Are Travel Nurse Stipends Taxable? The Real Answer With Scenarios

Introduction: The Short Answer and the Full Story

Ask any experienced travel nurse whether stipends are taxable and you will get the most frustrating — and most honest — answer in healthcare: “It depends.”

The short answer is that travel nurse stipends are non-taxable if you meet specific IRS requirements. But the long answer involves your living situation, your documentation habits, and whether you truly maintain what the IRS considers a “tax home.” Getting this right is not a minor detail. The difference between tax-free and taxable stipends can amount to $10,000 to $20,000 per year in take-home pay. That is the difference between building real wealth on the road and unknowingly racking up a tax bill you did not plan for.

This guide walks through seven real-world scenarios so you can find the one that matches your situation and understand exactly where you stand.

Disclaimer: This guide is for educational purposes only and does not constitute tax advice. Consult a qualified tax professional for guidance specific to your situation.

The IRS Rules in Plain English

The IRS treats travel nurse stipends as tax-free reimbursements for “duplicated living expenses.” The logic is straightforward: if you already pay for a home somewhere and your job requires you to temporarily live somewhere else, you are incurring double expenses. The stipend compensates you for that duplication, and the IRS does not tax it.

But two conditions must be met:

You have a tax home. This is a permanent place of residence where you maintain real financial ties — a mortgage, a lease, utility bills, voter registration, and similar connections.
You are working away from it temporarily. Your assignments must be in locations that require you to live away from your tax home, and each assignment must be expected to last less than 12 months.

When both conditions are satisfied, your housing stipend, meals and incidentals (M&IE) stipend, and travel reimbursements are all non-taxable. When either condition breaks down, those stipends become ordinary taxable income — and you owe federal and state income tax on every dollar.

The concept of “duplicated expenses” is the thread running through everything. If you are not actually duplicating your cost of living, the IRS has no reason to give you a tax break. For a deeper dive into establishing and maintaining your tax home, read our travel nurse tax home guide.

Scenario 1: Nurse With a Mortgage — Stipends Are Non-Taxable

The setup: Sarah owns a home in Tennessee, pays her mortgage every month, and travels to assignments 100 or more miles away. She maintains her Tennessee address on her driver’s license, is registered to vote there, and returns between contracts.

Why this works: This is the strongest possible tax home position. Sarah has clear, documented financial ties to a permanent residence. Every month she pays a mortgage on a property she is not living in while simultaneously paying for housing at her assignment location. Her expenses are undeniably duplicated.

Sarah’s stipends — housing, M&IE, and travel reimbursement — are all non-taxable. She should keep copies of her mortgage statements, property tax bills, utility bills, and any other records that prove she maintains the home.

What about renting the property out? If Sarah rents out her home while traveling, her tax home position weakens. The IRS may argue that she is not maintaining a residence for her own use. Some CPAs say renting out a room is acceptable as long as you retain access to part of the home. Renting the entire property is riskier. Talk to a travel-nurse-savvy CPA before going this route.

Scenario 2: Nurse Who Rents — Stipends Are (Usually) Non-Taxable

The setup: Marcus rents an apartment in Ohio. He keeps the lease active while working 13-week assignments in other states. He pays rent every month regardless of whether he is physically there.

Why this works: Renting is a strong tax home position as long as the lease is continuously maintained. Marcus pays rent in Ohio and pays for housing at his assignment location. His expenses are duplicated, and the IRS treats his stipends as non-taxable.

The critical detail is the word “continuously.” If Marcus lets his lease lapse between contracts — even for a month — he may lose his tax home status for that period. The IRS looks at whether you had ongoing financial obligations to a permanent residence. A gap in your lease is a gap in your tax home.

Subletting: If Marcus sublets his apartment to cover rent while he is away, the situation is similar to renting out a house. Subletting can weaken your position because the IRS may argue you are not maintaining the residence for your own use. Keeping the lease and paying rent without subletting is the cleanest approach.

Documentation: Keep copies of your signed lease, monthly rent payments (bank statements or canceled checks), utility bills, and any correspondence with your landlord. For more on what stipends cover and how they work, see our stipend explainer.

