Understanding Stipends and Deducting Travel Expenses

1099 Business,Taxes,Traveling

As a healthcare professional, you might often find yourself traveling for work, whether it’s for conferences, training, or temporary assignments. Navigating the world of stipends, per diems, and tax deductions can be complex, but understanding these concepts can help you manage your finances better. Here’s what you need to know about stipends, travel expenses, and how to maximize your tax benefits.

What Are Stipends and Per Diems?1

Stipends are fixed payments provided to employees to cover expenses such as meals, lodging, and transportation when they are away from their usual place of work. Per diems are similar but usually refer to daily allowances specifically allocated for daily expenses while traveling for work.

How Are Stipend Amounts Decided?

Stipend and per diem rates can vary based on the employer’s policy and the location of the travel. Employers often use guidelines provided by the General Services Administration (GSA) in the United States, which publishes rates for different locations based on the cost of living. Initially used for Federal government employees, GSA rates have become the standard for all types of non-government employees, including healthcare travelers. The GSA website allows you to enter your travel destination and see a breakdown of the per diem rates in each county in every state .

For healthcare professionals, particularly travel nurses, the amount of money received from a housing stipend often depends on the employer and the location of the assignment. For instance, some agencies may pay a lower stipend but higher taxable wages. The GSA determines maximum stipends based on the average cost of living in a particular area. Seasonal changes can also impact stipend amounts; for example, winter rates in warmer states may be higher due to increased demand.

When Are Travel Expenses Tax Deductible?

Understanding when travel expenses are tax deductible is crucial for managing your finances effectively. Generally, travel expenses are tax deductible if they are:

  • Ordinary and Necessary: The expenses must be common and accepted in your profession and helpful and appropriate for your business.
  • Incurred While Away from Home: You must be traveling away from your tax home for work purposes. Your tax home is your regular place of business or post of duty, regardless of where you maintain your family home.

Common deductible travel expenses include transportation costs, lodging and accommodation, meals (subject to a 50% limit), and incidental expenses such as tips and laundry.

How Does the IRS View Temporary Employees?

The IRS has specific rules for employees who work temporary assignments. A temporary assignment is generally considered to be one that is expected to last (and does in fact last) for one year or less. If you are on a temporary assignment, your travel expenses to that location can be deductible. However, if your assignment extends beyond one year or there is no clear end date, it may be considered indefinite, and your travel expenses may no longer be deductible.

Traits of Temporary Jobs

Here are some common traits that temporary jobs share:

  • Clearly Defined Contracts: A business gives the temp employee a contract that clearly defines their payment and length of employment with any other terms listed.
  • Doesn’t Exceed One Year: Typically, jobs for temporary employees last no longer than one year.
  • Exempt from Benefits: Employers don’t have to offer benefits to temporary employees.
  • Eligible for Workers’ Compensation: Temporary employees qualify for compensation if they receive an injury on the job.

Living in One Place and Deducting a Temporary Home

If you are working in a location temporarily and maintain your tax home elsewhere, you might be able to deduct the cost of maintaining a temporary home. To qualify, the temporary assignment must be expected to last less than one year. Here are some tips:

  • Maintain Your Tax Home: Keep ties to your tax home, such as maintaining a residence, having family members live there, or conducting business activities.
  • Document Everything: Keep thorough records of your temporary assignment, including contracts, assignments, and duration.
  • Understand Duplication of Expenses: You must be duplicating living expenses (maintaining your tax home and incurring expenses at your temporary location).

If you return to your tax home on days off, you can deduct travel expenses, including meals and lodging, while traveling between your temporary work location and your tax home. However, you cannot deduct the cost of meals and lodging while at your tax home.

Taking 31 Days Off to Maintain Tax Deductibility

For healthcare professionals on long-term temporary assignments, it’s important to understand the IRS’s requirement for maintaining the tax-deductible status of your travel expenses. To continue qualifying for deductions, you must take a break of at least 31 days from your assignment each year. This ensures that your assignment remains classified as temporary rather than indefinite.

