As mentioned prior, to maximize your income with traveling healthcare, you want to make sure that you qualify for the tax free stipends. You do this by making sure you are following the rules set in place by the IRS on maintaining a tax home. This is laid out in length in the “how to maintain your tax home while traveling” series.
However, there is one more often forgot about piece of information that matters to making sure we don’t lose our tax home and that’s the length of time we spend in one location.
The IRS Answer
The IRS gives us a working definition of how long we are allowed to work in one location stating:
“If you expect an assignment or job to last for 1 year or less, it is temporary unless there are facts and circumstances that indicate otherwise. An assignment or job that is initially temporary may become indefinite due to changed circumstances. A series of assignments to the same location, all for short periods but that together cover a long period, may be considered an indefinite assignment.”
What This Means for Us
This matter because it states that if we work in one location for over a year, then we go from being a temporary worker to being an indefinite worker. Meaning that we now have moved our tax home to this new location and we are no longer considered a traveler. Which ultimately means no tax free stipends or a dilemma if we were to ever be audited by the IRS.
As we have seen, most traveling jobs are 13 weeks with some reaching up to 26 weeks or 6 months. In this normal situation, we have nothing to worry about.
Though sometimes, we continue to extend at a given location and before we know it, that year mark is already upon us. So make sure that when you are extending, you are marking your initial start date to avoid this tax crisis. And don’t expect your recruiter or company to keep track of this for you, because quite frankly, they often times won’t. This is on us to keep track of.
Does Working at a Separate Assignment Before Returning to the Same Location Reset the Year Long Timer?
The short answer is no, if this time equals a year or more.
Often time people think that if they work for say 10 months in a location but then go work another assignment or go home for a month, that they then will be able to return to work at the same location as a traveler. But in reality, this would jeopardize our temporary/traveling status, as this time would add up to being over a year in one location.
This is because when we look at the second half of the IRS definition: “A series of assignments to the same location, all for short periods but that together cover a long period, may be considered an indefinite assignment”, it clearly states that a series of shorter assignments that adds up to a long period of time over a year will also be considered an indefinite assignment.
Again, removing our traveler status and forcing us to miss out on our stipends.
This isn’t a “hard” rule, but I would consider taking at least a year off at a location before attempting to return to this same location just to be safe.
What If I Change Assignments but Stay in the Same Location?
For example, say you were working in a city, again for a 10 month assignment. And as you know from reading above, you know you can’t stay in this location for over a year, but you want to stay in the same city. So you take an assignment in a different suburb of the city only 20-30 miles away.
According to the IRS, this again would put your traveler status in jeopardy as you are still remaining in the same location even though it is a different assignment.
Again, there is no “hard” rule on how far away you need to work from your previous assignment to constitute a new location. But a safe rule of thumb is to treat it the same as you would when working a local contract near your tax home.
I lay this out in detail in a previous article that you can check out: How Far Away Do I Need to Work From My Tax Home to Still Receive My Tax Free Stipend?
A Safer Alternative
I understand the desire to work in the same location for a long period of time. It could be the pay, family/friends in the area, a significant other, or the geographic location itself. I’m currently experiencing this at this very moment in Arizona.
I’ve found that there were far too many mountains to hike and things to see for me to accomplish it all in one contract length even though I have extended twice now already. So I plan to stay in Arizona for awhile longer.
Although I am not nearing my year mark yet, I have already decided to stay in the area not by continuing to extend but by working in a separate hospital in a new location. And when I say the same geographic area, I don’t mean the same metropolitan area. Because again, as mentioned above, if you work one contract and then take a separate contract 45 miles away, the IRS could view this as still working in the “same location” and put you at risk.
By doing this, it then allows me to stay in the same general geographic location but more importantly, it resets my clock on how long I am working in one place. This allows me to follow the IRS rules to maintain my tax home while also allowing me to continue to explore Arizona. Win-Win.
And with how many jobs there are available as a traveler at all times, this wasn’t that difficult to accomplish. If you are having any trouble with this, feel free to reach out to me here and I can get you in contact with one of my awesome recruiters.
So far I have been able to go wherever I have wanted even though I’m one of the more needy travelers as I only work outpatient jobs for over $1500 take home per week, in specific locations. When I type that out, I truly feel for my recruiters but they have still been able to come through none-the-less.
Conclusion
To summarize, you CAN NOT work in one location for over a year or work a series of contracts in the same location that add up to over a year or you may jeopardize yourself as a temporary worker. However, you are allowed to work at multiple locations within the same geographic region without penalty.
As I have always, and will continue to say, don’t mess with the IRS. Yes, the chances of getting audited are slim but the headaches and financial loss are not worth it.
If you have any questions, please feel free to comment below or reach out to me personally here!
