Travel Nursing – Is It Worth It Without a Tax-home?

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Travel nursing agencies and their recruiters trumpet the benefits of tax-free stipends in their marketing campaigns and sales pitches. And of course, why wouldn’t they? In most cases, the tax-free stipends can result in hundreds of additional dollars making their way into the pocket of the travel nurse. But what if the travel nurse doesn’t have a tax-home and therefore doesn’t qualify for tax-free stipends? Is it still worth it? There are several issues to consider when answering this question.

Travel Nursing: Establishing a Tax Home

First, travel nurses should consider the possibility of establishing and maintaining a tax-home so that they can qualify to receive the tax-free stipends. You can review this four part series (1, 2, 3, 4) for detailed information on how to accomplish this. I assume that those who believe they don’t have a tax-home are harboring this belief because they don’t incur duplicate expenses. In other words, they aren’t paying rent or a mortgage somewhere. However, travel nurses may still be able to establish a tax-home. Again, please refer to the four part series above for the details.

Travel Nursing Without a Tax Home: Comparing Pay Packages

If you determine that there is no way you can establish and maintain a tax-home, then you should compare the pay package with your permanent compensation package. When doing so, it’s important to consider ALL of the compensation variables when determining the total value of both compensation packages. For your permanent package, you must consider items such as the value of any paid vacation, paid sick days, medical benefits, and 401K matching if you’re participating in a 401K plan. For your pay package, you must consider the value of housing, bonuses, the pay rate, travel stipends, 401K plans, medical benefits and all other compensation related items.

As a recruiter, I routinely had healthcare professionals rebuff pay offers because “the rate” was too low. For example, if the assignment had a rate of $28 per hour, they’d tell me that there was no way they’d work for such a low rate. But of course, they’d also be getting company provided housing in addition to other compensation components. Now, if you are paying duplicative expenses, then you don’t really care about housing because you’re paying rent or a mortgage back home. However, if you don’t have a tax-home and aren’t paying rent or a mortgage, then the housing should indeed be considered compensation. You can review this three part series (1, 2, 3) for more information on determining the value of a compensation package.

Ultimately, your goal is to make an apples-to-apples comparison between your permanent compensation package and the compensation package. This means that you’ll need to break everything down to a common denominator. The best common denominators to use are those related to time. We’re talking about hours worked. You’re going to break everything down to an hourly value, a weekly value, or a monthly value. I prefer hourly values. For more information on how to accomplish this, please watch our travel nursing pay video.

Of course life is about more than just money, so you’ll have to consider the intangibles. Why are you considering travel nursing? Are you interested in travel? Are you tired of dealing with workplace politics? Do you just need a break from the permanent job scene? Are you hoping to quickly expand your skills and learn new procedures and systems? Travel nursing is a means to accomplishing all of these things. It’s up to you to determine how much they’re worth to you.

Travel Nursing Without a Tax Home: How do Agencies Handle It?

If after making these considerations you determine travel nursing to be a viable option, then you’ll need to consider how agencies are going to deal with your “itinerant” status. Itinerant just means that you don’t have a tax home. Determining how the agency handles this is important because it helps you understand how you’ll need to approach your own taxes when it’s time to file.

Some agencies may be unwilling to work with you unless you sign a document attesting that you have a tax-home and are entitled to receive tax-free stipends. They are concerned with being tagged by the IRS for wage recharacterizaton. It’s typically the larger corporate agencies that maintain such policies. This is largely a problem for the agency and not you, but if you’re interested, you can read this blog post for more information on wage recharacterization.

You’ll also find agencies that may not require you to sign such a document, but will still only provide their standard compensation package that includes tax-free stipends. You’ll also find some agencies that are willing to pay you an all taxable wage. In any case, if you do not have a tax home, then you’ll need to declare any tax-free compensation variables on your income tax return. Of course, some of these items will still be tax deductible. You can seek the advice of an experienced travel tax adviser to determine the best options for your unique circumstances.

In the end, I think the majority of nurses without a tax-home will find that travel nursing is indeed worth it even if they only consider the financial aspects. Even in difficult economic times, the fully blended rate for the average travel nursing contract is still somewhere between $37/hour-$43/hour. This puts it in-line or above the national median wage for Registered Nurses with 5-9 years of experience.

As always, your feedback is appreciated. Please share your thoughts and let me know if there’s anything I missed.

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10 replies
  1. Sunnie C. says:

    If I don’t have a tax home, what all is considered taxable besides my regular wages? For example, if I take company housing instead of the housing stipend, is the amount they pay for that considered taxable income for me? The utilities on it?

    Reply
    • Kyle Schmidt says:

      Thanks for the inquiry, Sunnie. In general , yes, the value of housing and utilities are taxable if you don’t have a tax home. Other items, like license and certification reimbursements, are not taxable. Please note that I’m not a tax adviser, so this is for informational purposes only. We recommend discussing your unique circumstances with a registered tax professional in order to ensure that you’re receiving the most reliable advice.

      Reply
    • Kyle Schmidt says:

      This is a really good question. Unfortunately, I don’t have the answer. My sincerest apologies. However, you can contact traveltax.com. They’ll typically answer questions like this free of charge.

      Reply
    • Kyle Schmidt says:

      Yes, that’s true for the most part. You could receive a tax free payment for travel expenses and write off your moving expenses. Also, you won’t be duplicating expenses, so that’s a plus. But yes, housing and M&IE are definitely not tax-free when you don’t have a tax home.

      Reply
    • Kyle Schmidt says:

      Hey Ali,

      Thanks for the inquiry. I’d have to see the entire pay package to answer your question definitively. However, I’d be surprised if you were losing that much in taxes. For example, let’s say you received $30 per hour taxable, instead of receiving it tax-free, you’d pay taxes on that $30 per hour that you wouldn’t have otherwise. As a result, you shouldn’t lose 50% of your entire pay check to taxes…just the additional taxes on that $30 per hour.

      I hope that makes sense. Please feel free to provide additional information or let me know if there are any questions I might be able to help with.

      Reply
  2. sandra davis says:

    I Have a question about the tax home, I just moved in with my sister do I have a tax home or not.? If I paid her rent money would that make me have a tax home? If I don’t pay rent would I have a tax home?

    Reply

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