Staffing and recruiting  ·  3 min read

The 12-month rule is a tax rule. Travel nurses often get part of their pay as tax-free stipends for housing and meals. That is allowed because they are working away from their tax home. If an assignment in one place is expected to last more than a year, the IRS treats it as indefinite, not temporary. Then those stipends can become taxable income. Recruiters should know the rule exists and explain it in plain words. Then send every traveler to a tax professional for their own case. This post is not tax advice.

A worker file checked against a hospital's requirements before the shift is confirmedTHE FACILITY REQUIRESRN license, this state, currentBLS card, not expiredTB test within 12 monthsBackground check on fileSite orientation done before shift oneFIVE ITEMS, WRITTEN DOWNTHE WORKER FILERN license, expires 2027BLS card expired last monthTB test, eight months agoBackground check, on fileOrientation: not scheduledTWO GAPS. FOUND ON TUESDAY, NOT AT THE DOOR.Check the file against the list before the shift is confirmed. A gap found at the door is a gap the client finds.
The rule is about where home is, and how long you have been away from it.
1Staffing and recruiting

The idea behind it

Tax-free stipends exist because the traveler keeps a home somewhere else. They are paying to live near the assignment too. The IRS allows that for temporary work. Temporary, in the IRS's view, means expected to last one year or less. Once the work in one place is expected to go past a year, it stops looking temporary. The place becomes the traveler's tax home, and the stipends stop being tax-free.

2Staffing and recruiting

What recruiters usually say

Many agencies use a rule of thumb: no more than 12 months in the same area in any 24-month period. The exact way agencies and tax professionals apply it varies. The rule of thumb exists for one reason. Travelers can drift into a year-plus stay by extending a contract three times without noticing.

3Staffing and recruiting

Why recruiters should not give the answer

Two travelers with the same assignment can have different answers. One keeps a real home elsewhere, pays rent or a mortgage there, and returns between contracts. The other gave up their apartment and lives from assignment to assignment. The rule treats them differently, and the details matter.

So the recruiter's job is three sentences. "There is a 12-month rule about tax-free stipends. It can affect you if you stay in one area too long. Talk to a tax professional who works with travelers before you extend." Then put those three sentences in writing.

4Staffing and recruiting

What to put in the offer and the extension note

  • The assignment length and the location.
  • A line saying the traveler is responsible for their own tax home rules.
  • The reminder to get tax advice before extending past a year in one area.

A traveler who was told clearly, in writing, is a traveler who does not blame the agency at tax time.

How M-Tracker helps

Where M-Tracker fits

The offer note and the extension note have a standard. For travelers, that standard includes the tax-home reminder. M-Tracker checks each note against the standard before it goes out and tells the recruiter in plain words when a line is missing. The reminder goes to every traveler, every time.

Try M-Tracker free14-day trial. No credit card. No employee surveillance.

How a task moves through M-Tracker: brief, work, review, improve, then the manager1BriefResult, audience,must include, due.Files and linksattached.2WorkThe person does itand attaches whatthey made.3ReviewM-Tracker comparesthe work with thebrief. One plainparagraph.4ImproveThey fix what ismissing while it isfresh.5ManagerSees work thatalready passed itsown test.No screenshots. No scores. The person sees the review first.
FAQ

Questions people ask

Does the rule reset if I leave for a few weeks?

Not reliably. Short breaks do not usually change whether the work is expected to last more than a year. Ask a tax professional.

What is a tax home?

Roughly, the place where you regularly live and have real expenses. You return to it between assignments. Keeping one is what makes stipends tax-free.

Can the agency decide this for me?

No. The agency pays the stipends. The traveler is responsible for whether they qualify. Get your own advice.

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