Travel Nursing Pay – The 50 Mile Myth for Tax Free Stipends
The “50 Mile Rule” is one of the most common fallacies pertaining to tax-free reimbursements for travel nurses. It’s prominent among both travel nurses and travel nursing recruiters. Purveyors of this “rule” claim that it allows travel nurses to accept tax-free reimbursements as long as the travel assignment is 50 miles or more from the travel nurse’s tax home. This is incorrect. The IRS makes no such determination. In this article, we’ll thoroughly review this topic so travel nurses can approach it with confidence.
What does the IRS say about the “50 Mile Rule”?
IRS Publication 463 states that you can accept tax-free reimbursements if “you need to sleep or rest to meet the demands of your work while away from home.” The IRS does not define a specific distance that would constitute your need to sleep or rest.
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Can Travel Nurses Accept Tax-Free Reimbursements Without Incurring Expenses?
Moreover, the IRS requires that you actually incur expenses in order to accept tax-free reimbursements for those expenses. Therefore, the scenario where a travel nurse drives 100+ miles to work a shift and then drives home without incurring expenses for lodging does not qualify for a tax-free lodging reimbursement.
How do Travel Nurses Qualify for Tax-Free Reimbursements?
We covered how travel nurses qualify for tax-free reimbursements in our extensive 4-part series of articles on this topic. We encourage you to review those articles by selecting this link.
In this article, we want to stay focused on the “50-mile rule.” Specifically, we want to thoroughly debunk all the arguments that commonly support this myth. These arguments can be convincing and we want you to be confident in rejecting them so you don’t fall pray.
Where Does the 50-Mile Rule Come From?
So, where does the 50-mile rule come from? Joseph Smith, a tax consultant specializing in taxes for mobile professionals, provided 3 possible origins.
First, some states have a 50-mile rule for state legislators to qualify for the tax-free reimbursements the states pay to legislators while conducting state business. Obviously, travel nurses are not state legislators and states don’t pay travel nurses. Therefore, these rules do not apply.
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Second, the IRS requires that a taxpayer’s new commute to a new workplace be more than 50 miles farther than their old commute in order for the taxpayer to write off expenses related to moving for work. This rule does not apply to the lodging and meal reimbursements that travel nurses receive. Therefore, it does not apply to travel nurses.
Third, many travel nursing companies utilize their own 50-mile rules as an internal policy to help them determine if a travel nurse qualifies for tax-free reimbursements. As a result, many in the industry have come to conflate these internal rules with IRS rules.
Why do travel nursing companies have such a rule?
You might be wondering why agencies maintain such rules. First, such rules serve as potential safeguards in case the IRS audits an agency. While the IRS does not officially recognize such a rule, consistently enforcing such a rule does, nonetheless, give the impression that an agency is attempting to ensure compliance with the spirit of IRS regulations. Whether or not the IRS views it favorably in an audit is another story.
Second, some agencies prefer to maintain one concrete rule to demarcate between PRN, local contracts, and travel nursing contracts. This is because different hospitals have different rules for how nurses qualify for the hospitals’ PRN, local contracts, and travel contracts. Therefore, it’s more efficient for the agency to have one rule that meets the requirements of all the facilities they work with than it is to check the requirements of each facility every time they submit a candidate for a job.
Some Hospitals Have 50-mile Rules
Another reason that the myth of the 50-mile rule persists is that many hospitals have their own distance rules for travel nurses. I’ve seen hospitals with distance requirements of 50, 75, and 100 miles for travel nurses.
Why hospital admin wants them
Hospitals enforce such policies for several reasons. First, this is a cost issue for hospitals. PRN bill rates are almost always lower than bill rates for travel nursing jobs. Sometimes, that difference is enough to cover the cost of housing and travel, so it can be significant.
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In addition, hospitals do not guarantee PRN shifts. However, they often must guarantee shifts for travel nursing jobs. Therefore, PRN shifts give the hospital flexibility to cancel shifts which can also save them money.
A hospital will typically try to fill its staffing needs at the lowest possible cost. Therefore, they prefer anyone within a 50-, 75-, or 100-mile radius to sign up for PRN shifts.
Why hospital staff wants them
Second, the hospital’s staff also has a stake in ensuring that travel nurses are not actually local. And, hospitals have a vested interest in keeping their staffs happy.
