Deciphering the travel nursing pay structure can be complicated. Tax homes, tax-free stipends, hourly wages, bonuses, benefits, housing, and reimbursement are all factors to consider when understanding your travel nursing pay. 

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The information contained herein is general in nature and based on authorities that are subject to change. We guarantee neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. We assume no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations.

Travel Nursing, Tax-Free Stipends, and Permanent Tax Homes

There are two ways you get can be paid as a travel nurse. Travel nurses are paid a ‘blended rate’ of tax-free stipends and taxable hourly wage; or, are paid a fully taxable hourly wage taxed on the total rate of pay.

Unfortunately, you can only receive the tax-free stipend option if you can claim a ‘permanent tax-home’. You must be able to prove that you contribute a ‘reasonable monetary amount’ (determined by the IRS) to a home that you own or rent. If a travel nurse claims a rented room or apartment as a tax home (for example, at your parents’ house), the monthly amount paid must be comparable to similar market prices in the area. If you own a home and rent it out while you are gone, you must claim that as income on your taxes. You must prove you are duplicating expenses if you are audited.

If you cannot prove you pay rent or maintain the cost of living on a home, you are required to be taxed on the total hourly wage. This may seem like a disappointment but isn’t necessarily a bad thing.

Taking the tax-free pay means that your yearly income will appear much lower on your W-2 than what you actually received in pay. This means if you want to apply for any sort of credit or loan, you may not be approved because your income appears to be less. This is an individual decision for each travel nurse. Look at your finances and see what is right for you.

You will be required to complete and sign a declaration of your permanent tax home with your travel nursing agency if you choose to take the tax-free stipends in your pay. It is wise to ask in advance what you will need as proof of a tax home so you can prepare any necessary paperwork. 

Hourly Taxable Wage

If you are eligible for a ‘blended rate’ of tax-free allowances and hourly wages, your hourly taxable rate is going to appear much lower on your pay stub than you may be expecting, don’t panic, this is normal. Although, it shouldn’t be less than $20/hour. Unrealistically low hourly rates are a red flag for the IRS. And no travel nurse wants to be audited. 

This is only the amount you are taxed on per hour, not your total pay. Ideally, your ‘blended rate’, the combination of your stipends and hourly wage should be $40-$80/hour depending on the location and travel nursing specialty. If it is a crisis rate or short-term strike assignment, your salary is going to be considerably more than the average travel nurse job. 

If a travel nurse is not qualified to receive tax-free stipends the rate will be the similar $40-80/hour but taxes will apply to the whole amount. You will still make more money than the average staff nurse in most states.

Taking the Housing Stipend Versus Agency Provided Housing

To complicate things even further, if you choose to take the blended rate option, you will have 2 choices for obtaining housing. 

The travel nursing agency will offer to provide you with short-term (the length of your contract) furnished housing. If you take this route, you will not receive a tax-free housing stipend, nor does the agency increase the hourly taxable wage.  Your paycheck will seem considerably smaller to quoted pay packages without a housing stipend. But, you will not have to worry about finding your own short-term lease. Everything will be set up for you prior to your arrival. 

MYTH: The agencies do NOT pay a high hourly wage and provide free housing- that is a common misconception. 

The alternative is to take the housing stipend in your weekly travel nurse pay and finding your own housing. This is also the only choice if you do not have a permanent tax home as you will not be eligible to receive any tax-free housing from the agency. You can opt to rent a room, apartment, or house. Or, if you are lucky you can stay with a relative or friend in the area to lower your cost of living. 

If you choose to take the housing stipend, you can dictate how much you will spend on housing per month and potentially take home some extra money if you don’t use the whole amount. Do some research on travel nurse housing costs in your area of choice before making this decision.

Travel Nursing Per Diem Stipends

A Per Diem stipend may also be referred to as ‘meals and entertainment’ or ‘incidentals’. You may also see it as the abbreviations ‘M&IE’ in your paychecks. The amount is usually quoted per week.  Your Per Diem and housing stipend are tax-free. Both amounts are determined by your travel nurse agency and the location of the travel nurse assignment. You will not receive Per Diem or housing stipends if you do not claim a permanent tax home. 

Travel Nursing ‘Bonuses’ and Why You Should Avoid Them

There are different types of bonuses, including travel, completion, and referrals. They are all taxed significantly more than any other type of pay. Try asking your travel nurse recruiter if the bonus can be added to your hourly wage (taxed less) over the duration of the contract instead of a bonus. If you’re feeling really bold you can ask for it to be added to the stipends, but the answer is usually no. Be prepared to provide mileage/travel documentation to the agency if you are requesting a travel reimbursement to get to the location of your travel nursing assignment. 

Check out my Guide to Travel Nursing Agencies and Recruiters for more info!

 

-RNRN