Ah, that time of year again… tax season. Before you begin filing your travel nurse taxes, it is important that you understand how taxes work. Since you are traveling and working in different states with different employers, it can be hard to keep track of financial matters. Many travel nurses bring in a combination of taxable income and non-taxable income, so which deductions are you allowed?
An Overview of Travel Nurse Taxes
The tax code is complex and it can be difficult to keep up with the system, especially for those with travel jobs. Living in different locations and receiving varying stipends and reimbursements can get confusing, so we’re here to help. Here are a few things to remember when filing your travel nurse taxes. Please note that these are our best recommendations to help you throughout the process. However, we highly recommend working with a tax accountant in order to confirm that you are filing your taxes correctly.
Under the IRS, you are required to have a “tax home” as a travel nurse. A tax home refers to a permanent residence where you incur expenses while you’re working in another location. A tax home involves paying a mortgage or rent and also goes beyond paying bills. Examples of this include having the address on your driver’s license, being registered to vote in that area, and using that location as your permanent mailing address. Once your tax home status is confirmed, additional expenses may be subject to tax deductions for travel nurses.
Housing & Food
Most agencies will provide housing or pay a stipend if you choose to find your own place to stay. In some cases, the stipend can be lower than the actual cost of lodging. Also, the contract might require the lodging to be treated as a taxable wage, or call for a straight wage rate without reimbursement. If you have a tax home, costs for lodging can be deductible including utilities.
The stipend is usually enough to cover both lodging and meals. It is not taxed, and the General Services Administration decides the maximum daily stipend by location. Again, if there are additional expenses, you are allowed to deduct on your travel nurse taxes.
Once you start your traveling, you can start recording your travel expenses. Any form of transportation counts including airfare, car, train, or public transportation. When filing your travel nurse taxes, don’t forget to deduct any reimbursements that the agency is already giving you for travel.
Costs incurred when traveling back home from an assignment can also be included. When calculating your deductible, use the 2017 Standard Mileage Rates provided by the IRS. Parking, tolls, maintenance and other expenses are also subject to deduction.
5 Tax Tips for Travel Nurses
1. Work with a professional
Having a tax professional help with filing your taxes can be of great assistance, especially if you’re new to travel nursing. They can help you with expenses and deductions that you may be unsure of and ensure that you are correctly following the legal process and regulations.
2. Keep your receipts
This may seem annoying, but it’s the best way to keep track of your expenses. Whether you just have a box of them or have them neatly organized, they can be very useful for reference. Of course, organized receipts will be easier to keep track of, but not everyone has time for that.
3. Use an app
You should still keep your receipts, but tracking your expenses in an easy to read format can be super helpful. There are tons of different apps to keep track of spending, so find the one that’s right for you and start getting your finances in order. Apps can be more effective than pencil and paper ledgers since you’ll always have it with you.
4. File on time!
If this isn’t already a priority, it should be one. Schedule a day to file your travel nurse taxes yourself or meet with a professional. This year, tax filing began on January 23 and returns are due on April 18.
5. Remember professional expenses
Don’t forget that any expenses used for continued education and keeping licenses up to date are also subject to deduction. This can include tuition, books/supplies, dues for organizations, malpractice insurance, and uniforms. Remember that these expenses have to be directly related to your professional career, and don’t include activities done for fun.