Your Top Travel Healthcare Tax Questions, Answered

Taxes are one of the most common—and most confusing—topics for travel nurses and allied health professionals. From tax homes and stipends to multi-state filings, the rules can feel overwhelming, especially when your career keeps you on the move. To help cut through the complexity, we sat down with Joseph Smith, a tax expert from our partner TravelTax, to answer some of the most frequently asked questions we hear from travelers. 

“What is a tax home for travel nurses and allied clinicians? And what do I need to do to prove I have one?” 

“The most confusing thing about your tax home is that it is not the same as a permanent residence. A tax home is where a person regularly earns their income. Since most travelers do not have a regular place of work, the tax residence can default to where they maintain their principal residence dwelling and have a financial burden for that through rent, shared expenses, or mortgage.” 

“If I work in several different states this year, do I need to file taxes in each one?” 

“Yes, you will file in every state you work, and your home state, unless there is a reciprocity agreement or the state does not have an income tax.” 

“Some states have agreements where you don’t have to pay taxes in both your home state and your work state. How do I know if that applies to me?” 

“It's good to familiarize yourself with your home state taxes because not all payroll platforms are efficient when they are dealing with all 50 states. Most reciprocity agreements involve border states. There is also a five-state group, which includes California, Oregon, Arizona, Indiana and Virginia that runs on a reverse credit process.” 

“My home state has a higher tax rate than some of the states I work in. How do I make sure I’m not underpaying and getting hit with penalties?” 

“There are three ways to approach this. 1) If your agency practices “courtesy withholding”, then they will be taking out the taxes for both the home and work state and any excess will be refunded when you file your return. 2) You can make estimated payments if the shortfall is significant, or 3) You can just wait until you file your return and pay. The problem with the third pathway is that you could run the risk of having to pay interest for not paying your taxes during the year.” 

“My contracts usually include housing and meal stipends. What do I need to know to make sure those are treated as tax-free, and what kind of records should I keep?” 

“Stipends are reimbursements for meals and lodging. They are generally tax-free if you have a qualifying tax residence. You need to keep proof of your home expenses and your home away from home expenses particularly for lodging. For your home expenses, keep proof of the payments that you make monthly as well as any written agreement you may have. For your home away from home, the lease agreement and proof of the payments. One thing to keep in mind is that stipends are generally seven days a week stipend, so if you stay in a hotel or come home frequently, a part of the stipends is taxable.” 

“If I ever get audited, what kinds of questions would the IRS ask about my travel work, and how should I be prepared to answer them?” 

“Historically in audits of travelers, the IRS will attempt to deny the validity of your tax residence and change the stipends to taxable wages. Most of these cases are settled at the appeals level unfortunately because the first level exam staff are often in training or novices. The IRS can ask any question regarding your arrangement including proof of expenses. Audits are not limited to the IRS only, because some states can be very aggressive as well.” 

“What happens if my assignment ends late in the year—should I think about filing an extension, or just plan to get my tax information submitted earlier?” 

"Finishing an assignment later in the year really doesn’t change your documentation because W-2s are required to be sent by January 1 regardless of when the work was performed the previous year. You may want to file an extension for convenience and the fact that your travels may prevent you from obtaining critical tax documents in time to file or engage a professional by the normal deadline. Since the deadline is extendable, unless you have certain circumstances that would require an un-extended filing. An extension gives you time to finish your taxes after the due date when you’re not in a hurry and your tax professional is less stressed too."

“I’ve heard there are different types of tax consults for travelers. What situations would make it helpful for me to book one, and how do I know what to look for?” 

“Most travelers would make a wise investment in having a professional go over the rules before they travel. Not everybody wants to spend their time reading tax law and like any other situation that is new, you can be your own worst enemy because you don’t know what you don’t know. So, it’s good to get a consultation when you’re starting or when you have a change in circumstance. And your change in circumstance may not be related to your travels, but other decisions in your life that might affect your tax obligations.” 

“I’ve seen some travel jobs offered as W-2 and others as 1099. What’s the difference for me as a traveler, and how does each one affect my taxes and take-home pay?” 

“This is a topic in itself. It boils down to whether you want to be an employee or self-employed. Self-employment is possible under the right conditions and if you are offered a rate that is the same as your W-2 rate for the same job, the W-2 job is always better. If you are considering this this is one of those situations where you would want to take advantage of a consult with a tax professional and determine when 1099 work is most profitable. 

“Tax season feels overwhelming when I’ve been on the road. What’s the best way to stay organized with my documents and deadlines so filing is less stressful?” 

“If you’re using a tax professional, often they will have a portal that you can upload documents throughout the year. Otherwise, organizing your documents is more personality-specific. Some people are very good at paper documents; some will do better digitizing the documents but then organization can be anything from manila folders to how you arrange your digital folders. The one temptation is to put off the task so long that you wind up spending an entire day looking through a year’s worth of records. So sometimes the best advice is to always set aside one time a month or maybe every other week to organize and scan your documents in a coherent manner, so tax time is not as stressful when the filing date arrives.” 

Tax situations for travelers can be complicated, but you don’t have to navigate them alone. At FlexCare, we partner with trusted experts like TravelTax to make sure you get the answers and support you need every step of the way. Whether it’s questions about your tax home, stipends, or state filings, we’re here to help you focus on what matters most—your career and your patients.