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Travel Therapy Tax Questions

Travel therapists face some unique tax concerns and often have many travel therapy tax questions. Working in multiple states, identifying and maintaining a tax home, and deducting expenses are some unique issues to travelers.

Joseph Smith specializes in helping mobile professionals with tax preparation at Travel Tax . He is a former traveling respiratory therapist and a current IRS-enrolled agent. In this post, I interview Joseph and he answers some frequently asked tax questions from healthcare travelers. Where “JS” is marked – that stands for Joseph Smith’s answer.

What is a travel therapy tax home and how to I determine if I have one?

From joseph: in three sentences a travel therapy tax home is:.

One main area of work/income on a regular, annual basis.
If you do not have a main area of work/income, the tax home can be where you maintain a dwelling that you incur significant expenses for that are duplicated when away from home on assignment.
If you do not have #1 or #2, you are itinerant and all per diems, stipends, allowances, travel reimbursements are taxable.

How do I maintain a travel therapy tax home?

The follow questions break down the different things that you need to do to maintain a travel therapy tax home.

How many days per year should I physically spend there?

JS: 30 a year or 60 every two years

What if I cannot find work in my tax home neighborhood and do not earn any income there?

JS: Then you would qualify under the duplicated expense method of a tax home

How do I determine if I am duplicating expenses? Do I have to pay fair market value rent or can I pay the utilities on the property?

JS: You are maintaining a dwelling, not a utility. Utilities are part of maintaining a dwelling. If with a related party, rent needs to be fair market value OR you can split expenses like roommates.

If I rent from my family do they have to pay tax on the rent? What are the implications if they don’t?

JS: Preferable if they claim it on their return since you have so much tax free riding on the arrangement – if they don’t, an auditor can always follow your rent money trail

What if I own my home and the mortgage is paid off?

JS: Homeownership costs are inherent and you still have maintenance expense. Best way to travel.

Can I still travel if I don’t have a tax home?

JS: Yes, but stipends are taxable

Do I have to pay taxes to my tax home state even if I did not work there? What if my state has a local tax – do I have to pay it?

JS: Yes and if you are lucky to live in a city/state that has a local tax the will tax ALL income earned anywhere less credits for taxes paid to other states. Your permanent residence state (not tax home state) determines who taxes GLOBAL income

If my tax home is in a state with no tax and I work in states with a tax do I have to pay tax to the states that I work in?

JS: Absolutely. You are physically present there

Joseph C. Smith, EA, MSTax, RRT is the founder and owner of Travel Tax . He is a Registered Respiratory Therapist and IRS Enrolled Agent. If you have any more questions about travel therapy taxes or tax homes, you can book a consult to with Travel Tax to get your travel therapy tax questions answered.

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2 thoughts on “Travel Therapy Tax Questions”

Question: tax home is Florida Started traveling last year June-September NC Sept-December OR Jan-July Turlock CA. TAKING off August Could I return to same hospital in Turlock in sept for 13 weeks. Or would that cause trouble with taxes? Thanks in advance

Hi Joy – Thanks for the question. However, Joe doesn’t check the comments on this blog. Here is a page with his contact info, including a phone number to call. https://traveltax.com/contact-us/ That would be the best way to get a hold of him.

What on Earth is a Travel Therapy Tax Home?

To continue our series on travel therapy , I wanted to provide some more information on probably the biggest topic on everyone’s minds: pay.

Travel therapist pay is usually placed into two different categories: taxed and untaxed. But, regardless of what any recruiter might tell you, qualifying for this untaxed pay unfortunately isn’t as easy as checking a few boxes.

The good news, however, is that with just a little bit of upfront effort, maintaining this status throughout your time as a traveling therapist is simple.

DISCLAIMER: I am not an accountant or tax attorney, and the following article is not intended to be instructional tax advice. Everything in this article is for informational purposes only. Always consult a licensed tax professional to understand what to do for your own personal situation.

Becoming an Itinerant Employee vs. Maintaining a Tax Home

It’s first important to point out that you technically have two options when going into travel therapy – being an itinerant employee or an employee that has a static tax home. Being an itinerant employee is inherently simpler.

An itinerant employee doesn’t have a permanent residence – they live on the road! If you intend to do travel therapy long-term, this may sound like your dream. No permanent home to worry about, no location that you’re tied to, and the freedom to go wherever the wind takes you.

However, all of this freedom comes with a catch – itinerant employees are not eligible for tax-free stipends. You see, the reason that this income is allowed to be untaxed is based on the premise that you are duplicating expenses in housing, meals, and incidentals.

When you are an itinerant employee, you have no “true” home, and as such, no duplicate expenses. Sound confusing? Think of it like this: A person taking a business trip travels a few states away from home for a week. Due to distance, the employee is unable to return home nightly during this period of time. But their mortgage at home doesn’t pause for a week even though they aren’t using their home – thus, duplicated expenses. Their company is then allowed to reimburse them for the cost of their hotel stay and meals.

Think of travel therapy similarly – it’s effectively a long-term business trip.

Only you can decide if being an itinerant employee is right for you. While itinerant employees aren’t able to claim tax-free stipends, they do have the benefit of not having to maintain a tax home, which definitely comes with its own set of costs. Itinerant employees can also stay in a location as long as they want, whereas maintaining a tax home comes with certain rules that make that difficult.

For me, the decision was easy because I liked my home and knew I would want to return. And, even with the costs of maintaining a tax home, this has financially been the better option for me. As always, I recommend consulting an accountant on your personal situation to see what choice will make the most sense for you.

Tax Homes, Permanent Residences, and Bears, Oh My!

