Most new travelers, and many seasoned travelers will tell you about the “50 mile” rule in regards to this question. This is the rule stating that in order to qualify for your tax free stipends, the IRS requires that your assignment needs to be 50 miles away from your tax home. However, this is actually false.
The IRS considers you to be traveling away from home if “your duties require you to be away from the general area of your tax home substantially longer than an ordinary day’s work” AND “you need to sleep or rest to meet the demands of your work while away from home.”
These are loose terms but basically you need to require lodging and food due to the need of being away from your tax home for work.
No where does the IRS mention a strict 50 mile rule in relation to this IRS law. To read more yourself, you can check out Publication 463 on the IRS.
Make Sure to Check with Your Traveling Company
However, some traveling agencies and hospitals have self imposed mileage rules to help them to better keep consistency with their travelers. This allows them to make sure their travelers are abiding by the above IRS definition for traveling away from home and potentially limit the potential for a IRS audit.
So this makes it an important question to ask when screening potential traveling companies if you are considering traveling locally. This is to make sure you don’t miss out on your tax free stipends because this is where the true money comes from with traveling healthcare..
What This Means for Travelers
The important thing to remember is making sure you are working far enough away from your tax-home that would be considered too far to commute to and you would “need” to pay for lodging and food. I put “need” in quotations because in most situations, the IRS does not regulate the exact mileage or define what is considered too far to commute.
The best advice I can give is to be aware of this rule and be reasonable with your definition of “too far to commute” but not limit yourself to an exact mileage amount.
A Strategic Tax Home
Another option if you are considering traveling locally is to set up your tax home in a location that meets the above IRS requirements. If you are strategic with your tax home, this can open up further options for jobs within your area.
For me, my parents are divorced and my mom lives in the metropolitan Twin Cities area where as my dad lives more in a rural setting 45 miles East of the cities from where my mom lives. So when deciding which house to establish as my tax home, I chose my dads as there was likely going to be more potential traveling jobs available in the metro area near where my mom lived.
Had I picked my mom’s house for my tax home, this would likely limit the jobs that I could find due to the proximity to the city. So by picking my dad’s house, it extends the distance of my tax home and potentially would allow me to live at my mom’s and work in an area near her. Ultimately saving me money on rent.
I plan to discuss in a future post how to properly set up a tax home and what steps need to be taken in order to avoid surrendering your stipends.
My Local Traveling Experience
When I traveled locally, I was around 65 miles away from my tax home at my dad’s house, yet I worked much closer to my moms house. Although, I still ended up staying at a family friends cabin very near to work, I could have commuted from my mom’s and still been within the definition of the IRS rules.
Conclusion
Some of you may feel like this is breaking the rules, but everything that I have done is within the IRS guidelines. Sometimes, the most important thing is learning the rules so that you know how to best use them for your own particular situation.
Ultimately, if your tax home is a reasonable distance from your traveling assignment, you should still be eligible for your lodging stipend. There isn’t a hard mileage cap on what is considered “far enough” away as we have often been told in the past.
Have you been told about the “50 mile” rule before?
Let me know I you have any specific tax home questions, I’d love to help!
As always, comment with any questions or thoughts and feel free to message me here with any specific questions.
