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Tax Homes and Take-Home Pay: What Every Travel Nurse Needs to Know

Tax Homes and Take-Home Pay: What Every Travel Nurse Needs to Know

Read on if you’re working a healthcare job in multiple states

The 2025 tax season may be over, but it’s not too early to think about 2026. If you’re a travel nurse or just starting out, it’s a good idea to stay informed about the residency rules for travel nurses. Knowing these rules is vital because they determine how you receive stipends, such as housing and meals, and whether that income is tax-free or taxable. This directly affects the net income travel nurses receive from each assignment. With every new assignment, travel nurses must navigate a new set of residency and tax rules that differ by location. Understanding these rules can help you maximize your income, ensure IRS compliance, and avoid costly mistakes when moving between assignments.

Why residency rules matter for travel nurses

While transitioning from one job to another may seem straightforward, travel nurses must navigate the logistics of their new assignments along with the accompanying financial responsibilities. Some of the financial items on that list include stipends, which property to claim as your living space, and more. For example, the IRS has strict criteria for tax-free stipends. To qualify, you need to provide evidence of maintaining a permanent residence and being away from it for work. This means you incur living expenses at both your tax home and your assignment location. If these guidelines are not followed, you risk losing tax-free stipends and facing additional tax-related expenses.

Picture of a model home with a jar of change to the right of it

What is a tax home and why is it important?

A tax home is not simply where you grew up or where your family lives; it’s a location where you maintain your primary residence and to which you regularly return. The IRS defines a tax home as a person’s place of business or employment, regardless of where the family residence is located. For travel nurses who tend to work temporary jobs in different states, your primary residence can still qualify as your tax home, provided you meet certain IRS requirements.

Many travel nursing expenses can be considered tax-free if they meet specific IRS guidelines. Housing, meals, and travel allowances, known as stipends, must qualify under these IRS criteria to be reported as tax-free. If they don’t qualify, they must be reported as taxable income. This is where having a valid tax home becomes important because, to claim non-taxable meals, travel expenses, and housing, you must have an established tax home. 

Do travel nurses need a permanent residence?

Yes, you must have a permanent residence to establish and maintain a tax home. This means more than just having an address on your driver’s license. You’ll need to prove that you have a physical home where you:

  • Pay rent or a mortgage (with your name on the lease or deed)
  • Maintain utility bills (in your name)
  • Return between assignments (even if only occasionally)
  • Have your driver’s license and voter registration

Merely providing a P.O. box or a relative’s address will not suffice. The IRS requires proof of your active financial and personal ties to a specific location, including living expenses or a plane ticket.

How do you declare and maintain a tax home?

Declaring a tax home isn’t a one-time process; it requires continuous documentation and diligence. Maintaining it will require continuous efforts. Here’s how it’s done:

1. Establish your permanent residence

Choose a location as your tax home such as your own apartment, house, or a rented room, at fair market value. Fair market value is used to establish a tax home, which the IRS then uses to determine whether your claimed expenses are legitimate and reasonable. Ensure your name is on the lease or mortgage, and keep records of rent or mortgage payments, utility bills and property taxes.

2. Maintain your records

Keep your driver’s license, car registration and voter registration in your home state and current. File state taxes as a resident of your tax home state, even if you’re working elsewhere.

3. Duplicate living expenses

To qualify for tax-free stipends, you must show that you incur duplicate living expenses. Financial statements should show you’re paying for your tax home and temporary lodging simultaneously while on an assignment. This is a key IRS requirement. If you give up your tax home and only pay for housing where you work, you’re no longer considered a traveler.

4. Follow the 12-month rule

The IRS has a “12-month rule” for temporary assignments, meaning if you perform services at the same location for more than 12 months out of any rolling 24-month period, that location will become your new tax home. This means that you would no longer be eligible for tax-free stipends in that area. You can avoid this by not working in the same city for more than a year within a two-year window. Periodically return to your tax home to maintain eligibility for tax-free stipends.