So you might notice that I keep circling back to the phrase “maintaining a tax home.” But what even is a tax home? Is it like a permanent residence? Do you automatically have a tax home? Help!

Take a deep breath. For most people, figuring out their tax home is easy. It’s their permanent residence – the location where they live and work 365 days out of the year. For people who do business in multiple places, that question gets dicier.

The IRS thus defines a tax home through three factors:

You perform part of your business in the area of your main home and use that home for lodging while doing business in the area.
You have living expenses at your main home that you duplicate because your business requires you to be away from that home.
You haven’t abandoned the area in which both your historical place of lodging and your claimed main home are located; you have a member or members of your family living at your main home; or you often use that home for lodging.

If you meet all three of these qualifications, then congratulations, you have a tax home!

The good news is that the IRS technically only requires you to satisfy two out of three of these factors to claim a tax home. I do say technically, because, unfortunately, tax law is murky and there aren’t a lot of hard and fast rules. So, my advice would be to try to satisfy all three of these rules as best you can, but definitely fulfill two if you are interested in maintaining a tax home.

Satisfying the Rules

I always recommend fulfilling this rule if you can because it lends a lot of credibility if the status of your tax home ever comes into question. Not only do you live in your tax home, you earn income there which is really what the IRS is concerned about.

Now, this is where the law gets murky again – can you come home and work one PRN weekend a year to meet this rule? Probably not. To fulfill this factor, the IRS is looking for you to do a significant portion of your business in this location. So if you work 6 months out of the year in your tax home? Almost definitely significant. If you earn most of your income there? Again, almost definitely significant. If you work there for six weeks out of the year? Maybe.

Unfortunately, there is no number that the IRS provides that travelers can aim for. As a rule of thumb, I have known some people to attempt to earn 25% of their taxable income for a year in their tax home, but again, this is mostly guesswork based on how the IRS has ruled in specific cases in the past.

Travelers often want to avoid fulfilling Rule 2 as duplicating expenses sounds, well, expensive! But while fulfilling this rule definitely isn’t free, it is sometimes the financially smarter option. There are also ways to this that are less costly than others. For example, I got rid of my large, costly apartment and started renting a bedroom from friends. Others may choose to take on a roommate or set up their home as a vacation rental when they are away.

Basically, as long as you have a residence that you pay for, whether through a mortgage or renting, you are duplicating expenses. And yes, this does mean that if you’re planning on using a family home as a tax home that you will probably still have to pay them fair market rent, which just means that it’s a rent price that could actually be found in your area, without any friends and family discount.

This one is the most “fun” rule for me to fulfill – traveling home! Again, there are no set in stone rules here, but it has been advised to me to try to return home for at least 30 days total in a calendar year. I also fulfill this requirement by maintaining personal business at my tax home – e.g. going to the doctor, volunteering, banking, and voting.

My tax home is also my permanent residence and as such, the address I use for my driver’s license, car registration, billing address, etc. Do take note of the phrase “historical place of lodging” here as well. It doesn’t mean much if you plan for your tax home to be the place where you’ve lived for the past several years, but it does prevent someone from “choosing” their tax home to be in a place that is less of a financial burden – like somewhere with lower rent costs.

Breaking the Rules

If you got through all of that and aren’t scared off yet, then congratulations! You may be wondering, if it’s this complicated and expensive to maintain a tax home, then why does anybody do it? The honest answer is that not everyone does.

Despite all these rules, there’s no form that you have to fill out every year that proves you abided by them. I’ve known plenty of travelers who claim tax-free stipends who are probably more correctly categorized as itinerant employees – whether it’s because they use a PO box as a tax home, never actually go back to their tax home, or use a family member’s house and don’t pay them rent.

And while there are people out there getting away with it, to me the risk is not worth it.

While the IRS won’t ask you to prove that you’re playing by the rules every year, if you are ever audited, you run the risk of paying back taxes on ALL of the untaxed income that you didn’t actually qualify for (plus penalties, especially if it’s found that you purposely tried to defraud the IRS!).

And since travelers already run a higher risk of being audited, it’s not unlikely that it could happen to you. Even though some people see it as “losing out” on money, for me the peace of mind of knowing I’m attempting to do everything by the letter of the law is worth a lot more than an extra few hundred bucks a month.

_______________

We hope this article has helped demystify the tax home process! As confusing as all of this info might seem, I’m happy every day that I took the plunge to become a traveling occupational therapist.

We’ll continue exploring traveler pay, finding housing, and other topics in this series, but if there’s anything in particular you’d like to have addressed, let us know in the comments below!

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I seriously need help to find housing. Im on first assignment (Travel) in Suffolk county, NY. I was “tol-l-l-d by my agency that I would be set up with housing and housing stipend. however at this date, 1week after I have started assignment I still have no housing and I am commuting 100 miles to & from work each day by car. I cannot find housing and I may have to cancel this assignment. 500 mi/wk on my leased car is going 2 push mileage wayyy high. what should I do here what are my options? can I find housing through some organization. Altho ive told my agency, theyre doing extremely little. I feel like theyre lying to me and getting PaId.

Hi Vickie, I’m so sorry you’re going through this headache! I’m surprised your agency didn’t help you with housing, that definitely seems out of the norm for sure and a huge stressor for you. We wrote this all-inclusive guide for travel housing options that go deeper than just company housing and Airbnb’s, so I hope it helps you find some closer options. Best of luck and I hope you find something soon! The Ultimate Guide to Travel Therapy Housing

I am living with my parents through OT school and plan to start travel therapy after. I am uncertain as to which type I would be. My parents home is the only address I’ve ever had and what everything I own is registered with. I plan to travel places where I will have to live away from this home. However, they don’t charge me rent. If they were to charge me rent would I get a housing stipend? Or should I go with being itinerant and not bother with it? My plan is to travel for a few years and save up to buy a home, then take a more permanent job.

