Practicing nursing internationally in countries like Australia, New Zealand, the United Kingdom, Canada, or the Middle East offers clinicians extraordinary cultural and professional experiences. However, working overseas does not relieve American citizens of their United States tax obligations.
The United States is one of only two nations that taxes its citizens on their worldwide income, regardless of where they live or where their earnings are paid.
The Foreign Earned Income Exclusion (FEIE) explained
To prevent severe double taxation on American citizens working abroad, the Internal Revenue Code provides the Foreign Earned Income Exclusion (FEIE) under Section 911.
The FEIE allows qualifying American expatriates to exclude a substantial amount of foreign wage income from federal income taxation, indexed annually for inflation to over $120,000.
To qualify for the exclusion, your tax home must be in a foreign country, and you must satisfy either the Bona Fide Residence Test or the Physical Presence Test.
Review statutory exclusion criteria in IRS Publication 54 (Tax Guide for U.S. Citizens and Resident Aliens Abroad).
Passing the Physical Presence Test for travel nurses
Most international travel nurses qualify for the FEIE using the Physical Presence Test.
To satisfy this test, you must be physically present in a foreign country or countries for at least 330 full 24-hour days during any consecutive 12-month period. Brief trips back to the United States to visit family or attend conferences count against your 330-day tally.
If you return to the United States too frequently and fail to meet the 330-day threshold, you lose the entire foreign earned income exclusion, making your foreign hospital wages fully taxable by the IRS.
You can simulate how foreign income affects your tax planning using our Contract Analyzer.
State taxes on international nursing contracts
While the federal government offers the Foreign Earned Income Exclusion, individual states do not always follow federal foreign tax exclusions.
Sticky residency states like California, Virginia, South Carolina, and New Mexico consider you a state resident unless you permanently sever all ties, such as relinquishing your driver license, closing bank accounts, and selling property. If you take a one-year nursing contract in Sydney while maintaining residential ties in California, California will tax all of your Australian wages.
Check your tax home ties and overseas compliance risks with our Tax Home Quiz.
Frequently asked questions
What is the Foreign Earned Income Exclusion (FEIE) for nurses abroad?
Under Section 911, qualifying American citizens working abroad can exclude over $120,000 in foreign earned wage income from federal income taxation.
How does the 330-day Physical Presence Test work for international nurses?
You must spend at least 330 full 24-hour days inside a foreign country during any consecutive 12-month period to qualify for the foreign exclusion.
Do individual US states recognize the Foreign Earned Income Exclusion?
Not all states conform. Residency states like California may tax foreign earnings unless you formally sever all resident ties before departing.