The issue is that travel nurses often have guaranteed hours. Moreover, travel nursing contracts are typically for 13 weeks.
As a result, if a hospital needs to cancel a shift, then they may call off staff members before calling off a travel nurse. This doesn’t happen very often, but it can and does happen. That’s because the hospital might have to pay the travel nurse even if they call them off.
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Therefore, it’s in the best interest of the staff to have local health care professionals signed up for more flexible PRN shifts. That way, the PRN worker would get called off before the permanent staff worker.
No matter the reason that the 50-mile myth exists, or the explanation given to justify it, it’s important that you not put any faith in to it. Again, at its worst, purveyors claim the myth allows travel nurses to accept tax-free stipends as long as the travel nurse’s tax home is more than 50 miles from the facility. This claim can get people into a lot of trouble. To learn how to legitimately qualify for tax free money as a travel nurse see our series on the subject.
So, it would appear that the article has been corrected and now cites the correct tax rules. However, I would like to point out there seems to be a lot of anger directed toward nurses in this post. Have any of you bothered to look at who wrote the article? If you had you would notice that it was not written by a nurse. Now I could take the same low road that many appear to be taking here and make assumptions related to intelligence, and ability to read, but I’m not going to. I would like to point out the person who wrote this article is not a nurse. Click on the authors profile…I wouldn’t want you to take the word of a nurse given your apparent disdain for us.
To the nurses who responded before me…please don’t allow yourself to be provoked and respond nasty comments with nasty comments…you are representing our profession and have done nothing here to help us prove our professionalism. I’m not saying “take crap”, I’m just saying either announce yourself as a nurse and act professional, or leave off the credentials and then sling mud. We all lose our composure, but I ask that you represent our profession with dignity in the eyes of the public. Anything less will not help us gain the respect and recognition we truly deserve.
To the CPA slinging insults above, I’m going to assume that you can read and just didn’t take the time to look at the credentials of the author of this article (who is not a nurse). You have certainly done little here to promote your profession. It is unfortunate that the person who typed this article hit a couple of wrong keys and referenced the wrong IRS publication which appears to have been corrected. Your message however, remains as written, and certainly does not promote your profession favorably. I think I’ll stick to doing my own taxes thank you, as I prefer to trust my finances to someone who reads things thoroughly before rushing forward with insults, and as it would appear, either their own miskeyed entry or mistaken.
To the author of the article, thank you for taking the time to write it. I enjoyed the read! Very informative and just the information I was looking for.
Now…I have spent way more time here than I planned…I have much to do, and very little of it might I point out, is peeling bandaids. That, by the way, is not taught in nursing school.
Lol
Sorry but you’re wrong. IRS publication 455 states “The distance test: Your new workplace must be at least 50 miles farther from your old home than your old job location was from your old home. If you had no previous workplace, your new job location must be at least 50 miles from your old home. ”
This is why nurses should stick to peeling band-aid wrappers for doctors and emptying bed pans (the maids of hospitals)….. Pay for an accountant people.
CPA,
You are sorely mistaken. IRS publication 455 relates only to Moving Expenses. Travel nurses are not “Moving”. They are working away from their tax homes temporarily. Publication 455 does not pertain to their circumstances. Publication 463 is the pertinent document for them.
Readers,
This is why you should stick with Accountants who specialize in taxes for travel professionals like the folks at traveltax.com. Otherwise, you may find yourself with a CPA who seemingly got their credentials out of a Cracker Jack Box like this fool.
Nice comment back!!!!
Seems like you don’t think very highly of nurses. Hope you never get sick and end up in a hospital. You will soon find that nurses do much more and you rarely see doctors. Show more respect for nurses.
CPA – (Idiot),
FYI – Most Nurses have bachelors degrees In science which has been recently claimed as the toughest degree to get by Guinness World Book of record. Most hospitals require a bachelor’s degree to be hired in their hospital. therefore your associate’s degree in accounting and your CPA certificate doesn’t mean a whole lot.
Anybody can read an IRS publication and follow the directions. Try putting in a NG Tube , IV or working a code to save life of some ungrateful asshole like yourself.
HOSPITAL MAID with a BSN.