Hi Olivia, if your parents were to charge you a fair market rent each month, then you would receive the housing stipend. If you’re still unsure which way to go, we recommend you chat with an accountant and/or recruiter to weigh the pros and cons for your specific situation.

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What is a Tax Home?

If you travel for work, you may be able to claim tax deductions for some of the expenses you incur while you're away from home on business. But your "home," in this sense, isn't necessarily where you live. It's where you work—what the IRS refers to as your "tax home."

Deductions and your tax home

General definition of a tax home, why your workplace is home, when you have no regular workplace, employees vs. the self-employed.

When you travel away from your tax home for work you might be eligible to deduct travel expenses on your taxes. For tax years prior to 2018, unreimbursed employee expenses, including travel away from your tax home, can be an itemized deduction. However, beginning in 2018 these types of expenses are deductible for businesses but no longer as an unreimbursed employee expense for employees.

The IRS defines your tax home as the "entire city or general area" of your workplace. If you work in Pittsburgh, for example, then your tax home is the entire Pittsburgh metro area. The tax home designation typically doesn't have anything to do with where you actually live—the place where you lay your head at night. You could live 100 miles from your workplace and commute, but the workplace would still be your tax home.

The tax home designation largely exists for the purpose of deducting work-related travel expenses, which is why your workplace, rather than your house or apartment, is "home." Imagine if you really did live 100 miles outside Pittsburgh but worked in the city.

If you were allowed to count your house out in the country as your tax home, then, theoretically, you could consider any money you spent in Pittsburgh to be a work-related travel expense . The IRS is wise to these kinds of tricks, which is why "tax home" is what it is.

Some people have workplaces that are divided among several places. In such cases, the IRS expects you to choose one as your work home based on several criteria:

How much time you spend in each place.
How much work you actually do in each place.
How much money you make in each place.

Of these, the IRS says time spent in each place is the most important.

If you work at home or travel to assignments directly from home, without a fixed workplace, your tax home may well be your actual home. If you don't have a fixed workplace and you have no fixed home address, the IRS might consider you itinerant, in which case you wouldn’t be able write off any travel expenses because you're never "away from home."

The tax home rules are generally the same for employees and self-employed people, although the degree to which they can deduct business-related travel expenses differs. In general, employees can deduct only work-related expenses for which they haven't been reimbursed by their employer, and they can't deduct the full amount . Instead, for tax years prior to 2018, these expenses can be taken as an itemized deduction , subject to (reduced by) 2% of adjusted gross income, on your tax return. Usually, self-employed people can deduct ordinary and necessary business-related expenses from business income. Travel expenses must be incurred away from their tax home to qualify for deductions. Beginning in 2018, most all employees are no longer eligible to deduct these or other unreimbursed employee expenses.

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Frequently asked questions about work-life referral services

Background on work-life referral programs

A work-life referral (WLR) program is an employer-funded fringe benefit that provides WLR services to eligible employees. WLR services are restricted to informational and referral consultations that assist employees with identifying, contacting, and negotiating with life-management resources for solutions to a personal, work, or family challenge.

WLR programs are often incorporated into an employee assistance program (EAP) or may otherwise be bundled with other types of services or programs offered by an employer. These FAQs do not address the direct or indirect payment for the life-management resources or other services offered through an EAP or that may be bundled with a WLR program. These FAQs only address the federal tax treatment of WLR services.

WLR services include assistance with completing paperwork and basic administrative tasks that help direct the employee to appropriate providers of the necessary underlying life-management resources (e.g., adult- and child-care centers, financial services providers, home repair tradespeople). WLR programs work with subject-matter specialists who are trained in helping employees navigate through work-life challenges involving access to and eligibility for child and elder care, health care, government and employer-provided benefits, and legal and financial issues. More specifically, WLR services offer employees guidance, support, information, and referrals in connection with, for example:

identifying appropriate education, care, and medical service providers,
choosing a child or dependent care program,
navigating eligibility for government benefits, including Veterans Administration benefits,
evaluating and using paid leave programs offered through employer or a state or locality,
locating home services professionals who specialize in adapting a home for a family member with special care needs,
navigating the medical system, including private insurance and public programs, and utilizing available medical travel benefits, and
connecting the employee with local retirement and financial planning professionals.

WLR programs may be available to a significant portion of an employer’s employees, but they are used infrequently by employees and only when an employee faces one of the particular challenges the programs are designed to address.

WLR programs often rely on third-party providers that charge the employer a per-eligible-employee monthly fee, regardless of how many employees actually utilize the WLR services. WLR programs sometimes provide employees with access to a set number of consultations per year covering a variety of life-management issues.

The use of a WLR service provider adds a desirable layer of anonymity so that employees who may be grappling with sensitive issues affecting their family, finances, or health have the assurance that their communications will remain confidential and not be disclosed to their employer, and employers do not need to establish systems for handling sensitive or protected information.

Background on tax treatment of de minimis fringe benefits

Section 61 of the Internal Revenue Code (Code) provides that gross income includes all income from whatever source derived, including compensation for services, fees, commissions, fringe benefits, and similar items. A fringe benefit provided by an employer to an employee is presumed to be income to the employee unless it is specifically excluded from gross income by another section of the Code.