Scenario 3: Full-Time Traveler, No Permanent Home — Stipends ARE Taxable

The setup: Jenna sold her house, gave up her apartment, and has been living assignment to assignment for two years. She stores her belongings in a storage unit and uses a mail forwarding service. She loves the freedom and has no plans to settle down.

Why this does not work: The IRS classifies Jenna as an “itinerant worker.” She does not maintain a permanent residence anywhere, so she does not have a tax home. Without a tax home, there are no expenses being duplicated — her only living expenses are wherever her current assignment happens to be.

All of Jenna’s stipends become taxable income. This changes her compensation math significantly.

The financial impact: Suppose Jenna receives $1,400 per week in non-taxable stipends. Over a 48-week working year, that is $67,200. If those stipends become taxable and she is in the 22% federal bracket plus 5% state tax, she owes roughly $18,100 in additional taxes. That is real money — and it is money Jenna may not have set aside.

Use the pay calculator to model the difference between taxable and non-taxable stipends for your own numbers. The results are often a wake-up call.

Scenario 4: Living With Family, Paying Rent — Gray Area

The setup: David uses his parents’ house in Florida as his permanent address. He has a written lease agreement with his parents and pays $800 per month in rent via bank transfer. He returns between assignments and keeps a room there.

Why this can work (carefully): The IRS does allow family member residences as a tax home — but the arrangement must be legitimate. David needs all of the following:

A formal, written lease agreement
Rent payments at or near fair market value for the area
Payment made through a traceable method (bank transfer, check — never cash)
Evidence that he actually uses the residence between assignments

If David meets all four criteria, his stipends can be non-taxable. However, IRS scrutiny is higher for family arrangements because they are easy to fabricate. Documentation is everything.

Scenario 5: Living With Family, NOT Paying Rent — Likely Taxable

The setup: Ashley lists her mother’s address in Georgia on all of her documents, but she does not pay rent. She stays there for a few days between assignments and keeps some clothes in her old bedroom.

Why this is the weakest position: The IRS can argue that Ashley has no duplicated expenses. She is not paying for housing at her “tax home,” so the stipend is not reimbursing her for a cost she is actually incurring. Without a genuine financial obligation to maintain a residence, Ashley does not have a valid tax home in the IRS’s eyes.

How to strengthen this position: Ashley could formalize the arrangement by signing a lease with her mother, paying fair-market rent, and documenting everything. Until she does, her stipends are likely taxable, and she should be planning accordingly.

Scenario 6: Nurse Takes Only Local Assignments — Stipends May Be Taxable

The setup: Kevin lives in Dallas and accepts a travel assignment at a hospital 30 miles away. His agency offers him a housing stipend.

Why this is risky: The IRS requires that you be working “away from home” to qualify for non-taxable stipends. If Kevin can reasonably commute from his permanent residence to his assignment, he is not away from home — he is just going to work.

You may have heard of the “50-mile rule.” This is a common agency guideline used to determine stipend eligibility, but it is not an actual IRS rule. The IRS looks at whether the assignment requires you to sleep away from home overnight. If Kevin is commuting daily from Dallas, his stipends may be taxable regardless of the distance.

The safest position is accepting assignments that genuinely require you to live in a different area during the contract.

Scenario 7: Nurse on Extended Assignment (Over 12 Months) — Stipends Become Taxable

The setup: Rachel has been at the same hospital in Portland for 11 months. The facility offers her a 4-month extension, which would bring her total time in the area to 15 months.

The IRS rule: When an assignment in the same general area is expected to last — or actually lasts — longer than 12 months, it is no longer considered “temporary.” The assignment location effectively becomes your new tax home, and your stipends become taxable from that point forward.

This catches many nurses off guard. Extensions that push past the 12-month mark trigger the rule even if the original contract was well under a year.

How to avoid this: Break your time in a location before hitting the 12-month mark. Take an assignment in a different area, then return later if you want. The key is that no single continuous period in one location exceeds 12 months. Talk to your CPA before accepting any extension that puts you near the limit.

