A traveler will eventually encounter the “50 Mile rule” during conversations with recruiters or fellow travelers.
The rule is often discussed as an accepted law of traveling and defended with evangelistic zeal on social networking sites. No matter how times it is refuted, the rule emerges in another conversation like a marathon game of Whac-A-Mole[i].
Let’s start with the facts:
THERE IS NO SUCH THING AS A 50 MILE RULE!
Ahhh, that feels better… Now that we have released our frustrations, let’s explain the origins of this myth.
The 50 Mile Myth and the 50 Mile Reality
Myth: As the myth goes, if you live more than 50 miles away from the assignment, you are entitled to, eligible for, or guaranteed a special government subsidy for lodging that is completely free of taxes. What a deal! If it sounds too good to be true, it probably is.
Reality: Tax free reimbursements for lodging are only allowed when one is traveling away from their tax home (not their permanent residence)[ii]. The distance traveled must require the employee to get rest and sleep at the assignment location to fulfill their duties at the facility. There is no mileage benchmark for this. It is a simple overnight stay test.
Apply a bit of logic here: why should one receive tax free lodging allowances without incurring lodging expenses?
Agency Use of the ’50 mile Rule’
Unfortunately, a lot of agencies have this 50 mile verbiage in their contracts, tax home statements and marketing. Some recruiters are taught this as an IRS rule and insist that travelers use an alternate address on their tax home forms to qualify for the provisions. It’s no wonder that there are more than 20 agencies being audited and for some of them, the 50 mile myth is part of the problem.
50 mile rules are good internal screening tools for the agency to test the validity of the information that a traveler provides. However, it is not the litmus test to determine eligibility for tax free lodging allowances. Even if a traveler prefers to drive 80 miles each way to work and back each shift, they do not qualify for tax free lodging allowances. Why? There are no lodging expenses to reimburse.
Some facilities that use travelers or per diem staff incorporate a 50 mile limit for the professionals that the agencies submit for positions or shifts.
This is attempt to keep current employees from jumping ship and working with the agency for premium pay. Some facilities have a longer distance requirement of 75 or even 100 miles due to geographical nuances of the area that they serve. This facility rule is often confused with the mythological 50 mile IRS rule by recruiters and travelers alike.
There are only two places where there is a 50 Mile Rule in the tax laws.
First, §162(h) of the Internal Revenue Code allows state legislators to receive a per diem when traveling more than 50 miles for legislative business. They are not required to incur lodging expenses for the payment.
Furthermore, the second 50 mile rule applies to moving expense deductions. A taxpayer can deduct moving expenses when they permanently move their residence 50 mile plus their old commute to be closer to a new permanent job. Moving expenses do not apply to a regular traveler. A traveler is never “moving” – they are temporarily working “away from home”.
We hope this clarifies the 50 mile rule for you. We realize that it may be another futile attempt at resisting assimilation by the industry Cybermen. Maybe this installment of Traveler Dr. Who will prevail for good[iii].
- [i] Our apologies to those of you that are too young to remember this game J
- [ii] A Permanent Residence and a Tax Residence are different- refer to previous articles for this discussion
- [iii] Both the Borg in Star Trek and the Cybermen in Dr. Who warned their prey of assimilation
Would you like to learn more?
Check out the TOP 10 Questions for Travel Nurses on Taxes.