Section 132(a)(4) of the Code provides that gross income does not include any fringe benefit that qualifies as a de minimis fringe. Section 132(e) defines a de minimis fringe as any property or service the value of which is (after taking into account the frequency with which similar fringes are provided by the employer to the employer's employees) so small as to make accounting for it unreasonable or administratively impracticable.

Section 1.132-6(b)(1) of the Treasury Regulations requires the employer to establish the frequency with which it provides fringe benefits by referencing the frequency with which the employer provides the fringe benefits to each individual employee (the “employee-measured” frequency standard). If the employer can establish that it would be administratively difficult to determine such employee-measured frequency, it may instead reference the frequency with which the employer provides the fringe benefits to the workforce as a whole, under section 1.132-6(b)(2) of the Treasury Regulations (the “employer-measured” frequency standard).

Certain items, such as cash and cash equivalent fringes (e.g., fringes provided through a gift certificate or charge or credit card), cannot be de minimis fringes (except for special rules that apply to occasional meal money and local transportation fare).

For purposes of the Federal Insurance Contributions Act (FICA), the Federal Unemployment Tax Act (FUTA), and federal income tax withholding, sections 3121(a)(20), 3306(b)(16), and 3401(a)(19) of the Code provide, in part, that the term “wages” does not include any benefit provided to or on behalf of an employee if, at the time the benefit is provided, it is reasonable to believe that the employee will be able to exclude the benefit from income under section 132.

Questions and answers on work-life referral services

Q1. what is a de minimis fringe benefit.

A1. In general, a de minimis fringe benefit is one which, considering its value and the frequency with which it is provided, is so small that accounting for it would be unreasonable or administratively impracticable. In circumstances where it would be administratively difficult to determine the frequency with which fringe benefits are provided to each employee, the employer can measure frequency using the employer-measured frequency standard. De minimis fringe benefits are excluded from gross income and are not subject to U.S. employment taxes.

Q2. Do employer-provided WLR services result in gross income to the employee?

A2. No, the use of such referral and information services would be excluded from gross income as a de minimis fringe benefit.

Q3. Are employer-provided WLR services subject to U.S. employment taxes?

A3. No, the use of such referral and information services would be excluded from U.S. employment taxes, including FICA, FUTA, and U.S. federal income tax withholding as a de minimis fringe benefit.

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Travel Therapy Mentor

Travel PT duo helping PTs, OTs and SLPs to become successful travel therapists!

Tag: travel taxes

Taxable pay as a travel therapist.

What is a reasonable hourly taxable pay rate for a travel therapist?

This is a question we get quite often, which is understandable. This area of travel healthcare is confusing and certainly not black and white. Pretty much everyone knows that travel therapists earn more than permanent therapists on average. What some therapists don’t realize though is that the reason travelers earn more is due to the stipends (also called per diems) that are offered on travel contracts.

If you’re new to this concept, it’s important to learn the basics about travel therapist pay and how travel pay packages are set up first.

Some travelers who travel without a tax home receive their stipends as fully taxed income, in which case they don’t earn nearly as much as they would otherwise after taxes each week. Travel therapists without a tax home often wonder if it’s actually financially worth it to be a traveler, and in some cases it isn’t depending on the bill rate of the job and the amount the travel companies keeps .

But, the majority of travel therapists do have a tax home , which means that they are eligible to receive their housing, meals, and incidental stipends tax free. This is great and certainly means more take home pay each week. But naturally, many travel therapists when negotiating contracts and looking at their pay packages wonder how much of the money should be received in the form of stipends and how much should be received as hourly taxable pay.

Why Do Travel Therapists Receive Stipends?

The first thing that’s important to understand is why travelers would receive tax free stipends in the first place. Obviously the stipends themselves are for housing, meals, and incidentals while traveling for a contract, but why would they be tax free for some therapists but taxed for others? The reason for this is that if a travel therapist has a tax home that they’re traveling away from temporarily for work, then the IRS doesn’t see it as fair for them to have to pay taxes on money that they’re using for additional expenses that they’re already incurring back home.

This is the same reason that those traveling away from home for business can write off the cost of their lodging, meals, incidentals, and transportation against their business income. For example, think of a pilot or other professional who travels away from home often for work. Those costs had to be incurred as part of the job, and the individual still has all of their fixed costs back at home as well, so they’re not obligated to pay taxes on those travel related costs that are associated with their job.

On the other hand, those travel therapists without a tax home don’t have any costs back home, so there’s no reason for them to be getting a tax break on their lodging, meals, and incidentals since the costs at their “travel job” are the only living costs they’re paying. Once you understand the reasoning, it makes perfect sense, although it can be confusing at first.

To learn more about travel pay when traveling with vs. without a tax home, check out this article and this video .

Evolution of Taxable Pay Over Time

We can all agree that in most cases, if a therapist can’t earn more money as a traveler, then it doesn’t make much sense to do it. After all, there are certainly cons of travel therapy that can make it a hassle. Packing and moving often, finding temporary housing, getting licensed in various states, and having the risk of a contract being cancelled early are all headaches. Figuring out benefits when working with multiple travel companies is also a concern that permanent therapists don’t have to deal with. Yes the adventure and freedom aspects of being a travel therapist are amazing, but ultimately probably not worth the downsides for most therapists if extra money isn’t involved. Because of this, for clinics to entice therapists to take travel contracts, they have to be willing to pay more for them to offset the cons and risks. Otherwise no one would take the position.

Initially when travel healthcare was new, this meant that a facility would offer a taxable pay rate at or higher than a permanent therapist would make at a comparable job in that location. The stipends were then added on top of that pay rate to cover housing, meals, and incidentals. The stipends weren’t very high because often the facilities couldn’t afford to pay both a high taxable rate and high stipends.