What Happens If You Get It Wrong

If the IRS determines that your stipends should have been taxable, the consequences are serious:

Back taxes: You owe income tax on every dollar of stipends received during the period in question.
Penalties and interest: The IRS charges penalties for underpayment plus interest that accrues from the original due date.
Your agency is not responsible. Agencies may help you structure your pay, but they are not liable for your tax home status. That is entirely on you.

If you realize mid-year that your stipends should have been taxable, the best move is to consult a CPA immediately and start setting aside money for the tax bill. You can also adjust your W-4 withholdings or make estimated tax payments to catch up. Dealing with it proactively is far less painful than an IRS notice two years later.

How to Protect Yourself

Protecting your tax-free stipends comes down to five habits:

Maintain thorough documentation of your tax home. Keep lease agreements, mortgage statements, utility bills, property tax records, and anything else that proves your financial ties to a permanent residence.
Work with a CPA who understands travel nursing. A general accountant may not know the rules around tax homes, stipends, and multi-state filing. A travel-nurse-savvy CPA pays for themselves many times over.
Be honest with yourself about your tax home status. If you do not actually maintain a permanent residence, do not claim non-taxable stipends. The short-term savings are not worth the long-term risk.
Do not rely on your agency’s guidance for tax decisions. Recruiters are not tax professionals. They want to help, but your tax situation is your responsibility.
Keep records for at least 3 to 7 years. The IRS can audit returns up to three years back (six years if they suspect substantial underreporting). Store your documentation digitally and keep it organized.

Take the tax home quiz to get a quick read on whether your current setup qualifies.

FAQ

My agency says I do not need a tax home — should I trust them?

No. Your agency’s primary goal is to fill positions, and recruiters are not tax advisors. Many recruiters genuinely want to help, but they are not qualified to make tax determinations about your specific living situation. Some agencies tell every nurse they qualify for non-taxable stipends because it makes the pay package look better. The IRS does not care what your agency told you — they care about the facts of your situation. Always verify your tax home status with a qualified CPA or enrolled agent who understands travel nursing tax law.

Can I make my stipends non-taxable retroactively?

Generally, no. Your tax home status is based on your actual living situation at the time the stipends were paid. You cannot go back in time and establish a tax home you did not have. However, if you had a legitimate tax home but simply failed to document it properly, a CPA may be able to help you reconstruct records using bank statements, lease agreements, and other evidence. The lesson is to set up your tax home before your first assignment, not after.

What if I lose my tax home mid-contract?

If your tax home situation changes during a contract — for example, your lease ends and you choose not to renew — your stipends may become taxable from that point forward. The change does not retroactively affect stipends you already received while you had a valid tax home. Notify your CPA immediately if your living situation changes, and be prepared to adjust your tax withholdings or estimated payments.

Are stipends taxable in my state even if they are not federally?

Most states follow the federal treatment of stipends, meaning if your stipends are non-taxable federally, they are non-taxable at the state level as well. However, state tax rules can be complicated, especially when you work in multiple states during the year. Some states have unique filing requirements that can affect how your income is reported. A CPA experienced with multi-state travel nurse filing can help you navigate this.

How likely is an IRS audit for travel nurses?

The overall individual audit rate is low — roughly 0.4% of returns. However, travel nurses can attract attention when their W-2 shows a relatively low taxable income compared to what the IRS might expect for a registered nurse. Large non-taxable stipends that reduce your reported income can flag your return for review. The best defense is solid documentation of your tax home. If you are audited and your records are in order, the process is straightforward. If your records are thin, it becomes expensive and stressful.

Key Takeaways

Stipends are non-taxable only if you maintain a valid tax home and work away from it temporarily.
Your specific living situation determines the answer. Review the scenarios above and find the one that matches yours.
When in doubt, consult a travel-nurse-savvy CPA. The cost of professional advice is a fraction of the cost of getting this wrong.
Document everything. Leases, mortgage statements, utility bills, and bank records are your proof.
Use the pay calculator to see exactly how much taxable vs. non-taxable stipends affect your total compensation.

Affiliate Placement Notes

CPA referral affiliate link in “How to Protect Yourself” and key takeaways
Tax software affiliate in the “What Happens If You Get It Wrong” section
Pay calculator link to show stipend impact on total comp in Scenario 3