How to Establish a Tax Home for Travel Nursing: Step-by-Step Guide

Ready to establish a tax home so you can receive tax-free stipends? This step-by-step guide walks you through exactly what to do, how much it costs, and how to document everything properly.

Before You Start: Is a Tax Home Worth It?

Let’s do the math to make sure establishing a tax home makes financial sense for you.

The Cost-Benefit Analysis

Costs of maintaining a tax home:

• Monthly rent: $500-1,500
• Utilities: $100-200
• Annual cost: $7,200-20,400

Tax savings from tax-free stipends:

• Average tax-free stipends: $1,500/week
• Annual stipends: ~$78,000
• Tax on that if fully taxable: ~$19,500 (25% bracket)
• Tax savings: ~$19,500

Net benefit: $19,500 - $15,000 (housing costs) = $4,500+ per year in savings

For most travel nurses, a tax home clearly pays for itself—often by a significant margin.

---

Step 1: Choose Your Tax Home Location

Factors to Consider

State Income Tax

States with no income tax are popular choices:

• Texas
• Florida
• Nevada
• Washington
• Wyoming
• South Dakota
• Alaska
• Tennessee (no wage tax)
• New Hampshire (no wage tax)

Potential savings: 5-10%+ on state taxes

Cost of Living

Lower costs = more savings:

• Texas: Moderate housing, no state tax
• Florida: Moderate housing, no state tax
• Nevada: Moderate housing, no state tax
• Ohio: Low housing, but has state tax

Personal Factors

• Family nearby?
• Climate preferences?
• Friends and support system?
• Job opportunities for local work?

Best States for Tax Homes (2026)

---

Step 2: Secure Housing

You have several options for establishing housing at your tax home.

Option A: Rent Your Own Apartment

Best for: Those who want privacy and clear documentation

Typical costs:

• Studio/1BR: $800-1,500/month
• Utilities: $100-200/month
• Security deposit: 1-2 months rent

Pros:

• Clearest tax home claim
• Your own space when you return
• Can store belongings
• Easy to document

Cons:

• Most expensive option
• Paying for empty space while traveling

How to do it:

1. Search apartments in your chosen area
2. Explain you’re a travel nurse and may be gone for periods
3. Set up autopay for rent and utilities
4. Keep all lease documents

Option B: Rent a Room

Best for: Budget-conscious nurses who want lower costs

Typical costs:

• Room rental: $400-900/month
• Utilities often included

Pros:

• More affordable
• Someone watches the place while you’re gone
• Utilities usually included
• Still valid for tax home

Cons:

• Less privacy
• Shared space
• Need a compatible roommate situation

How to do it:

1. Find room rentals on Furnished Finder, Facebook, Craigslist
2. Get a written rental agreement
3. Pay by check or transfer (documented)
4. Keep receipts of all payments

Option C: Stay with Family and Pay Rent

Best for: Those with family in a good tax home location

Typical costs:

• Fair market rent: $400-800/month
• Should reflect actual value of the space

Pros:

• Most affordable option
• Family support when home
• Comfortable, familiar space

Cons:

• Can be harder to document
• Must pay fair market rent
• IRS scrutinizes family arrangements more

How to do it:

1. Research fair market rent for the space
2. Create a formal written lease agreement
3. Pay rent monthly by check or transfer (paper trail!)
4. Keep all documentation
5. Consider getting the lease notarized

Important: The rent must be fair market value. Paying $100/month for a room that would rent for $700 elsewhere raises red flags.

Option D: Buy Property

Best for: Those planning to travel nurse long-term

Typical costs:

• Down payment: 3-20% of purchase price
• Mortgage: Varies by price and rate
• Maintenance, taxes, insurance

Pros:

• Strongest tax home claim
• Building equity
• Potential rental income if you rent part
• Long-term investment

Cons:

• Highest upfront cost
• Maintenance responsibilities
• Less flexibility

---

Step 3: Set Up Essential Documentation

Once you have housing, establish a paper trail.

Transfer to Your Tax Home Address

Change your address on:

• Driver’s license
• Vehicle registration
• Voter registration
• Bank accounts
• Credit cards
• Nursing license(s)
• Professional memberships
• Insurance policies

Set Up Utilities in Your Name

If not included in rent:

• Electric
• Water
• Gas
• Internet
• Trash service

Create a Filing System

Keep organized records of:

• Lease or mortgage documents
• Monthly rent/mortgage payments
• Utility bills
• Time spent at home (travel receipts)
• Local work (if any)

Pro tip: Create a dedicated folder in Google Drive or Dropbox. Scan and upload documents monthly.

---

Step 4: Maintain Your Tax Home

Establishing a tax home isn’t a one-time event—you must actively maintain it.