Maximizing Your Stipends and Benefits

To make the most of your stipends and benefits:

  • Communicate with Your Recruiter: Ensure you discuss your tax home status and eligibility for per diems with your recruiter. They can provide guidance and help you complete necessary worksheets to determine eligibility.
  • Utilize Company Resources: Many travel nursing agencies, such as Health Carousel Travel Nursing (HCTN), offer dedicated travel and housing teams to assist with finding accommodations, providing discounts, and answering any questions about housing stipends.
  • Consider All Options: If you qualify for a tax-free per diem, consider whether company-assisted housing or a per diem assistance program is more beneficial for you.

Take Home

Understanding stipends and how to deduct travel expenses can significantly impact your financial health as a healthcare professional. By staying informed about the rules and guidelines set by the IRS and leveraging resources provided by your employer, you can ensure that you make the most of your travel assignments while maximizing your tax benefits.

Navigating this terrain might seem daunting, but with the right knowledge and support, you can manage your finances effectively and focus on what you do best – providing exceptional healthcare. Stay proactive, consult with tax professionals if needed, and keep abreast of any changes in tax laws to ensure you’re optimizing your travel-related expenses.


  • Protect yourself and your assets by performing your contract work under the umbrella of a business entity. Think about what you’d like your proposed business to be named!
    • Visit your Secretary of State website to see if your chosen name is available
    • Check with your state’s Board of Nursing for state specific requirements
  • File applicable business set-up paperwork
  • The S-Corp Edge: How you structure your 1099 CRNA business will have far-reaching consequences, whether it is a sole proprietorship, a limited liability corporation (LLC), or an S corporation (S-corp). 
    An S-corp may offer several advantages over other business structures when it comes to taxation. In this structure, a business owner is called a shareholder, and the business owner is recognized by the IRS as an employee of the business. What this means is that the business owner must pay themselves a salary through the corporation. The S-corp pays their payroll taxes, which can in turn be deducted as a business expense. Income tax is paid through its owners’ tax returns based on their percentage of ownership. Moreover, any remaining profits have a lower tax rate than regular income. An S-corp may also allow 1099 CRNAs to avoid a higher tax level that other self-employed contractors pay for Medicare and Social Security.
          A CRNA may structure their company as an S-corp serving as the sole owner, with their business income, tax deductions, and losses passing through to the owner, as opposed to being taxed at a corporate level – a potentially smart move for maximizing financial security in the future.
    • Register for an EIN
  • Open a business checking account and credit card
  • Keep track of all your business expenses as these could save you money come tax time!
    • Have an envelope for receipts or a folder on your computer where you scan these into
  • Be sure not to co-mingle your business and personal finances!
  • Remember, as a freelance CRNA, if you don’t work, you don’t get paid!
    • Do you have at least six months savings should your contract abruptly stop?
  • Think about replacing your current benefits
    • Health Insurance
    • Health Savings Account/Dependent Savings Account
    • Retirement Savings Account
    • Life Insurance
    • Disability Insurance
  • Procure malpractice insurance
  • Look for jobs!
  • Apply for state licenses where you want to work
    • Each state needs a different CRNA license (and RN if they are not a compact state). Keep this in mind as some BONs can take 3-6 months to license a provider.
  • Have an employment attorney review your contract
  • Have your contract written to your business and deposit all earnings into your business checking
  • Keep A Schedule
  • As a W-2 employee, your taxable income and amounts taken out for taxes appeared on your W-2 form at the end of every year, without you having to calculate them. But when a firm pays more than $600 for services from an independent contractor, that income must be reported to the IRS.
    What many 1099 CRNAs don’t realize is that they must pay taxes on their income as they earn it. Paying your quarterly estimated income taxes will be a new part of running your business successfully. 
          It doesn’t sound so difficult—keeping track of paying estimated income tax only happens four times a year. But the reality is a late payment can result in penalties and fines from the IRS. Keeping a schedule to help you stay on top of your quarterly estimated tax payments, and paying adequately to avoid underpayment, is imperative in avoiding penalties in the future. Not to mention providing peace of mind!
  • Make sure you have a trusted team of accounting and/or financial professionals who have experience with freelance CRNAs to guide you through this process!
  • CPAs
  • Financial Planners
  • Bookkeepers
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