If you work by contract, paid on a 1099, as a per diem nurse, a locum tenens clinician or a consultant, you report the income on Schedule C and pay self-employment tax on the profit. Three questions then decide most of your tax bill. Where is your tax home, because travel costs are deductible only when you are away from it. Is each assignment temporary, meaning realistically expected to last 1 year or less. And are you in a specified service field, which health care and consulting are, and which limits the QBI deduction at higher incomes.
This guide works through those three questions with the IRS rules and with hypothetical numbers from our own calculators. It builds on the freelancer deductions guide for the general rules, on the QBI guide for the deduction itself and on the paying yourself guide for draws and set-asides, so it doesn’t repeat them. If you’re not sure you should be on a 1099 at all, see the 1099 vs. W-2 comparison.
Income under a contract
Contract income works like any other freelance income. You include what clients pay you in the year you receive it, and our timing guide for writers, designers and developers covers the cash method, checks that arrive at year end and unpaid invoices. What’s different for you is the cost side. A clinician or consultant who takes assignments away from home has lodging, transportation and meals that most freelancers don’t, and the rules for deducting them are specific.
Your tax home
Publication 463 starts with the tax home, since you can only deduct travel away from it. The IRS says generally your tax home is your regular place of business or post of duty, regardless of where you maintain your family home, and it includes the entire city or general area where your business or work is located. If you have more than one regular place of business, it’s your main place of business.
If you have no regular or main place of business because of the nature of your work, your tax home may be where you regularly live. Then the IRS uses three factors:
| Factor | In plain words |
|---|---|
| 1 | You do part of your business in the area of your main home and use that home for lodging while you work there |
| 2 | You have living expenses at your main home that you duplicate because your work requires you to be away |
| 3 | You haven't abandoned the area of your historical lodging and main home, a family member lives at your main home, or you often use it for lodging |
1
- In plain words
- You do part of your business in the area of your main home and use that home for lodging while you work there
2
- In plain words
- You have living expenses at your main home that you duplicate because your work requires you to be away
3
- In plain words
- You haven't abandoned the area of your historical lodging and main home, a family member lives at your main home, or you often use it for lodging
Source: IRS Publication 463 (2025), chapter 1. If you meet all three, your tax home is the home where you regularly live. If you meet only two, it depends on all the facts and circumstances. If you meet only one, you are an itinerant.
The last line matters most for people who travel full time. The IRS says an itinerant, someone with no regular or main place of business and no place where they regularly live, has a tax home wherever they work. As an itinerant you can’t claim a travel expense deduction, because you are never considered to be traveling away from home. Keeping a real home, with the costs of running it, is what supports the deduction.
You’re also only traveling away from home, in the IRS’s terms, if your duties require you to be away from the general area of your tax home substantially longer than an ordinary day’s work and you need to sleep or rest to meet the demands of your work.
Temporary or indefinite
Each assignment has to be temporary for the travel costs to be deductible. Publication 463 says that if the assignment is temporary, your tax home doesn’t change, and you’re away from home for the whole period. A temporary assignment in a single location is generally one that is realistically expected to last, and does in fact last, 1 year or less. If it’s indefinite, the location becomes your new tax home and you can’t deduct your travel expenses there. An assignment is indefinite if it’s realistically expected to last more than 1 year, whether or not it in fact does.
Three details from the IRS are worth knowing before you sign:
- You decide when you start. Publication 463 says to determine whether an assignment is temporary or indefinite when you start work, and that one you expect to last 1 year or less is temporary unless facts and circumstances show otherwise.
- Expectations count as much as outcomes. The IRS’s own example: you realistically expected the work to last 18 months and it was completed in 10. The job is indefinite because you expected more than a year, so you can’t deduct travel expenses there.
- A series of assignments can add up. The IRS says a series of short assignments to the same location that together cover a long period may be considered an indefinite assignment. Extensions that change what you can realistically expect can turn a temporary assignment into an indefinite one from that point.
For an indefinite assignment, Publication 463 adds that amounts you receive from your employer for living expenses are income, even if they’re called travel allowances. How that applies to payments from a facility to a contractor isn’t covered here. If a contract offers you an extension at the same facility, ask a tax professional how it affects your tax home before you accept.
What you can deduct on assignment
One detail on meals: Publication 463 says meals include amounts spent for food, beverages, taxes and related tips, and the chart lets you deduct tips you pay for any expense in it. Keep the receipts together with the trip dates.
Table 1-1 in Publication 463 lists the travel expenses you can deduct when you’re away from home on business, including travel between your home and your work destination, local transportation, lodging and meals if the trip is overnight or long enough to need sleep or rest, dry cleaning and laundry, business phone calls, and the tips you pay on these items.
| Cost | Deduction |
|---|---|
| Lodging | Your actual cost. There is no standard lodging amount. |
| Meals | Generally 50%. With the standard meal allowance you can generally deduct 50% of it. |
| Transportation to and from the assignment | Deductible when you're away from your tax home |
| Local transportation (taxi, rental car, parking, tolls) | Deductible; for a rental car, only the business-use portion |
| Laundry, dry cleaning, business phone calls, tips on these | Deductible |
Lodging
- Deduction
- Your actual cost. There is no standard lodging amount.
