Do I need to file tax returns in every state where I work as a travel nurse?
This question was answered by Taylor, CPAI, Deduction’s AI tax accountant, and Deduction’s licensed CPAs.
Generally, yes. Travel nurses typically must file a tax return in every state where they earned income during the year, plus a resident return in their home state (tax home). However, exceptions apply for states without an income tax and states with reciprocity agreements.
The Basic Rule
As a travel nurse working in multiple states, you will usually need to file:
- A resident return in your home state (tax home) reporting all income from everywhere
- A nonresident return in each state where you worked and earned income
Your home state taxes you on all income regardless of where it was earned, while work states tax you only on income earned within their borders.
States With No Income Tax
Nine states do not impose a personal income tax on wages, so you do not need to file a state tax return if you work there:
If you work in one of these states, you won't owe state income tax there or need to file a return for that assignment, though you'll still owe taxes to your home state on that income if your home state has an income tax.
Reciprocity Agreements
Some states have reciprocal tax agreements that allow residents of one state to work in another without having taxes withheld or filing a nonresident return. If a reciprocity agreement applies between your home state and your work state, you submit an exemption form to your employer and only file in your home state.
Currently, 16 states and the District of Columbia have reciprocity agreements with at least one other state: Arizona, Illinois, Indiana, Iowa, Kentucky, Maryland, Michigan, Minnesota, Montana, New Jersey, North Dakota, Ohio, Pennsylvania, Virginia, West Virginia, and Wisconsin.
However, these agreements are typically between neighboring states (such as Ohio/Pennsylvania, Illinois/Indiana, or Michigan/Ohio) and may not cover most travel nurse assignments, which often span non-adjacent states.
How Multi-State Filing Works
Filing Sequence: File nonresident returns for each work state first, then file your resident return in your home state last using the exact figures from your nonresident returns.
Avoiding Double Taxation: Federal law prohibits multiple states from taxing the same income. Most states provide a credit for taxes paid to other states. When you file your home state resident return, you claim a credit for the taxes you paid to work states, reducing or eliminating double taxation.
Understanding Your Tax Home
The IRS defines your "tax home" as your regular place of business or post of duty, regardless of where you maintain your family home. Your tax home is critical because it determines where you file as a resident and whether your housing/meal stipends are tax-free.
Three Factors for Determining Tax Home
According to IRS Publication 463, if you do not have a regular or main place of business, the IRS uses the following three factors to determine your tax home:
- You perform part of your business in the area of your main home and use that home for lodging while doing business in the area.
- You have living expenses at your main home that you duplicate because your business requires you to be away from that home.
- You have not abandoned the area in which both your historical place of lodging and your claimed main home are located; you have a member of your family living at your main home; or you often use that home for lodging.
If you satisfy all three factors, your tax home is the home where you regularly live. If you satisfy two factors, you may have a tax home depending on all the facts and circumstances. If you satisfy only one factor, you are a transient, and your tax home is wherever you work.
Temporary vs. Indefinite Assignments
Per IRS Publication 463 and Topic No. 511, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for 1 year or less. If your assignment is temporary, your tax home does not change. However, if your assignment or job is indefinite (expected to last more than 1 year), the location of the assignment becomes your new tax home.
Important: If you initially expect to work at a temporary location for one year or less, and that expectation changes so that you realistically expect to work there for more than one year, the assignment becomes indefinite when your expectation changes.
Tax-Free Stipends
Travel nurses often receive stipends for housing, meals, and incidentals. Under IRS rules for accountable plans, these stipends can be excluded from gross income if:
- The expenses have a business connection (you are traveling away from your tax home on temporary assignment)
- You adequately account for the expenses
- You return any excess reimbursement within a reasonable period of time
If you do not maintain a valid tax home, your stipends become fully taxable income. Maintaining your tax home status is critical to preserving the tax-free nature of your stipends.
State-Specific Filing Requirements
California and New York (two of the biggest markets for travel nurses) do not have reciprocity with any other states.
Important Exception: As of 2026, many states have updated their "telecommuting" or "convenience of the employer" rules, but for nurses physically present in a hospital, the rule remains: if you worked there physically, you file there.
California (California Franchise Tax Board)
Nonresidents must file Form 540NR (California Nonresident or Part-Year Resident Income Tax Return) if they have income from California sources and their gross income or adjusted gross income exceeds the filing threshold. California taxes nonresidents on income earned from services physically performed in California. One way to calculate California-source income is to multiply total income by the ratio of days worked in California over total days worked.
New York (New York State Department of Taxation and Finance)
Nonresidents must file Form IT-203 (Nonresident and Part-Year Resident Income Tax Return) if they are a nonresident with New York source income and their New York adjusted gross income exceeds their New York standard deduction. As a nonresident, you only pay tax on New York source income, which includes earnings from work performed in New York State.
What Documents You'll Need
Gather these documents for tax filing:
- W-2 forms from each employer
- State-specific tax forms for each state (resident forms for your home state, nonresident forms for work states)
- Records of assignments: dates, locations, income earned in each state
- Proof of tax home: lease/mortgage statements, utility bills, receipts showing you maintained your residence
New Credit: The "Mobile Worker" Credit
A few states (like Illinois and Minnesota) introduced small "Mobile Worker" tax credits in late 2025 to attract healthcare professionals. When filing your nonresident returns in those states, check for any Healthcare Worker Credits that might reduce your liability in that specific state.
Related Questions
- Do I need to file a tax return in another state for my rental property if I live elsewhere?
- What Is PTE Tax?
- How much is the California state tax on a 401 k withdrawal?
Summary
Sources:
IRS Publication 463 (2024), Travel, Gift, and Car Expenses
IRS Topic No. 511, Business Travel Expenses
IRS Publication 5137, Fringe Benefit Guide
Treasury Regulation § 1.62-2 - Reimbursements and other expense allowance arrangements.
The information provided does not, and is not intended to, constitute legal advice.
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