Can Your Parents' House Be Your Travel Nurse Tax Home? What the IRS and the Courts Say

Q: What does the IRS three-factor test ask?

Publication 463 asks whether you perform part of your business in the area of your main home and lodge there while doing it; whether you have living expenses at your main home that you duplicate because work requires you to be away; and whether you have not abandoned the area of your historical lodging and claimed home, have family living at the main home, or often use it for lodging. All three means the home is your tax home, two means it depends on the facts and circumstances, and one means you are an itinerant. Living with parents usually meets the third; paying no rent fails the second, and working every contract elsewhere fails the first.

Q: What happened in the court case about living with parents?

In Henderson v. Commissioner, 143 F.3d 497 (9th Cir. 1998), a stagehand on a traveling ice show claimed his parents' home in Boise as his tax home. He had strong personal ties there: mail, belongings, his dog, Idaho voter registration, driver's license, bank account and state income tax. He lost. The court found he paid no rent and had no ownership interest in his parents' home, that his parents' mortgage and utilities were not a substantial living expense incurred by him, and that he had no business reason to live in Boise, where he worked one night that year. One judge dissented. The away-from-home test it applied is the same one that decides whether a per diem is tax-free.

Q: How much rent do you need to pay your parents?

No rule sets a number. The test is real living expenses at the home that continue while you are away, and Henderson shows that occasional help, about $500 of supplies or costs your parents would pay anyway do not count. The safest benchmark is a fair rent for what you use. IRS Publication 527 defines a fair rental price as the amount of rent that a person who is not related to you would be willing to pay, and says rent substantially below similar properties is not fair rent. Pay it every month, including the months you are on contract.

Q: Do your parents have to report the rent?

Generally yes. IRS Publication 527 says that in most cases all amounts received as rent must be included in gross income, so rent you pay your parents is their income, and they may be able to deduct a share of related expenses depending on their own return. It also makes the arrangement credible: rent that appears in your bank records and on your parents' return is a household expense, while rent that appears nowhere is hard to tell apart from no rent.

Q: What should the record show?

The Henderson court said objective financial criteria are usually more significant than intent. The record should show a written rental agreement at a defensible fair rent; payments by bank transfer or check every month, including months on assignment; your parents reporting the rent; your driver's license, voter and vehicle registration and tax filings at that address; dated time actually spent there between contracts; and, if you can arrange it, work in the area such as a per diem or PRN position near home, which addresses the business connection the Henderson court found missing.

Q: What if you only satisfy two of the three factors?

Then it is a facts and circumstances question with no guaranteed answer. The common case is a traveler who pays fair rent to parents and keeps strong ties there but works every contract elsewhere, meeting the second and third factors but not the first. That is stronger than Henderson's position, but both the Ninth Circuit in Henderson and the First Circuit in Hantzis treated a business reason for the claimed home as weighty, so some local work narrows the gap. If stipends are a large share of your income, have a tax professional review it, since an adverse finding makes them taxable wages.

By CircleRN Team | Published 2026-09-30 | 8 min read

Living with parents can be a valid tax home for a travel nurse, but living there is not enough. The IRS three-factor test, the appeals court case a traveler lost for paying no rent, what fair rent means, and what the record should show.

Yes, your parents' house can be your tax home, but living there is not what makes it one. The IRS and the courts look for two things that living with family often lacks: living costs at that home that you keep paying while you are away, and a work connection to the area. A federal appeals court denied a traveling worker's claim because he paid his parents no rent and had no business reason to live there.

For most travelers this is not mainly a question about deductions. Your agency can only pay housing and meal stipends tax-free if you are traveling away from a tax home, so the real question is whether the stipend in your package was tax-free at all. The broader rules are in our tax home guide; this one covers the living-with-family case in detail. It is general information, not tax advice for your situation.

Can your parents' house be your tax home?

It can, if the arrangement looks like a home you maintain rather than a place you stay. Under IRS Publication 463, your tax home is generally your regular place of business. A traveler who takes contracts in different places usually has no regular place of business, and then, in the publication's words, your tax home may be the home where you regularly live. If there is no such place, you are an itinerant, your tax home is wherever you work, and you are never away from it.

Nothing in the rules says the home must be yours or that it cannot belong to family. What the rules test is what you do there and what it costs you.

What does the IRS three-factor test ask?

Publication 463 lists three factors for someone without a regular place of work:

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 haven't abandoned the area in which both your historical place of lodging and your claimed main home are located, you have a member or members of your family living at your main home, or you often use that home for lodging.

All three, and the home is your tax home. Two, and you may have a tax home depending on all the facts and circumstances. One, and you are an itinerant.

Living with parents usually satisfies the third factor easily, since family lives there and it is often where you grew up. The second is the one that fails when you pay nothing. The first fails when all your work is elsewhere, which for a full-time traveler is common. A traveler at a parents' house with no rent and no local work is at one factor, which is the itinerant result.