Meals
- Deduction
- Generally 50%. With the standard meal allowance you can generally deduct 50% of it.
Transportation to and from the assignment
- Deduction
- Deductible when you're away from your tax home
Local transportation (taxi, rental car, parking, tolls)
- Deduction
- Deductible; for a rental car, only the business-use portion
Laundry, dry cleaning, business phone calls, tips on these
- Deduction
- Deductible
Source: IRS Publication 463 (2025), chapter 1, Table 1-1 and the discussion of the standard meal allowance, and chapter 2 for the 50% limit. We don't quote the allowance amounts because they change; check the current rates before you use the standard method.
Malpractice insurance is a separate and often large cost for clinicians. Publication 334 lists malpractice insurance that covers your personal liability for professional negligence, among the premiums you can generally deduct, along with liability insurance. State licenses and credentialing are business expenses too, which the deductions guide covers. Keep receipts and a log of your assignment dates, locations and business purpose.
Three hypothetical examples
We ran three made-up contract workers through the same functions as our Freelance Tax Calculator: a single filer with no other income, the 2026 standard deduction, no employees and no state tax. All three are specified service fields, so the QBI limits are applied as the Form 8995-A instructions describe. The amounts of income and expenses are hypothetical, not IRS figures.
| Per diem RN (local) | Locum NP | Locum physician | |
|---|---|---|---|
| Contract payments received | $92,000 | $190,000 | $330,000 |
| Lodging | $14,400 | $26,000 | |
| Transportation to assignments | $7,800 | $15,000 | |
| Meals, deducted at 50% | $2,600 | $4,200 | |
| Malpractice insurance | $900 | $4,500 | $9,800 |
| Licenses, credentialing, CE | $1,500 | $3,200 | $9,500 |
| Scrubs, equipment, phone, software, accounting | $1,700 | $2,800 | $3,500 |
| Total expenses | $4,100 | $35,300 | $68,000 |
| Net profit | $87,900 | $154,700 | $262,000 |
| Self-employment tax | $12,420 | $21,858 | $29,895 |
| Income tax after QBI | $6,256 | $17,182 | $44,465 |
| Additional Medicare Tax | $0 | $0 | $378 |
| Total federal tax | $18,676 | $39,040 | $74,738 |
| Share of profit | 21.2% | 25.2% | 28.5% |
Contract payments received
- Per diem RN (local)
- $92,000
- Locum NP
- $190,000
- Locum physician
- $330,000
Lodging
- Per diem RN (local)
- Locum NP
- $14,400
- Locum physician
- $26,000
Transportation to assignments
- Per diem RN (local)
- Locum NP
- $7,800
- Locum physician
- $15,000
Meals, deducted at 50%
- Per diem RN (local)
- Locum NP
- $2,600
- Locum physician
- $4,200
Malpractice insurance
- Per diem RN (local)
- $900
- Locum NP
- $4,500
- Locum physician
- $9,800
Licenses, credentialing, CE
- Per diem RN (local)
- $1,500
- Locum NP
- $3,200
- Locum physician
- $9,500
Scrubs, equipment, phone, software, accounting
- Per diem RN (local)
- $1,700
- Locum NP
- $2,800
- Locum physician
- $3,500
Total expenses
- Per diem RN (local)
- $4,100
- Locum NP
- $35,300
- Locum physician
- $68,000
Net profit
- Per diem RN (local)
- $87,900
- Locum NP
- $154,700
- Locum physician
- $262,000
Self-employment tax
- Per diem RN (local)
- $12,420
- Locum NP
- $21,858
- Locum physician
- $29,895
Income tax after QBI
- Per diem RN (local)
- $6,256
- Locum NP
- $17,182
- Locum physician
- $44,465
Additional Medicare Tax
- Per diem RN (local)
- $0
- Locum NP
- $0
- Locum physician
- $378
Total federal tax
- Per diem RN (local)
- $18,676
- Locum NP
- $39,040
- Locum physician
- $74,738
Share of profit
- Per diem RN (local)
- 21.2%
- Locum NP
- 25.2%
- Locum physician
- 28.5%
Hypothetical amounts. Single filer, no other income, 2026 standard deduction, federal tax only, no state tax or credits, no employees. The physician's taxable income before QBI is $230,952, inside the phase-in range, so the specified service business percentage applies. The meal rows are the 50% deductible amount ($5,200 and $8,400 spent). The physician's QBI deduction applies the phase-in, and the figures match our Freelance Tax Calculator with the health work type selected, including the Additional Medicare Tax.