Over time, there are incentives which have gradually shifted more of the travel therapist’s pay toward stipends and less to taxable pay. You see, it benefits the travel therapist, the facility, and the travel company for taxable pay to be lower and stipends to be higher. This is because the taxes you pay as a traveler and the taxes the travel company pays on your behalf (FICA) are both lower when taxable pay is less. That means more money for you each week after taxes and lower expenses for the travel company. The facility benefits as well because they can pay a lower relative bill rate and still be competitive when compared to permanent positions when looking at after tax pay than they’d otherwise be able to. So, these days, travel companies try to offer as low of a taxable hourly rate as possible to the therapist, while offering the highest tax-free stipends possible, to get the highest after tax weekly take home pay for the therapist that the bill rate will allow.

Again, if all of this is very confusing to you, it’s best to start by learning the basics of travel therapist pay here and here .

So now you might be wondering, if making the taxable pay as low as possible benefits everyone involved, why not make it really low? Like minimum wage low? Here’s where the IRS enters the chat.

How Low of Taxable Pay is Allowed?

Everyone benefits from a low taxable pay… except for the government. Lower taxable pay means less tax revenue for both federal and state governments. To keep the government from losing out in this travel work arrangement, the IRS has put rules and guidelines in place. One way they’ve done this is to set maximum allowable amounts for housing, meals, and incidental per diems that they adjust based on the cost of living in the area of the job. You can find these maximum amounts on the GSA website . This keeps travel therapists and travel companies from agreeing on unreasonably high tax free stipends on a contract.

For example, if you take a travel therapy contract in a high cost of living city like San Francisco, the allowable stipends (AKA per diems) for a job there will be very high. So, if the bill rate from the facility is high enough, the travel company can pay you a LOT in tax-free stipends. Whereas if you take a travel therapy job in rural Kansas, the allowable per diems will be much lower, so there are restrictions on how much of the bill rate the company can allocate to tax-free stipends.

As most travelers, and the IRS, know though, not all travel jobs have a high enough bill rate to max out those stipends, while keeping the hourly taxable pay in a reasonable range. There is only so much money in the “pot” (the bill rate that the facility is paying) to go around, and it has to be divided accordingly into the taxable hourly rate and the stipends.

If the GSA per diem rates were the only safeguard, then on those lower bill rate contracts, that would mean that a travel company could just pay a traveler minimum wage for their taxable rate, while putting all of the extra money into stipends to max them out. This would save both them and the traveler money on taxes. However, the IRS knows that there are incentives for companies to do this, and if left with no rules they would do this every time. So, guidance was put out by the IRS to stop this from happening. Not paying high enough taxable wages in order to move money into tax free stipends is known as wage recharacterization and is illegal.

Avoiding Wage Recharacterization

So, we want to make as much as possible after taxes as travel therapists. Part of this means paying less in taxes ( in addition to working with high paying travel companies and negotiating well ) by having higher tax free stipends and a lower taxable hourly rate. But we don’t want to reduce the taxable rate so much that we risk wage recharacterization. So, we have guidelines on the maximum stipends via the GSA website. But, how do we know what is an appropriate hourly taxable wage? How low is too low?

If only it was that easy. If you know anything about the IRS, you should know that nothing is black and white. Unfortunately, there’s no clear answer here. Part of it depends on your discipline (PT, OT, SLP, PTA, COTA, etc). Part of it depends on what a comparable permanent job would pay in that setting and location. Part of it depends on how high the bill rate for the job is, and if your stipends are able to be maxed out or not. Part of it depends on how you, your accountant, and your travel company (likely guided by their lawyers and accountants) interpret wage recharacterization.

The safest bet would be to accept a taxable hourly wage that is the same as the permanent staff is making in the facility where you’ll be working as a traveler, and then just take the remainder as tax free stipends. This would mean much lower take home pay than you’d make with higher tax free stipend amounts, but absolutely no risk of the wages being considered as recharacterized. On the other end of the risk spectrum, you could insist on only taking minimum wage for every contract and get as much as possible in tax free stipends. This would mean a much higher paycheck, but it would put you at serious risk of having to pay taxes and fines if ever audited due to wage recharacterization. I have heard of several therapists doing this over the years. The right decision is probably somewhere in between.

Your taxable hourly wage should be a reasonable amount for the work performed, without being so high that it makes travel therapy no longer worth it. For me, as a traveling physical therapist, I have always chosen to err on the side of caution with a taxable rate in the $20-$30/hour range depending on the contract. My justification for this pay range is that I know some therapists who have taken permanent jobs making that hourly wage in the past, so it’s much easier to justify this rate than it would be accepting minimum wage as a physical therapist. It’s also low enough that my tax free stipends are usually plenty to cover my living expenses (and have extra to put towards savings) while on contract.

What Should You Choose for Your Taxable Pay as a Travel Therapist?

Ultimately, there’s no clear answer here, and the decision is up to you. Choose an amount that you could justify based on the particular contract. If you feel uncomfortable making a decision, then consulting a professional is warranted. I recommend setting up a consultation with a trusted CPA who is knowledgeable on taxes for traveling professionals to get their opinion. Our preferred CPA who works with healthcare travelers is Nermina Culesker at Choice 1 Accounting and Tax. You can set up a consultation with her here if you’d like to discuss your taxable pay as a traveler or other travel tax related questions. Having worries of an audit hanging over your head isn’t worth making a little extra each week by cutting corners on how your pay is allocated. Peace of mind is valuable.