What happened in the court case about living with parents?

Henderson v. Commissioner, decided by the Ninth Circuit in 1998, is the case most often cited on this. Henderson was a stagehand on a traveling ice show who lived at his parents' home in Boise between tours. His ties to Boise were strong: he received mail there, kept his belongings and his dog there, voted, banked and held a driver's license in Idaho, and paid Idaho income tax. He lost.

The court found that he paid no rent and had no ownership interest in his parents' home. His parents' mortgage and utilities benefited him, the court said, but that is not a substantial living expense incurred by him, and any minor expense was not continuing while he was on tour. The court also found no business reason for him to live in Boise: he worked there for a single night that year. Because the deduction exists to offset duplicated living costs, a taxpayer who has none has no home to be away from.

One judge dissented, arguing that his parents' home was his home under any reasonable definition and that the Code does not require a taxpayer to pay for it. That view lost, and the majority's reasoning is what an examiner will start from. Henderson is a Ninth Circuit decision about deductions, but the away-from-home test it applied is the same one that decides whether a per diem is tax-free.

How much rent do you need to pay your parents?

No rule sets a number. What the factor asks is that you have real living expenses at the home that continue while you are away, and the case shows what does not count: occasional help, about $500 of supplies, or costs your parents would have paid anyway.

The safest benchmark is a fair rent for what you use. IRS Publication 527 defines a fair rental price as the amount of rent that a person who isn't related to you would be willing to pay, and says rent substantially below similar properties in the area is not fair rent. That definition is written for your parents' side of the arrangement, but it is the natural yardstick for yours too: what would a stranger pay for your room, or your share of the house, in that town. Paying it every month, including the months you are on contract, is what makes the expense continuing and duplicated.

Do your parents have to report the rent?

Generally yes. Publication 527 says that in most cases you must include in gross income all amounts received as rent. If your parents receive rent from you, it is their income, and they may be able to deduct a share of the related expenses. How that works for them depends on their own return, so they should check it with their preparer.

This is also part of what makes the arrangement credible. Rent that appears in your bank records and on your parents' return is a household expense. Rent that appears nowhere is hard to tell apart from no rent.

What should the record show?

The Henderson court said that while intent can be considered, objective financial criteria are usually more significant, so the record matters more than the story. It should show:

A written rental agreement for the room or share of the home, at a rent you could defend as fair
Payments by bank transfer or check, every month, including months on assignment
Your parents reporting the rent
Your driver's license, voter registration, vehicle registration and tax filings at that address
Time actually spent there between contracts, with dates
Work in the area if you can arrange it: a per diem or PRN position near home, or contracts there, which addresses the first factor and the business connection the Henderson court found missing

The address you give your agency should match all of this. If you are also deciding how long you can stay in one area, the one-year rule is covered in extending or ending a contract.

What if you only satisfy two of the three factors?

Then it is a facts and circumstances question, and no answer is guaranteed. The common two-factor case is a traveler who pays fair rent to parents and keeps strong ties there, but works every contract elsewhere. That traveler meets the second and third factors and not the first.

It is a stronger position than Henderson's, who met only the third. But both the Ninth Circuit in Henderson and the First Circuit in the case it relied on, Hantzis, treated a business reason for the claimed home as weighty. Some local work, even occasional, narrows that gap. If your stipends are a large share of your income, this is the situation worth paying a tax professional to review, since an adverse finding makes the stipends taxable wages.

Bottom Line

A parents' house can be a travel nurse's tax home, but living there is not enough. Pay a fair rent every month, including while you are away, keep it in bank records, have your parents report it, and keep your license, registration and filings at that address. Work in the area when you can, because the business connection is the factor full-time travelers most often miss. Henderson lost with strong personal ties and no rent; the rent is the part you control.

Next: the general tax home rules, how stipends are taxed, and this year's stipend limits by state.

Sources

IRS Publication 463, Travel, Gift, and Car Expenses (chapter 1: tax home, the three factors, the itinerant rule)
Henderson v. Commissioner, 143 F.3d 497 (9th Cir. 1998) (no rent and no ownership interest; no business reason for the claimed home; dissent by Judge Kozinski)
IRS Publication 527, Residential Rental Property (rental income; fair rental price)
IRS, Revenue Procedure 2019-48 (per diem allowances for travel away from home)

Frequently Asked Questions

Can your parents' house be your tax home?

It can, if the arrangement looks like a home you maintain rather than a place you stay. Under IRS Publication 463 your tax home is generally your regular place of business; a traveler without one may have a tax home at the home where they regularly live, and someone with no such place is an itinerant whose tax home is wherever they work. Nothing in the rules says the home cannot belong to family. What matters is whether you pay continuing living costs there and have a work connection to the area, because a travel stipend is tax-free only if you are traveling away from a tax home.

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