The advantages of declaring a tax home

Establishing and claiming a tax home offers benefits beyond just meeting compliance requirements:

  • Tax-free stipends: You may also claim tax-free housing, meals and other incidental allowances, increasing your net income.
  • Travel expense deduction: When moving between assignments, you can deduct travel-related expenses such as mileage, airfare, and lodging.
  • Benefits on state taxes: Remaining a resident in your home state allows you to receive credits for taxes paid to other states, thus preventing double taxation.

Impact of not having a tax home

Without a tax home or a primary place of business, the IRS may classify you as “itinerant,” meaning all your income is taxable regardless of where you work. Staying in one location for too long (over 12 months within a 24-month period) can mean you’re automatically designating wherever you’re working as your new tax home, which may affect stipend eligibility and state tax responsibilities.

Do travel nurses need to file taxes in every state they work?

Travel nurses who work in several states typically must file a non-resident tax return in each state where they’ve taken an assignment and a resident return for their home state. Some states have no income tax or reciprocal agreements, but multi-state filings can be complex. Keep careful records of your assignments and earnings in each state.

Woman explaining a graph on paper to another person.

Should travel nurses consult a tax professional?

It might be a good idea. The tax rules for travel nurses are complicated and mistakes can be costly. An experienced tax professional stays up-to-date on any tax code changes you might not know. They can help you:

  • Structure your documentation for your tax home
  • Maximize your tax-free stipends
  • Navigate multi-state tax returns
  • Shield yourself from IRS audits and penalties

Even if you’re confident in your record-keeping, the peace of mind that comes from professional advice is well worth the investment.

Keep travelling, but stay tax compliant

The travel nursing career may be distinct and interesting, but it also has unique obstacles that staff nurses wouldn’t have to encounter. Complying with IRS and residency rules allows you to safeguard your income and focus on what you do best: delivering exceptional patient care nationwide. If you’re looking for assistance, reach out to us here at StaffDNA. Our experienced recruiters can assist with any questions you might have and help book your dream assignment without the worries.

Headshot of Amy Larkins

Amy Larkins

Compliance

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Healthcare organizations face some of the toughest workforce challenges: tight budgets, lean IT teams and limited tools for sourcing, hiring and onboarding staff. Add in manual scheduling, rising labor costs and high burnout, and the pressure grows. Rolling out complex systems can feel out of reach without dedicated tech support. Even simply evaluating new technology can overwhelm already stretched-thin teams.

These challenges make it clear that technology isn’t just helpful; it’s essential for healthcare organizations. Especially when they’re striving to do more with less. Not only are healthcare organizations falling short on implementing new technology, but they’re struggling to update outdated systems. A 2023 CHIME survey found that nearly 60% of hospitals use core IT systems, such as EHRs and workforce platforms, that are over a decade old. Outdated tools can’t integrate or scale, creating barriers to smarter staffing strategies. But the opportunity to modernize is real and urgent.

Tech in Patient Care Falls Short

In healthcare, technology has historically focused on clinical and patient care. Workforce management tools have taken a back seat to updating patient care systems. Yet many big tech companies have failed when it comes to customizing healthcare infrastructure and connecting patients with providers. Google Health shuttered after only three years, and Amazon’s Haven Health was intended to disrupt healthcare and health insurance but disbanded three years later.

Why the failures? It’s estimated that nearly 80% of patient data technology systems must use to create alignment is unstructured and trapped in data silos. Integration issues naturally form when there’s a lack of cohesive data that systems can share and use. Privacy considerations surrounding patient data are a challenge, as well. Across the healthcare continuum, federal and state healthcare data laws hinder how seamlessly technology can integrate with existing systems.

Why Smarter Staffing Is Now Essential

These data and integration challenges also hinder a healthcare organization’s ability to hire and deploy staff, an urgent healthcare priority. The U.S. will face a shortfall of over 3.2 million healthcare workers by 2026. At the same time, aging populations and rising chronic conditions are straining teams already stretched thin.

Smart workforce technology is becoming not just helpful, but essential. It allows organizations to move from reactive staffing to proactive workforce planning that can adapt to real-world care demands.