If you’re brand new to travel therapy and this was all very confusing to you, then I’d recommend checking out our free Travel Therapy 101 series to learn the basics. If you want more in depth knowledge before jumping into travel therapy to improve your odds of financial success, then our course, Becoming a Financially Successful Travel Therapist is the way to go. If you want help getting connected with great recruiters for your situation, then fill out our recruiter recommendation form to get our top picks based on interviewing hundreds of recruiters over our years as travel therapists.

Written by Jared Casazza, PT, DPT – Jared has been a traveling physical therapist since 2015. He is also a personal finance enthusiast. He has become an expert in the field of travel healthcare through his experience, research, and networking over nearly a decade.

Pursuing Travel Therapy Without a Tax Home

Is it possible and/or worth it to pursue travel therapy without a tax home ? This a question we’ve been getting increasingly often lately. The answer can be complicated and of course depends on each traveler’s specific situation. You certainly can take travel therapy contracts without a tax home, but it’s often not the best move financially depending on the type of travel therapist you want to be. There are really two different situations in which a travel therapist may be considering traveling without a tax home, and I’ll cover each of them in this article so that you can gain some insight on if travel therapy without a tax home is a possibility for you.

Travel Therapy Tax Home Background

In order to be eligible to receive tax free stipends as part of your compensation package as a travel therapist, you need to maintain a tax home. Since the tax free stipends are a large part of why travel therapy is so lucrative, understanding this before beginning your travel therapy journey is vital. If you’re completely unfamiliar with what a tax home is and how to establish a tax home, then read this tax home article for a full explanation.

Essentially though, having a tax home almost always involves duplicating living expenses. Because paying for living expenses in both your home location and at your travel contract location can be costly, many new travel therapists look for ways to get around doing this, especially if maximizing finances is a priority.

When Whitney and I started traveling as new grad PTs in 2015, my goal was to reach financial independence as quickly as possible, so trying to minimize my costs for housing was something I spent a lot of time researching. While I ultimately decided on other ways to reduce expenses while still maintaining a tax home and duplicating expenses ( i.e. lower rent at my tax home location and travel contract location ), I did look into what it would be like to travel without a tax home. Below are some considerations and scenarios for who this might work for.

Local Travel Therapy Contracts

The first type of potential travel therapist usually asking about taking travel contracts without a tax home are those planning to take local travel contracts, commuting from where they live, just in one city or region. Local contracts may or may not be possible depending on how specific your needs are in terms of setting and the location where you live. You can learn more about that in this article .

Often these are people who have heard about the much higher pay that travel therapists earn and are burnt out on their current job, looking to take shorter term contracts in their area, and have the flexibility of contract work at various locations instead of a perm job. But, they don’t want to, or can’t, move for one reason or another. Often not wanting or being able to to move for traditional travel contracts is due to family or social obligations near their home. They think they’ll get the best of both worlds by taking travel contracts within driving distance of their home to make more money and have the perk of flexibility as well as the other benefits that come with being a travel therapist, all while not actually having to move.

Local Contract Implications and Pay

Unfortunately in this situation, the travel therapist won’t be eligible for tax free stipends due to not duplicating expenses. If you’re commuting to a contract job from your home address, then there’s no reason for the IRS to allow the stipends you receive to be tax free, since you aren’t actually incurring additional expenses by “traveling” to that job. So as a local travel therapist, you won’t be eligible for tax free stipends, but does that mean that it isn’t worth it? Well, that depends on what you would make at a normal permanent job in that area, how good your benefits would be at a permanent job, and how well the local travel job is paying.

Most local travel therapists can expect to make a similar rate to that of a PRN job. The average range of pay for a local travel travel contract (for PT/OT/SLP) is between $45-$60/hour. We have seen some pay higher but this is usually in rare circumstances. Where your local contract pay will fall in that range will depend on the setting and location of the contract, as well as how desperate the facility is to get a therapist in there quickly.

Pros and Cons of Local Travel Contracts

So now that we know the normal pay range of a local travel contract, it’s important to look at some of the pros and cons to determine if it’s worth it.

The two biggest pros of taking a local contract are higher pay than a permanent job, but with more consistency than most PRN jobs. After all, if the pay is similar to a PRN job, then why not just take a PRN job close to home? With a local travel job, there are often guaranteed, full time hours included in the contract, whereas with a normal PRN job, hours can be inconsistent. In most cases, a local travel contract will include at least a 32 hour guarantee, but sometimes even 40 hours. That means PRN pay but with full time hours which can be pretty lucrative.

In addition to the pay and consistent hours, you’ll also have the option of receiving benefits similar to a permanent job via the travel staffing agency, which you normally wouldn’t receive with a PRN job. Plus, by taking temporary travel contracts, you get the flexibility that travelers have, like switching jobs often if you want more variety or don’t like the facility, and taking longer periods off between contracts that you may not be able to do with a permanent or PRN job.

There are also some cons to taking a local travel contract. The biggest one is that your options will often be very limited (or potentially nonexistent) in most areas of the country, which makes finding a good facility and having consistent work year round difficult. This is obvious, but if there aren’t any facilities near you looking for a travel therapist, then there won’t be any local travel contracts available to you, unless you’re willing to think outside the box and contact places without listings to see if they would potentially be interested in hiring you on a short term contract basis.

Another con of local travel contracts is that you won’t receive all of the same benefits that you would at a permanent job. Vacation time and sick days don’t exist on travel contracts, so you’ll have to account for that with your own savings when you want or need time off.

Lastly, it’s much more likely that you’ll lose your job when taking a local travel contract than with a permanent or PRN job. This is due to the fact that it costs the facility more money to have you there as a traveler/contractor, which means that they’re almost always looking to replace your position with someone willing to work there permanently at a lower rate.

