Do travel nurses pay taxes in both states? Yes, if you are a travel nurse, you have to file taxes in both states, but no, you shouldn’t be paying double. Travel nurses need to understand taxes because, without this, even high-paying travel nursing contracts can leave you with less money than expected.
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How does the travel nurse tax actually work?
For travel nurses, taxes are based on two key locations:
- Your tax home or permanent residence
- Your assignment location/state
Tax home:
Tax home is the permanent residence of the nurse where they live, pay mortgage, rent, and consistently maintain strong financial and personal ties. Even if you travel to multiple states, your tax home remains your primary state for tax reporting. Travel nurses need to have a tax home because this determines whether they qualify for tax-free stipends such as housing, meals, etc.
Work state:
This is the assignment location, where you physically work during a travel nursing contract. According to the IRS, income is taxed where you work, which means that each state where a travel nurse works has the right to tax their income. Travel nurses are required to file a non-resident tax return and report the income they earn within the state during their contract to ensure they comply with tax laws and avoid any penalties.
Do travel nurses pay tax in both states?
The short answer is yes, but nurses are not taxed twice. As a travel nurse, you will file taxes in more than one state, but you will not pay taxes twice on the same income. You will pay state income tax first in the state where you have earned the money, and then you file in your home state. You may receive tax credits for the taxes already paid to the work state. To understand more clearly, here is an example:
If the tax home has no income tax:
If you live in Texas, which has no state income tax, and your assignment is in California, which does have state income tax. So this means you pay California state income tax and do not pay Texas income tax because they don’t have any.
If the tax home has income tax:
If you live in New York and your assignment is in California, then you pay California taxes, file for New York taxes, and claim a credit for taxes paid to California.
What if a travel nurse has no tax home?
If a travel nurse has no tax home, then they are considered an itinerant worker, which means all income, including stipends, is fully taxable.
Tips to stay tax safe
- Always keep proof of your tax home expenses, such as utility bills, etc.
- Track all your assignments and income by state.
- Don’t stay at one location for too long. It should not be more than one year.
- Save contracts and pay stubs.
- Consult a tax professional
Are travel nurse stipends always tax-free?
You can qualify for your tax-free stipends if you maintain a tax home and do not work in one state for too long.
What happens if a travel nurse doesn’t file taxes correctly?
A travel nurse might face some risks, such as
- State fines
- IRS penalties
- And losing tax-free stipends
What tax mistakes should travel nurses avoid?
The biggest mistakes that travel nurses should avoid are as follows:
- Claiming a false tax home
- Poor record keeping
- Not filing in all required states
- Not following the stipend rules
- Avoiding professional tax advice
Conclusion
Travel nurses file taxes in multiple states, but that does not mean that they have to pay taxes twice on the same income. It is important for travel nurses to understand taxes because when it is done right, they can maximize their income, keep stipends tax-free, and avoid penalties.
