Does extending a travel contract change your stipends?

An extension does not change your stipends by itself, but it can change whether they stay tax-free, because the IRS judges a stay in one place by how long it is realistically expected to last. If an extension makes a stay of more than a year at the same place realistic, the assignment is indefinite from that point, and the stipends paid after it count as income.

By ProTherapy Staffing, published November 2, 2026.

How does the IRS decide whether an assignment is temporary?

By what you can realistically expect when you start, not only by how long you end up staying. IRS Publication 463 says that “generally, 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,” and that an assignment “is considered indefinite if it is realistically expected to last for more than 1 year, whether or not it actually lasts for more than 1 year.”

The publication adds that you “must determine whether your assignment is temporary or indefinite when you start work.” For a traveler that means the first contract at a facility is judged on what everyone expected when it was signed.

What can an extension change?

The expectation. The publication says “an assignment or job that is initially temporary may become indefinite due to changed circumstances,” and “a series of assignments to the same location, all for short periods but that together cover a long period, may be considered an indefinite assignment.”

Its own example is a worker who expected a job to last under a year and was then asked to stay on. From the point the extension made a stay of more than a year realistic, the job counted as indefinite, and only the travel expenses before that point were deductible. A traveler weighing a second or third extension at the same facility is in the same position: the question is what the stay as a whole is now expected to be.

What happens to stipends once an assignment is indefinite?

They are taxed as pay. Publication 463 says that if your assignment is indefinite, “you must include in your income any amounts you receive from your employer for living expenses, even if they are called ‘travel allowances’ and you account to your employer for them.” The location also becomes your tax home, so there is no longer a tax home you are away from.

This is why the same extension can be worth less than it looks. The weekly total on the offer may not change, but the part that was paid untaxed may now be taxed, and the take-home pay drops with it. A tax professional can apply the rule to your own facts.

Does the per diem rate change during an extension?

It can. GSA sets the per diem rates “that federal agencies use to reimburse their employees for lodging and meals and incidental expenses” for each federal fiscal year, and the tables turn over each October. An extension that runs past that change may be measured against the new rates for the county where you sleep, and a stipend above the rate is partly taxable.

The steps for checking a stipend line against the current tables for your county are on checking an offer against the current rates.

If you want an extension's pay lines and its total time at the facility set out in writing before you say yes, ask a ProTherapy recruiter: Find my next contract.

What should you ask before you say yes to an extension?

Ask for the extension in writing, as a new offer, and read it as one.

A clear answer puts the total time at the facility on paper, so you and your tax professional can judge the stay against the rule rather than against a guess.

Frequently asked questions

Can I extend a travel contract and keep my stipends tax-free?

Often, if the stay at that place is still realistically expected to last a year or less in all. Once an extension makes a longer stay realistic, the IRS treats the assignment as indefinite from that point, and stipends paid after it count as income.

Does the clock restart with each new contract at the same facility?

Not by itself. Publication 463 says a series of short assignments to the same location that together cover a long period may be treated as one indefinite assignment, so count the whole stay, not each contract.

Who decides whether my assignment is temporary or indefinite?

You do, on your return, under the IRS rules; your employer decides how it pays the living-expense lines. A tax professional can apply the rules to your own contracts and dates.

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