One final consideration, which may be a pro or a con depending on your lifestyle, is that a local travel job is only temporary and is usually only three months long. For some this is a deal breaker since they need consistent work throughout the year, whereas for others it’s a good thing because then you’re a free agent again to explore other options or take time off once the contract ends.

Travel The Country Without a Permanent Home

The other type of potential travel therapist who would be considering traveling without a tax home is someone who doesn’t want to keep a permanent home location and would prefer to be a nomad just moving from travel contract to travel contract. This might be someone who just graduated and doesn’t really have their own home aside from keeping a few things at their family’s home (but not wanting to deal with the tax headaches of establishing this as an official tax home), or someone who has been working and living on their own, but wants to sell their house or get rid of their lease and travel full time. In IRS lingo, this is called being an itinerant worker . In this situation, since you wouldn’t have a tax home, you also wouldn’t be eligible for tax free stipends due to not duplicating expenses. That doesn’t necessarily make it not worth it though. Even though your stipends will be taxed like with the local travel example above, not having to pay for any housing expenses back home can save you quite a bit of money.

Having your stipends taxed means less take home pay for you as an itinerant travel therapist for a couple of reasons. The obvious reason is that instead of receiving a large portion of your pay tax free, you now owe federal, state, and FICA taxes on all of the money you receive. The other reason that many travel therapists don’t consider when thinking about pursuing travel therapy without a tax home is that the travel company will also have additional taxes and expenses to pay on your behalf, which reduces how much they’re able to pay you. The travel company is responsible for paying FICA taxes on your behalf based on your taxable pay, which is higher as an itinerant travel therapist, and worker’s compensation insurance is also higher for them when your taxable pay is more.

All of that means that you’ll earn significantly less in after-tax dollars when working as a travel therapist without a tax home than you would as a regular travel therapist. How much less? Again this will depend on a variety of factors including: the bill rate of the travel contract (largely impacted by the setting, location, and demand for the job), the amount the travel company keeps for their overhead, and how much you earn in total throughout the year since tax brackets are marginal ( including states taxes ) meaning higher income earners pay a higher percentage.

Pay Difference When Traveling Without a Tax Home

The average weekly take home pay range for a travel therapist working as an itinerant worker is $1,200-$1,600/week. To compare, the average weekly take home pay range for a travel therapist traveling with a tax home is about $1,650-$1,900/week. This means that when traveling as an itinerant worker, you can usually expect to make about $300-$400/week less after taxes than you would if taking the same jobs while maintaining a tax home and receiving the tax-free stipends. That comes out to about $1,500/month less. Is that worth it to not have to worry about maintaining a tax home and duplicating expenses back home? Well, that depends on how much it would cost you in expenses back home and the hassles involved in your particular situation.

If you’re from a low cost of living area like Whitney and me, maintaining a tax home can pretty inexpensive, so we’d come out way behind if we chose to travel as itinerant workers. Our costs back home while on assignment have usually been $700/month each or less depending on if we were renting a room (which we did for the first 5 years or so of our travel careers) or house hacking a portion of our townhouse (which we do now). For others in very high cost of living areas, that may not be the case though, and you could really break even or come out ahead by not having expenses back home, plus skip out on the hassles of maintaining the tax home.

Other Considerations

If you look at your own situation and determine that travel therapy without a tax home would be a good choice for you financially, then there are a few other things to consider.

Where will you go between contracts or if you’re unable to find a contract for a few weeks?

If you don’t maintain a tax home then you’ll be paying for short term housing or relying on friends and family for a place to stay between contracts. For some this is fine, for others it may not be.

Where will your mail go?

Most travelers have all of their mail go to their tax home and either forward it temporarily, go back to check it intermittently, or have someone at the home location help with the mail. Without a tax home, you may be changing your mailing address regularly which could be a hassle, or you’d have to look into alternative mail solutions.

Where will you register your car, setup you insurance, get a driver’s license, get a bank account, etc.?

Without a permanent address, deciding what to do about all of your accounts can be difficult. Changing your address for everything each time you move to a new contract is complicated and can lead to issues.

Is Travel Therapy Without a Tax Home Worth it?

As you can see, there is no one size fits all answer here just like with most things in life. For most it will make more sense to maintain a tax home while traveling both financially and logistically to have a place to go back to between contracts and maintain your permanent ties. For some, working as an itinerant worker is the right choice, whether you’re taking local contracts while commuting from home, or want to be a nomad without a permanent residence. The most important thing is to be aware of all of the differences and to make an informed decision.

I hope this was helpful in guiding you on some decision making regarding tax homes as a travel therapist. If you have detailed questions about your own personal tax home situation, we highly recommend contacting a tax professional (NOT us) for the best advice. Our preferred CPA who works with healthcare travelers is Nermina Culesker at Choice 1 Accounting and Tax. You can set up a consultation with her here if you’d like to discuss your personal tax home situation as a traveler or other travel tax related questions.

If you have general questions we can help you with, please feel free to send us a message . If you need help getting started with travel therapy, we have a lot of resources on our website that will be very helpful. And if you need travel therapy recruiter recommendations, fill out this form and we will get you connected!

IMAGES

Travel Therapy: What is a "Tax Home"?
What Is A Travel Therapy Tax Home?
Tax Homes 101 (for Travel Therapists)
Travel Therapy Tax Home Basics
What Is A Travel Therapy Tax Home?
What on Earth is a Travel Therapy Tax Home?