The locum nurse practitioner is the case where tax home matters. If the $24,800 of lodging, transportation and meals weren’t deductible, because the assignment was indefinite or because there was no tax home, profit would be $179,500 and total federal tax $46,898, which is $7,858 more than the $39,040 in the table. That is the stake in a decision about how long to expect an assignment to last.
The specified service limit
Health and consulting are both on the IRS list of specified service trades or businesses, which the QBI guide covers in detail. The Form 8995-A instructions list health, including physicians, pharmacists, nurses and other similar healthcare professionals, and consulting, meaning providing clients with professional advice and counsel. They exclude services not directly related to a medical field, and, for consulting, sales, training and educational courses, and consulting embedded in a business that isn’t a specified service when there’s no separate payment.
It only matters above the threshold, $201,750 of taxable income before the deduction for a single filer in 2026. The nurse and the nurse practitioner are well below it, so their QBI deduction is the full amount, $13,118 and $25,534. The physician is not: taxable income before QBI is $230,952, which is 38.9% of the way through the $75,000 range, so only 61.06% of the business counts. With no W-2 wages, the wage limit cuts what is left by the same share, which leaves $18,424. A business outside the specified service fields at the same profit would get $30,172, which would lower the physician’s total federal tax from $74,738 to $71,058. Retirement contributions that lower taxable income can pull a clinician back toward the threshold, as the QBI guide shows with numbers.
When an S corp fits
The paying yourself guide explains how an S corporation changes the way you pay yourself, the reasonable compensation requirement and the extra costs, so we don’t repeat it. For the nurse practitioner at $154,700 of profit, with hypothetical assumptions: a $4,500 yearly cost to run the company and two possible salaries.
| Salary $90,000 | Salary $110,000 | |
|---|---|---|
| Sole proprietor: total federal tax | $39,040 | $39,040 |
| S corp: payroll taxes (FICA and FUTA) | $13,812 | $16,872 |
| S corp: income tax after QBI | $20,562 | $21,229 |
| S corp: total federal tax | $34,374 | $38,101 |
| Extra yearly costs (hypothetical) | $4,500 | $4,500 |
| Net saving from the S corp | $166 | -$3,561 |
Sole proprietor: total federal tax
- Salary $90,000
- $39,040
- Salary $110,000
- $39,040
S corp: payroll taxes (FICA and FUTA)
- Salary $90,000
- $13,812
- Salary $110,000
- $16,872
S corp: income tax after QBI
- Salary $90,000
- $20,562
- Salary $110,000
- $21,229
S corp: total federal tax
- Salary $90,000
- $34,374
- Salary $110,000
- $38,101
Extra yearly costs (hypothetical)
- Salary $90,000
- $4,500
- Salary $110,000
- $4,500
Net saving from the S corp
- Salary $90,000
- $166
- Salary $110,000
- -$3,561
Hypothetical salaries and costs, not IRS figures. Single filer, no other income, 2026 federal rates, standard deduction, federal tax only. The salary doesn't count as QBI, and the S corp's income tax reflects deducting the extra costs. State taxes and fees are not included. Same functions as our S corp calculator.
A $90,000 salary leaves the S corp roughly even, and a $110,000 salary makes it worse. That shows how sensitive the result is to a number the IRS doesn’t give you. The IRS says it can reclassify payments to shareholders as wages, and lists the factors it looks at, so the salary needs support.
For the physician, the S corp math is harder, because the specified service rules also reach the S corp’s profit when taxable income sits in the phase-in range. Work that one through with a CPA who handles S corps for clinicians, using real quotes for payroll and your state’s fees.
Watch out
Multi-state work adds questions we don’t cover here, such as state income tax in the places you work and state payroll rules for an S corp. The examples in this guide are federal only.
How we got these rules
The tax home definition, the three factors, the itinerant rule, the temporary and indefinite assignment rules, the 1-year rule, the series-of-assignments warning, the 18-month example, Table 1-1, the standard meal allowance and the 50% limit come from IRS Publication 463 (2025), chapters 1 and 2. The malpractice insurance deduction comes from Publication 334 (2025), chapter 8. The list of specified service fields, with health and consulting and their exclusions, comes from the 2025 Instructions for Form 8995-A, and the 2026 thresholds from Rev. Proc. 2025-32. The reasonable compensation point comes from the IRS page on S corporation compensation. The exact excerpts are in docs/extractos-citas-2026-10.md. We opened the sources on October 14, 2026. The examples are hypothetical and their tax figures are our own arithmetic from the same federal functions our calculators use. We didn’t cover state taxes, multi-state rules, how travel reimbursements from a facility are treated, or W-2 travel assignments. For how we choose sources, see How We Research.
This is general information, not tax or legal advice for your situation. Your tax home and the length of your assignments depend on facts, so confirm them with a tax professional before you rely on a travel deduction.
