Truths and Tips About Travel Nurse Taxes and the 50 Mile Rule
If you are already working as a travel nurse, you’ve likely encountered this mythical 50-mile radius rule. The belief being, that if you work at least 50 miles from where you live, you will receive a housing stipend that is tax-free! What an amazing benefit for travel nurses! Maybe you’ve even come to believe it! But beware! It is only a unicorn. A shiny, magical thing that’s talked about and imagined but that is not actually real.
You’re here for the truth, aren’t you? You can handle the truth! (channeling Jack Nickelson and Tom Cruise here!) There is no 50-mile rule. Take a deep breath and say it with me, “There is no 50-mile rule”.
Why do so many travel nurses believe the 50-mile radius myth?
Why is this unicorn belief so persistent? There is a combination of factors that keeps this myth alive and well. The main reason for this is because many hospitals and medical facilities have their own rules and regulations in place that may stipulate a distance requirement. These rules are often an attempt to prevent their full-time staff who live nearby from picking up travel nursing contracts.
Furthermore, what has likely given it more weight, is that a horse was mistaken for a unicorn. The IRS had (note the past tense verbiage) a 50-mile rule for applying for relocation tax deductions (i.e. moving expenses). This horse-rule didn’t apply to travel nurses. Travel nurses work away from home for a temporary period of time, they don’t relocate.
Misunderstanding of Tax Deductions Causes Confusion
Prior to the tax year 2018, if a person’s new job location was at least 50 miles away from their previous home, a person could qualify for moving expenses deductions for relocating to a new home. To be very clear, this rule – that didn’t apply to travel nurses anyway – is no longer an option for any nonmilitary taxpayers.
According to the IRS in their Publication 521:
“For tax years 2018 through 2025, the deduction of certain moving expenses is suspended for nonmilitary taxpayers. In order to deduct certain moving expenses, you must be an active member of the military and moving due to a permanent change of duty station. (…) For tax years 2018 through 2025, reimbursements for certain moving expenses are no longer excluded from the gross income of nonmilitary taxpayers.”
Travel Nurse Tax Deductions
So now that we are clear on the unicorn actually being a past-tense horse, let’s move on to the actual travel nursing benefit of tax-free housing stipends. This is an exciting benefit and definitely financially motivating, but you need to understand it fully. The truth is, a traveling nurse can only get tax-free stipends for housing when they have traveled away from their tax home. As a traveling nurse, in order for you to get these benefits tax free, you must be able to show that you have housing expenses on your tax home AND at the location of your travel nurse contract. This benefit is intended to help travel nurses who have duplicate housing costs.
You might be thinking now, “ok, I think I get it, but what exactly is a ‘tax home’?” Your tax home is important for IRS purposes. Your tax home is the home where you are paying a monthly mortgage or rent, have utility expenses, and have some sort of legal tie. Legal ties to your tax home can include being a registered voter under that address and have a driver’s license with that address. Do not rent out your tax home, or sub-let your rental lease unless you are prepared to be disqualified from the tax-free housing reimbursements.
As a trusted travel nursing agency, Elite Specialty Staffing pays nurses the housing stipend as long as he/she qualifies for it based on the hospital’s established rules. However, when it comes time for taxes, it’s up to you to keep your records straight and it’s highly advised that you hire a consultant.
It is extremely important that you keep records of your housing expenses, both of your tax home, and your travel assignment home. When it comes time to do your taxes, your CPA is going to ask you for these documents. Think about how much less stressful tax time will be for you if you don’t have to scramble around calling banks and companies for copies of old bills and payment receipts?
What’s the Difference Between Travel Nurses and Per Diem Nurses?
While both types of nursing careers are similar and you often travel to work PRN nursing shifts, don’t confuse travel nursing with per diem nursing. There is no contract assignment like there is with travel nursing. If you are picking up per diem nursing jobs or considering it – it might be helpful for you to be aware of the maximum per diem rates for the area.
How Much Money Do Per Diem Nurses Make?
Per diem rates vary greatly by city, state. This totally makes sense when you consider that the cost of living in New York City is notoriously high compared to the surprisingly low cost of daily living expenses in Las Vegas, Nevada.
The per diem nursing rates are renewed yearly on October 1st. You can find them on the U.S. General Services Administration website, here. Of course, in today’s smartphone-driven age, there is also an app. Your agency may not pay as much as the GSA guidelines suggest, but this is a good tool for you to use because it will help you to know if your agency is way-off the mark.
For more information on the differences between travel nursing and per diem nursing and the benefits of per diem nursing, read my previous post, “What’s the difference in Travel Nursing and Per Diem Nursing” or this post, “Per Diem Nursing Jobs“.