Return Regularly

There’s no magic number, but aim to:

• Return between assignments when possible
• Spend at least 30 days per year at home (more is better)
• Never go more than 12 months without returning

Keep Paying Expenses

• Pay rent/mortgage every month
• Keep utilities active
• Maintain the property

Work Locally When Possible

Working in your tax home area strengthens your claim:

• Pick up PRN shifts between assignments
• Do per diem work at local hospitals
• Even a few shifts per year helps

Maintain Ties

Keep connections to your tax home area:

• Vote there
• Register vehicles there
• Maintain bank accounts there
• Keep memberships (gym, library, etc.)

---

Step 5: Document Everything

If the IRS ever questions your tax home, you’ll need proof. Document:

Housing Expenses

• Lease agreement or mortgage documents
• Monthly payment confirmations (bank statements, cancelled checks)
• Utility bills and payment records
• Renter’s or homeowner’s insurance

Time at Home

• Flight itineraries showing returns home
• Gas receipts for drives home
• Calendar entries showing time at home
• Photos with dates (geotagged photos help)

Local Work

• Pay stubs from local facilities
• Hospital credentialing records
• Work schedules

Ties to the Area

• Driver’s license with address
• Vehicle registration
• Voter registration card
• Bank statements with address
• Mail received at address

Keep Records for 7 Years

The IRS can audit returns for up to 3 years (6 years in some cases). Keep all documentation for at least 7 years to be safe.

---

Cost Breakdown: Real Examples

Example 1: Budget Tax Home

Location: Memphis, Tennessee

Tax savings: ~$18,000 (from tax-free stipends) Net benefit: ~$10,200/year

Example 2: Mid-Range Tax Home

Location: Dallas, Texas

Tax savings: ~$19,500 (from tax-free stipends) Net benefit: ~$1,500/year (plus you have your own space!)

Example 3: Family Arrangement

Location: Phoenix, Arizona

Tax savings: ~$18,000 Net benefit: ~$8,700/year

---

Common Mistakes to Avoid

Mistake 1: Not Paying Fair Market Rent

If staying with family or friends, you must pay what the space is actually worth. Paying $100/month for a bedroom worth $600 won’t hold up under scrutiny.

Fix: Research comparable room rentals in the area. Pay accordingly.

Mistake 2: No Written Agreement

Verbal agreements don’t provide documentation.

Fix: Always have a written lease, even with family.

Mistake 3: Paying Cash

Cash payments are hard to prove.

Fix: Pay by check, bank transfer, or Venmo/Zelle with clear description.

Mistake 4: Never Returning

Paying rent but never returning weakens your claim.

Fix: Make a point to return at least quarterly, or more often.

Mistake 5: Abandoning the Home

Stopping rent payments or removing your belongings ends your tax home.

Fix: Maintain continuous housing, even if you extend contracts.

Mistake 6: Not Keeping Records

No documentation = no proof if audited.

Fix: Create a system and update it monthly.

---

Timeline: Setting Up Your Tax Home

Week 1-2

• Research locations
• Decide on housing type
• Start apartment/room search

Week 3-4

• Sign lease
• Pay deposit and first month’s rent
• Set up utilities

Week 5-6

• Update address on all documents
• Create documentation system
• Scan and file all paperwork

Ongoing

• Pay rent monthly
• Save all receipts
• Track time at home
• Return between assignments

---

Frequently Asked Questions

How long does it take to establish a tax home?

You can establish a tax home as soon as you have housing set up with your name on the lease and documented payments. There’s no required waiting period.

Can I establish a tax home retroactively?

No. You can’t claim tax-free stipends for assignments before you had a valid tax home.

What if I’m between tax homes?

If you’re in transition (selling one home, buying another), consult a CPA. There may be a gap where you don’t have a valid tax home.

Can I change my tax home location?

Yes. You can move your tax home by establishing new housing in a different location. Just make sure to document the transition.

What if my agency says I have a tax home but I don’t?

Your agency doesn’t determine your tax home—you and the IRS do. Don’t accept tax-free stipends if you don’t have a valid tax home, regardless of what your agency says.

---

Summary Checklist

To Establish Your Tax Home:

• Choose a location (consider tax-free states)
• Secure housing (apartment, room, or family)
• Sign a written lease
• Set up utilities in your name
• Update all documents to new address
• Create a documentation system

To Maintain Your Tax Home:

• Pay rent/mortgage monthly
• Keep utilities active
• Return regularly (at least quarterly)
• Work locally when possible
• Save all documentation
• Keep records for 7 years

---

Related Resources

• What Is a Tax Home for Travel Nurses?
• Ultimate Travel Nurse Tax Guide 2026
• Tax-Free Stipends Explained
• Travel Nurse Pay Calculator — Calculate your take-home with tax-free stipends