COMMENTS

Tax Homes 101 (for Travel Therapists)
As a travel therapist, if you qualify, you will receive an hourly pay which is taxed, and in addition you will receive a stipend or "per diem" for housing, meals, and incidentals to help cover your expenses while you travel away from home to go work in the travel location, and this stipend is not taxed. You can learn more about how the pay ...
Tax Home Requirements Simplified for Travel Therapists
Let us simplify and explain the requirements needed to maintain a Tax Home as a travel therapist, so that you don't have to be scared of Tax Homes anymore! PLUS, we go through a list of "RECORDS TO KEEP" to make sure you're tax compliant while on travel assignments! We love tax homes because once you break it down, you realize it is the key ...
4 must know rules to tax-free money for travel therapists
The 4 travel therapy tax rules: Duplicate expenses at fair market value (and have proof!) It's not enough to just travel away from your tax home. Travel therapists have to prove that they are duplicating expenses. Essentially, they are paying for their tax home and paying for housing at their new temporary residence.
Tax Homes and Travel Taxes Explained
1. Keep paying rent at your tax home. (At fair market value - not a $100 electric bill only) 2. Also pay rent at the new place you are working (This is what duplicating expenses means) 3. Take a travel assignment that is far enough away from that tax home that you need a second place to stay while you work there. 4.
Travel Therapy Tax Home Basics
As a traveling therapist, it is important to know if you have a tax home or not. Because having a tax home is what determines if you receive free housing/tax-free stipends when you take travel assignments. If you have a tax home and are traveling away from it for work temporarily, you can qualify for tax-free money.
Travel Therapy Tax Questions
Travel therapists face some unique tax concerns and often have many travel therapy tax questions. Working in multiple states, identifying and maintaining a tax home, and deducting expenses are some unique issues to travelers. Joseph Smith specializes in helping mobile professionals with tax preparation at Travel Tax. He is a former traveling ...
Tax Tips for Travel Therapists
Here are few details every travel therapist should know when doing their taxes. AMN Passport Login. Call us 800-788-4815. Blog; Allied Travel; Allied Travel February 1, 2017 By Xai. Tax Tips for Travel Therapists ... A tax home exists to deduct work-related travel expenses. The IRS defines it as the "entire city or general area" of your ...
TAX HOME REQUIREMENTS SIMPLIFIED & RECORDS TO KEEP FOR TRAVEL ...
In today's video, we hope to simplify and explain the requirements needed to maintain a Tax Home as a travel therapist or nurse, so that you don't have to be...
Tax Tips for Travel Therapists
Here are a few details every travel therapist should know when doing their taxes. What is the difference between a tax home and a permanent residence? A tax home exists to deduct work-related travel expenses. The IRS defines it as the "entire city or general area" of your workplace. If your work is near a border, your tax home can even ...
What on Earth is a Travel Therapy Tax Home?
Travel therapist pay is usually placed into two different categories: taxed and untaxed. But, regardless of what any recruiter might tell you, qualifying for this untaxed pay unfortunately isn't as easy as checking a few boxes. The good news, however, is that with just a little bit of upfront effort, maintaining this status throughout your ...
Filing Taxes As A Traveler: Why We Use A Professional
Travel Tax has also had so many questions on "what is a tax home" that they now have a fee for service consultation on answering just that question. Last I checked it was $55, but you can click here to read their information and fees. Despite traveling for 5 1/2 years, we did have our own consult about a year ago to answer some lingering ...
House Hacking to Reduce Expenses as a Healthcare Traveler
There are a few different ways that a travel healthcare provider might choose to house hack their tax home to reduce costs. The first and most simple way is by simply renting a room in a house as their tax home, instead of having an entire house or apartment. Realistically, most travelers spend very little time throughout the year at their tax ...
Travel Nursing: What is a Tax Home?
For true "travelers," as defined above, the tax rules allow an exception to the tax home definition. Instead of looking at the primary place of income/business, it allows the tax home to default (fall back on) the permanent residence. For this to apply, however, the travel nurse must meet 2 out of 3 of the following criteria.
What is a Tax Home?
The tax home designation largely exists for the purpose of deducting work-related travel expenses, which is why your workplace, rather than your house or apartment, is "home." Imagine if you really did live 100 miles outside Pittsburgh but worked in the city. If you were allowed to count your house out in the country as your tax home, then ...
New (grad) travel therapist (OT) tax home questions
Hi all! I'm looking to begin the fun of travel therapy, but am having hangups regarding establishing a tax home. As many new grads, I am looking to use my parent's home as my tax home. However, I am particularly worried about satisfying factors 2 and 3 of the 3 contingencies.
Frequently asked questions about work-life referral services
FS-2024-13, April 2024 — This Fact Sheet provides answers to frequently asked questions (FAQs) addressing the tax treatment of work-life referral services (sometimes also called caregiver or caretaker navigation services) provided by an employer to an employee.
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Elektrostal Map
Elektrostal is a city in Moscow Oblast, Russia, located 58 kilometers east of Moscow. Elektrostal has about 158,000 residents. Mapcarta, the open map.
Which States Have the Best Tax Rates for Travel Therapists?
A travel therapist traveling with a tax home, is eligible for tax free stipends for housing, meals, and incidentals. These tax frees stipends can often be $1,000/week or more which means a lot more money in the pocket of the travel therapist throughout the course of a year. Outside of understanding the tax home rules and ensuring compliance ...
Elektrostal to Moscow
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travel taxes Archives
The average weekly take home pay range for a travel therapist working as an itinerant worker is $1,200-$1,600/week. To compare, the average weekly take home pay range for a travel therapist traveling with a tax home is about $1,650-$1,900/week.