One of the premier advantages of travel nursing is taking weeks or even months off between assignments to travel, rest, or spend time with family. However, clinicians often worry whether extended gaps between contracts will invalidate their tax home or draw IRS scrutiny.
Taking time off between assignments does not damage your tax home, provided you handle that time off correctly. In fact, spending contract gaps living at your permanent residence actually strengthens your tax home defense.
Returning to your permanent residence during gaps
Under IRS Revenue Ruling 73-529, one of the three core factors used to evaluate a tax home is whether you maintain physical and personal ties to your permanent residence. Returning to your home between assignments and living there provides strong proof that the property is your genuine base, rather than an empty mailing address.
If you take a six-week break between an assignment in North Carolina and an assignment in Texas, spending those six weeks residing in your permanent home in Ohio demonstrates that your travel is truly temporary.
Make sure you continue paying ongoing living expenses such as rent or mortgage, utility bills, and insurance throughout your time off.
You can test how your breaks and travel history affect your tax standing using our Tax Home Quiz.
Working local per diem shifts during breaks
Many travel nurses pick up PRN or per diem nursing shifts at a local hospital near their permanent residence during contract breaks. This practice is advantageous for your tax home.
Generating income in the vicinity of your permanent residence satisfies another primary factor of Revenue Ruling 73-529: having historical business or income connections in that area.
Keep pay stubs and employment records from any local hospital work. These documents show that your primary dwelling is an active economic and physical base.
Review guidelines on travel away from home in IRS Publication 463.
Claiming unemployment benefits between contracts
Filing for unemployment compensation between contracts requires caution. When you file for unemployment, you certify that you are available and actively looking for work in that local market.
If you claim unemployment from your home state while claiming you are primarily a traveling healthcare worker, ensure that your statements regarding work availability remain consistent across state workforce agencies.
Calculate your annual income projections and budget for planned contract breaks with our Contract Analyzer.
Frequently asked questions
Does taking two months off between contracts hurt my tax home?
No. Spending contract breaks living at your primary residence strengthens your tax home defense by demonstrating ongoing physical and personal ties under Revenue Ruling 73-529.
Can I work local per diem shifts at home during contract gaps?
Yes. Working PRN shifts near your permanent residence satisfies the business activity factor of tax home guidelines by generating income in your home community.
Can travel nurses collect unemployment benefits between assignments?
Yes, provided you are genuinely available for work. However, statements made to state unemployment offices must align with your traveling tax status.