Global Inspiration: Japan’s AI-Driven Workforce Model

Healthcare staffing shortages aren’t just a U.S. problem. So, how are other countries addressing this issue? Countries like Japan are demonstrating what’s possible when technology is utilized not just to supplement staff, but to transform the entire workforce model. With one of the world’s oldest populations and a significant clinician shortage, Japan has adopted a proactive approach through its Healthcare AI and Robotics Center, where several institutions like Waseda University and Tokyo’s Cancer Institute Hospital are focusing on developing AI-powered hospitals.

Japan’s focus on integrating predictive analytics, robotics and data-driven scheduling across elder care and hospital systems is a response to its aging population and workforce shortages. From robotic assistants to AI-supported shift planning, Japan’s futuristic model proves that holistic tech integration, not piecemeal upgrades, creates sustainable staffing frameworks.

Rather than treating workforce tech as an IT patch for broken systems, Japan’s approach embeds these tools throughout care operations, supporting scheduling, monitoring, compliance and even direct caregiving tasks. U.S. health systems can draw critical lessons here: strategic investment in integrated platforms builds resilience, especially in a labor-constrained future.

The Power of Smart Workforce Technology

In the U.S., workforce management is becoming increasingly seen as more than a back-office function; it’s a strategic business operation directly impacting clinical outcomes and patient satisfaction. Smart technology tools are designed to improve care quality, staff satisfaction, scheduling, pay rates, compliance and much more.

For example, by using historical data, patient acuity, seasonal trends and other data points, organizations can predict their staff needs more accurately. The result is fewer gaps in scheduling, fewer overtime payouts and a flexible schedule for staff. AI-powered analytics can help healthcare leadership teams spot patterns in absenteeism, see productivity and forecast needs in multiple clinical areas in real-time. Workforce management tools can help plan scheduling proactively, rather than reactively. It’s a proven technology tool that can help drive efficiency and reduce costs.

Why So Many Are Still Behind

Despite the clear benefits, many healthcare organizations are slow to adopt smart tools that empower their workforce. Several things are holding them back from going all-in on technology:

Financial Pressures

Over half of U.S. hospitals are operating at or below break-even margins. For them, investing in new technology solutions is financially unfeasible. Scalable, subscription-based and even free workforce management tools are available, but most organizations are unaware of or lack the resources to source these products. Workforce management tools can deliver long-term return on investment for most organizations. Taking the time to understand where the value lies and which tools to invest in needs to happen.

Outdated Core Systems

Many facilities still depend on legacy technology infrastructure that lacks real-time capabilities. Many large players in the healthcare workforce management industry dominate hospital systems. Other smaller, real-time tools that offer innovative solutions to scheduling, workforce hiring, rate calculators and more are available at a fraction of the cost.

Competing Priorities and Strategic Blind Spots

Healthcare organizations and hospitals have many high-priority business objectives and regulatory demands. Digital transformation naturally falls down on the priority list, which causes them to miss improvements that can lead to long-term stability. With patient care and provider satisfaction at the top of the priority mountain, technology changes can be easily missed or shoved to the side when other business objectives are perceived to “move the needle” more.

Poor Change Management

Even the best technology efforts can fail without the right strategy for adoption and support from senior leadership. Resistance from staff, lack of training, or poor rollout communication can undermine success. Effective change management—clear leadership, role-based training and feedback loops—is essential.

Faster than the speed of technology

Change needs to come quickly to healthcare organizations in terms of managing their workforce efficiently. Smart technologies like predictive analytics, AI-assisted scheduling and mobile platforms will define this next era. These tools don’t just optimize operations but empower workers and elevate care quality.

Slow technology adoption continues to hold back the full potential of the healthcare ecosystem. Japan again offers a clear example: they had one of the slowest adoption rates of remote workers (19% of companies offered remote work) in 2019. Within just three weeks of the crisis, their remote work population doubled (49%), proving that technological transformation can happen fast when urgency strikes. The lesson is clear: healthcare organizations need to modernize faster for the sake of their workforce and the patients who rely on providers to deliver care.

 

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