comments below!