For travel nurses, the "state of residence" or "tax home" is the state where they maintain their primary residence and where they are considered a resident for tax purposes, regardless of where they work on assignments.
In general, your tax home is established by demonstrating that they have a permanent residence in a specific location, which usually is shown by having a home, paying taxes, and having a driver's license in that state.
As a travel nurse, you'll likely need to file taxes in both your state of residence (tax home) and any state where you work on assignments. In your case you will likely have to file a resident return for North Dakota and a Nonresident return for Nebraska.
Note: To ensure accurate calculations, always complete the non-resident return first if filing in multiple states because your resident state might give you a credit for any taxes paid in that situation.
The IRS uses the following i determining your resident state:
- You have duplicate living expenses: You must pay housing expenses at your permanent tax home and another home you stay at during your travel nursing contract. These expenses must be reasonable based on fair market value. In other words, you can’t claim your parents’ house as a tax home if you aren’t paying a fair amount for rent and utilities based on the local real estate market.
- You haven’t abandoned your tax home: To meet this requirement, you must frequently return to live at your main home in between contracts. You can also fulfill this factor if one or more family members live there.
- You perform part of your work near your tax home: Keep a per diem job and work a shift or two when you’re home or take a contract near your home each year and live there for the duration.
If you meet all three criteria, you can usually declare your permanent residence as a tax home without incident. You may still be able to claim it under certain circumstances if you only meet two of the three requirements, but if you meet only one criterion, the IRS considers you an itinerant worker without a tax home.
Click here for Determining an individual's tax residency status.
Click here for What is my state residency status?
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