It’s that time of year again; the dreaded tax season is here.
Being a travel nurse, you can take advantage of some tax benefits, which is always helpful. Yet you must fully understand your specific situation. And let’s be honest, that gets complicated when dealing with multiple states and per diems.
But you don’t have to navigate your taxes alone. Come out on top by staying organized throughout the year so tax season comes and goes smoothly and efficiently.
This guide shows you how to navigate filing taxes as a travel nurse. Knowing the answers to the right questions can help you save money and avoid future tax issues and liability.
Table of Contents
- What Do Travel Nurses Need To Know About Taxes?
- 14 of the Most Common Travel Nurse Tax Questions
- Trusted Nurse Staffing: Optimize Your Income With Our Flexible Assignments, Top Pay, and Customized Benefits Packages
What Do Travel Nurses Need To Know About Taxes?
When it comes to travel nurse taxes, there are a lot of things you need to consider.
There are various things to stay on top of and think about your taxes throughout the year, including the following:
- Organizing your write-offs
- Determining your tax home location
- Knowing which state (or states) to file in — you must file non-resident tax returns in every state you work in
Always Contact a Tax Professional
The best option is to get tax advice from a tax expert. When things seem too complicated, ask some friends or family members for recommendations and consult with a professional.
14 of the Most Common Travel Nurse Tax Questions
#1: Are There Tax Advantages To Being a Travel Nurse?
You can earn good money working as a travel nurse. The salary can be lucrative, and there are other perks too.
As a travel nurse, you journey to new places and experience different cities. In the long run, paying attention and cutting your living costs when home and on the road can save you money.
Travel nurses often qualify for non-taxable stipends for the following when they are duplicating living expenses.
- Meals
- Travel
- Housing
Duplicating expenses come into play when you continue paying utilities at your permanent home but are also renting short-term where you live to fulfill your travel nurse contract. Tax-free money is advantageous because it increases your net pay giving you more to spend (or save).
#2: What Is a Tax Home and Why Do I Need One?
When you travel for work, you can often claim tax deductions for some of your expenses when you are away from your primary residence.
According to Investopedia,
“A tax home is the city or general area of a worker’s primary place of business or work, regardless of where the worker maintains a family home.”
Trusted Nurse Staffing is happy to offer you these tips, but we aren’t tax professionals. You should always consult a tax expert to learn exactly what you need to know about a tax home.
However, if it is your dream assignment you are looking for, Trusted Nurse Staffing can help. Using Pronto, you can search for jobs and find the perfect match for your lifestyle.
#3: How Do I Establish a Tax Home?
To prove your tax home, you need records to show the following:
- How long you have stayed in a location
- How much money you earned
- The type of business activity you completed there
#4: Can I Rent My Tax Home?
Renting your house changes your home from personal to business use. It can’t be a primary residence and tax home in this situation. But there are ways to work around this and rent part of your house out.
Here are some options you can choose regarding having a tax home:
- Partial rental — You occupy a portion of the house at all times; there is a space for you in your rental.
- Not-for-profit rental — You rent out the house for below the value of the area, then you can claim expenses up to the amount you make from the renters.
- Not having a tax home — If you want to earn money off your house and rent it out, hire someone to oversee the property. You won’t be able to write off meals, and your travel and housing stipends will be taxable, but this may be your best option.
#5: Can I Rent From My Parents and Count That as My Tax Home?
You can rent from your parents but must pay a fair market rental price or split yearly costs like roommates do. In addition, your parents must report the income they make from you on their tax return.
For something to be considered a rental property, the owner must use the property for less than 14 days a year or 10% of the days the house was rented at fair rental value during the tax year.
#6: What State Do I File In?
Depending on the number of places you work, this changes. You must file in your home state and all the states you worked in.
Anytime you have legal ties to a state, you file in that state. There are both non-resident and resident tax returns.
The consequences for not filing in your home state or a state you worked in may include losing your professional practice license.
#7: What Records Should I Keep?
Keep detailed records to ensure accuracy and have a paper trail supporting your decisions.
The IRS doesn’t usually go back more than six years and usually includes returns filed within the last three years. The good news is that most audits have been filed within the previous two years.
Staying organized is vital. Keep these documents to use as a reference:
- Mileage log — Keep track of your odometer reading.
- Copies of your travel contracts — These prove how long you stayed in a location and where you were.
- Expense receipts
- Housing
- Lodging
- Meals
- Uniforms
- Continuing education expenses
#8: Do Travel Nurses Get Taxed Twice?
As a travel nurse, you may have to pay taxes in each state where you work throughout the year.
However, some states have a reciprocity agreement, meaning they have decided that travel nurses working in those states will only have to pay taxes in one state. See the states with reciprocal agreements here.
Even though it may seem like you will be taxed twice, your home state often deducts the difference if it has a higher percentage rate or vice versa.
Taxes can be confusing. The best advice we can give you when talking about tax laws is to speak with your accountant so you can understand the rules to determine precisely what is right to do in your specific situation.
#9: What if I Work in a State Without Income Tax?
Nine states don’t have an income tax. However, even if your home state doesn’t have an income tax, you are still expected to pay this type of tax in states where you work that do.
It is essential to budget accordingly so there are no surprises at tax time. Ensure you have enough to pay what is owed — remember that your accountant is the expert who can assist you.
#10: What Can I Write off as a Travel Nurse?
There are differences depending on if you are a W2 employee or a 1099 contractor. Again, talking with a tax professional is crucial to determine where you fall.
Travel nurses can often deduct the following expenses:
- Travel expenses
- Mileage or gas
- A rental car
- Uniform and equipment expenses
- Continuing education
- Licensing fees
- Some meals
- Contributions to retirement funds and insurance
- Your tax home expenses
#11: Are Per Diems Taxable?
Travel nurses often feel the financial burden of renting during their assignments while maintaining their primary residence. Therefore, agencies give incentives by offering tax-free per diems.
This option is only available for those who can prove they are duplicating expenses.
Before accepting tax-free per diems as part of your compensation benefits, ensure you qualify.
Trusted Nurse Staffing can help you find the perfect assignment and set you up in your new area. However, we are not tax experts.
#12: Can I File My Own Taxes?
The more assignments you have and the more states you work in, the more complicated your taxes become.
A tax advisor can:
- Help you file your taxes — which makes the task easier
- Take away the liability that can fall on you if you make a mistake
- Ensure you understand your original contract
- Contact payroll offices and agencies when needed
- Help you stay organized
- Make life easier when you have to file in multiple states
Don’t tackle this task alone; tax professionals are ready to assist you.
#13: How Long Should I Keep My Tax Records?
According to the IRS, the period of limitations that apply to income tax returns can vary.
The IRS website says that you must keep records:
- For three years if situations (4), (5), and (6) below do not apply to you.
- For three years from the date you filed your original return or two years from the date you paid the tax, whichever is later if you file a claim for credit or refund after you file your return.
- For seven years, if you file a claim for a loss from worthless securities or bad debt deduction.
- For six years, if you do not report income that you should report, and it is more than 25% of the gross income shown on your return.
- Indefinitely if you do not file a return.
- Indefinitely if you file a fraudulent return.
- Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.
#14: Can Travel Nurses Get Audited?
Generally, people are at a higher risk of getting audited when they have high expenses and a low income. In these situations, the IRS tends to wonder how you can afford your lifestyle.
Working with a tax professional who understands the travel nursing career is always your best bet. Travel nurse staffing agencies can help you with your assignments, but it is best to leave tax help to the experts.
Trusted Nurse Staffing: Optimize Your Income With Our Flexible Assignments, Top Pay, and Customized Benefits Packages
Knowing what to expect regarding taxes helps you stay calm and collected during tax season. We all know that nursing is stressful — you don’t need to add anything else to your plate.
Although Trusted Nurse Staffing should not be your go-to help for tax advice, as we are not tax professionals, we can do many other things to make your life easier.
Here are some of the top benefits you may experience when working with Trusted Nurse Staffing:
- Enhanced work schedules with flexible assignments
- Increased earning potential with higher rates
- Customized benefit packages
Trusted Nurse Staffing has made finding your dream travel nurse assignment on Pronto easy. Try it for yourself today.